The global electric vehicle (EV) market is anticipated to reach well over $1 trillion by 2028, suggesting an impressive annual growth rate of 24.3% during that time period. With so many players in the space, investing in EV stocks can be overwhelming.

That said, leading EV companies stand to benefit greatly from the electrification of the automotive industry. Investors will have to do their homework to determine which companies are best positioned for success, while being prepared for the stock market's often irrational behavior.

With that in mind, let's take a closer look at Workhorse Group (WKHS -5.10%), an American EV company with a questionable past but a potentially optimistic future.

The stock price has fallen off a cliff

A quick glance at Workhorse's five-year chart might be enough to scare away volatility-averse investors. The stock is down more than 93% from its highs of February 2021. While those highs took place during a notoriously frenzied market, the drop has nonetheless been devastating for Workhorse and its shareholders.

So what happened? During the overabundant, stimulus check–fueled market of early 2021, retail traders -- anticipating Workhorse would win a $6 billion contract with the U.S. Postal Service for electric delivery vehicles -- drove the stock price to unforeseen heights. The stock reached nearly $43 in early February 2021.

However, Workhorse stock ended that February down more than 62% from those highs, and besides a brief rally in May of 2021, has continued to plummet ever since. The stock now trades for less than $3 a share. 

In November of 2021, Workhorse announced that it was under investigation by the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) for fake vehicle orders, accounting fraud, and the sale of company shares prior to the announcement of the USPS contract.

Rebuilding the company

Workhorse sent its former CEO packing in July of 2021, and it has been focused on turning itself around ever since. Appointed the same month, new CEO Rick Dauch soon replaced most of Workhorse's previous leadership team, citing weaknesses throughout the company's operations: poor communication and coordination, untapped resources, unsatisfactory suppliers, and disappointing products.

Dauch next handpicked Workhorse's leadership team, including former colleagues from his roles at Delphi Technologies and American Axle & Manufacturing. The new CEO then reduced the company's cash burn rate more than 30% by optimizing freight costs, using in-house resources rather than outsourcing, and spacing out material shipments.

In addition, Dauch withdrew Workhorse from its expensive USPS lawsuit and streamlined the company's workforce. With the help of its new CEO, Workhorse soon reduced its debt obligations significantly, and by late 2021 it had enough cash on hand to continue operations for the foreseeable future.

2023 outlook and beyond

Dead set on redemption, Dauch is confident about rebuilding the brand. During Workhorse's Q2 earnings call, he commented, "Make no mistake, Workhorse is a fundamentally different company today than it was a year ago."

In a significant achievement last quarter, Workhorse built and sold its first Class 4 trucks, medium-duty vehicles capable of carrying up to 16,000 pounds each. While looking to close out 2022 strongly, the company continues to renovate and improve its manufacturing facilities in anticipation of higher production volumes in 2023. That is certainly a good sign that Workhorse has begun distancing itself from its murky past.

Workhorse's EV truck portfolio currently includes two vehicles, with a third expected to complete testing by the end of the year. Additionally, the company plans to commence production of two additional delivery trucks within the next 1-2 years. Other plans include transitioning to a new enterprise resource planning (ERP) system, which is expected to help Workhorse "immensely" starting in late 2023.

During Workhorse's Q3 earnings call earlier this month, Dauch claimed, "We started to crawl in the third quarter," later suggesting that the company would be running hard by the first quarter of 2023. While the new CEO wasn't keen to discuss Workhorse's standing orders during the call, he underscored the company's focus on improving its facilities, processes, and products. Sales, he feels, will follow in due course.

Dauch claimed that more company details would emerge on Workhorse's upcoming Analyst Day on December 7. Its negative past largely in the rearview mirror, Workhorse may make a major recovery under its new management. And if the company can recover, I think the stock will follow suit.