Investors in last-mile electric delivery vehicle start-up Workhorse Group (WKHS -2.65%) haven't had much good news so far in 2021. The stock is down almost 60% year to date, and more than 80% off highs reached in February. Shareholders got more bad news today, and shares dropped 14% in reaction. The stock has regained some of that decline, but still remained down about 8.5% as of 10:25 a.m. EDT.
The latest hit comes after the company provided an update on its operations, saying it has suspended deliveries of its C-1000 electric delivery vans. Additionally, Workhorse is recalling 41 vehicles that have already been delivered to customers. The company said that based on customer feedback, it plans to review and redesign the vans "primarily related to vehicle dynamics to increase the vehicles' payload capacity."
Workhorse management released a statement saying "additional testing and modifications to existing vehicles are required to certify the C-1000 vehicles under Federal Motor Vehicle Safety Standards (FMVSS)." The company did not detail the effects of the plans on its previously stated production and commercial goals. But it said it would still provide investors with a long-term strategic outline when it reports its 2021 third-quarter financial results. Workhorse also said the newly announced testing should be completed in the fourth quarter of 2021.
Much of the source of the stock's decline this year came in February when the company lost out on a bid for a 10-year contract with the U.S. Postal Service for new-energy vehicles. Workhorse challenged that decision, but last week the company announced it was withdrawing its protest that had been filed in the United States Court of Federal Claims.
New Workhorse CEO Rick Dauch said in a statement that by doing so, "we can also better focus our time and resources on initiatives that we expect will be more productive for our company."
Workhorse had originally told investors it expected to produce 1,800 vehicles in 2021. When reporting its first-quarter results in May, however, the company reduced that target to 1,000 units. That adjustment came despite the fact that it said it was making production throughput improvements.
Today's news means there will likely be another downward adjustment to its 2021 production goals. And investors are pushing shares down even further as a result.