The USPS awarded Oshkosh Defense a deal to deliver 50,000-165,000 battery-electric and low-emission combustion-engine vehicles over 10 years, according to a news release, which described it as the Postal Service’s “first large-scale fleet procurement in three decades.”
Production is expected to begin in 2023
The postal agency will pay Oshkosh $482 million for initial engineering and factory buildout ahead of production of the “next-gen” delivery vehicles. The contract to build the next mail trucks is estimated to be worth more than $6 billion.
The U.S. Postal Service said it has awarded the contract to replace its white, right-hand drive, delivery vehicles to Oshkosh, a diversified seller of military and commercial vehicles. The electric-vehicle maker Workhorse bid, but it didn’t win.
Now Workhouse shares are plunging.
Workhorse (ticker: WKHS) stock dropped about 47% in Tuesday trading. Stock in Oshkosh (OSK), the winner, finished up 6.1%. The S&P 500, for comparison, gained 0.1%.
The moves add a few hundred million dollars to Oshkosh’s market capitalization and wiped out more than $1 billion in Workhorse’s. The numbers don’t match exactly, but that isn’t a big surprise. Oshkosh is a larger company with more sources of revenue. Its market capitalization is about $7.5 billion, and it has annual sales of close to $8 billion.
Workhorse didn’t generate significant sales in 2020. It is trying to break into the growing market for electric commercial vehicles. The USPS news is a setback.
Workhorse was the only all-electric offering among the finalists. The stock ran up after President Joe Biden talked about making the federal fleet all electric early in January.
The USPS referred Barron’s to the current press release. It says the Oshkosh vehicles will have both gas and electric powertrains, but the number and timing of electrified mail-delivery vans isn’t known just yet. Workhorse didn’t immediately respond to a request for comment.
After several delays tied to which vehicles to replace its aging fleet of trucks for mail delivery, the postal service awarded the 10-year contract to Oshkosh Tuesday. That comes nearly a month after President Biden sought to electrify government fleets.
