The U.S. Postal Service on Tuesday awarded Oshkosh (NYSE:OSK) an initial $482 million to modernize its fleet of postal-delivery vehicles, a big win for Oshkosh that has sent shares of electric truck maker Workhorse Group (NASDAQ:WKHS) plunging.
The Post Office in a statement announced a 10-year contract with Oshkosh Defense for the Next Generation Delivery Vehicle (NGDV). The initial contract will allow Oshkosh to finalize production design for the vehicle, with a plan to assemble 50,000 to 165,000 of them over the next 10 years.
The vehicles will be equipped with either fuel-efficient internal combustion engines or battery electric powertrains that can be retrofitted as technologies develop.
The first of the new vehicles are expected to hit the road by 2023. Overall, the contract is expected to be worth upwards of $6 billion. Postmaster General Louis DeJoy said in a statement:
As the American institution that binds our country together, the U.S. Postal Service can have a bright and modern future if we make investments today that position us for excellence tomorrow. ... The NGDV program expands our capacity for handling more package volume and supports our carriers with cleaner and more efficient technologies, more amenities, and greater comfort and security as they deliver every day on behalf of the American people.
The announcement is a big blow to Workhorse, an electric-vehicle start-up that investors had hoped could use the USPS contract to jump-start its business. Workhorse has other business to fall back on, including an order for 6,000 electric delivery vans received in January, but the hoped-for leap from a planned 1,800 vehicles built in 2021 to a large-scale manufacturing contract with the Post Office is apparently now not an option.
Shares of Oshkosh traded up 9% heading into the close Tuesday, while shares of Workhorse were down 42%.