What happened

Shares of Workhorse Group (WKHS 6.90%) gained 16.7% in August, according to data provided by S&P Global Market Intelligence. There's been a lot of enthusiasm surrounding electric vehicle (EV) companies all summer, and Workhorse had a few company-specific highlights that helped the stock to outperform for the month.

So what

Workhorse is focused on manufacturing electric delivery vehicles, but the company also holds a 10% stake in Lordstown Motors, a start-up specializing in electric pickup trucks. Lordstown early in the month announced plans to go public via a reverse merger with DiamondPeak Holdings (NASDAQ:DPHC).

That's good news for Workhorse, since the terms of the deal would dramatically increase the value of the company's Lordstown shares. Workhorse also is entitled to a 1% fee on any debt or equity raised to fund Lordstown and gets a royalty on each truck Lordstown sells.

A parking space marked for electric vehicles.

Image source: Getty Images.

Add it all up, and the Lordstown merger, which will give it more capital to help bring its products to market, looks like a great deal for Workhorse.

The company also got some positive news about its own product line. Workhorse is one of three finalists for a more than $6 billion contract to supply delivery vehicles to the U.S. Postal Service.

It's hard to handicap Workhorse's chances to win the deal; it's competing against a powerful alliance between Ford Motor and Oshkosh, among others. But at least it's still in the running.

Now what

There is a lot of hype around EV makers right now, and thanks to its Lordstown stake, Workhorse is particularly intriguing because it offers exposure to two potential winners. But auto investors should be mindful that these are still companies with very little revenue coming in that trade more on potential than actual results.

EV stocks including Workhorse have had a difficult first few days of September, driven down as much by a sell-off in industry heavyweight Tesla than by any particular company news. Expect the volatility to continue in the quarters to come as companies like Workhorse and Lordstown work to turn their potential into results.