Today's webcast contains certain forward-looking statements within the meaning of federal securities laws with respect to Workhorse Group, including statements related to the amendment of our articles of incorporation in Nevada and its potential impact on the company's ability to obtain financing to build our offering for commercial and aerospace vehicles. Forward-looking statements are predictions, projections, and other statements about future events based on current expectations and assumptions, and as a result, are subject to risks and uncertainties.
Many factors could cause actual future events to differ materially from the forward-looking statements made on today's webcast, including but not limited to, changes in voting and the actual vote counts on the day of the annual meeting, the availability of and need for capital, and the risks and factors and other uncertainties regarding the company's business, which are described in the risk factor sections of the company's annual report, which was filed on Form 10-K, with the Securities and Exchange Commission for the December 31, 2022 calendar year, which was filed on March 1, 2023, and the company's quarterly report on Form 10-Q, for the fiscal quarter ending June 30, 2023, filed with the SEC on August 14, 2023.
These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. The company assumes no obligation and does not intend to update or revise these forward-looking statements. With that, let's now turn the call over to Rick Dauch. Rick?
Thanks, Stan. Good morning, everybody, and good morning, special good morning to my fellow Workhorse stockholders. Thank you for joining us today. As you know, this is a critically important time for us here at Workhorse. As we continue to advance our product portfolio roadmaps, we are evaluating several financing options to help Workhorse build a bridge to its next phase of growth and value creation. The only way for these financing options to be available to us are if our stockholders vote for the proposal to increase Workhorse authorized shares ahead of the special meeting of stockholders, which is just a few days away on August 28. Over the last several weeks, we've been engaging with many of our stockholders. We have respect your views. We appreciate how sophisticated, knowledgeable, and I'll say passionate you are about Workhorse.
Thanks for your continued interest and support of our company. We also recognize that you want to have as much information as possible as we approach the special meeting next Monday. Our goal of this webcast today is to address your questions and explain about the proposal, our business, and how we are working on behalf of stockholders to rebuild Workhorse and create long-term shareholder value. We invited your questions last week, and we're quite impressed by the number of people submitting questions. Well over 100 questions were received. We intend to answer as many questions as we can. We received a number of duplicate answers, so we combined some of those, and we'll try to get through all those. Stan is going to read the questions, and then Bob and I will take turns answering the questions depending on what the question is.
Before we jump into Q&A, I want to give you a perspective, my perspective on the importance of the vote. I've had the opportunity to hold executive leadership positions at multiple companies across the global industry over my 30-year auto career, and I've been through some of the toughest times ever, the 2008 and 2009 global recession, and the COVID period of 2019 and 2020. We understand what tough times are in the auto industry. When I joined Workhorse as CEO on August 21, some of my experience was sought after because we knew we had some challenging situations here at Workhorse.
I knew the company had incredible potential, but we had to address some legacy issues, and we've talked about those very openly with our shareholders over the last few years, and we put 95% of those behind us. Since then, we have transformed this business, executing a clear strategy to stabilize, fix, and properly grow Workhorse into a viable commercial EV OEM. Easier said than done. We've revamped our management team. We've revitalized our facilities. We've doubled our engineering staffs. We've advanced our roadmaps with our products, both on the commercial vehicle side and also over on the drone side of the business. We strengthened the company's financial position, giving us the financial flexibility to execute the plan we put together, and I have in complete confidence that we're on the right path.
Our goal to increase Workhorse share authorizations is to protect our shareholders and create long-term value. We're looking to issue the shares we need so we can continue to fund our operations and our future growth of the company. Our ask of you is very simple: We need your support for the vote, and we encourage you to vote as soon as possible. We intend to use the financing we raise to strengthen our business and drive forward on our plans. Revamped leadership team is laser-focused on executing new designs, ramping up production, profitably growing our revenue, and creating value for all stakeholders. We will use the capital to expand and advance our product roadmaps. We are launching 3 new vehicles in 12 months and 9 vehicles over 3 years.
That requires investment in our plants, in our people, in our suppliers, and with our dealers and distributors. We're ramping up production of the W4 CC and W750. As we said earlier, those, those vehicles are now in production. Beginning next week, we start our first official production of the W56. To date, we've only done program builds or test vehicles. We're now starting production next, next Monday. We have the parts all due in today. We'll be all sorted out this weekend, and we'll start our production next week. And then we'll start the W Next later on in this year, but it won't launch until 25 or 26. As I said, the W56 chassis is rolling down the line next week, and we're excited to continue that ramp-up production throughout the month of September and into October. In addition, we continue to invest in supplier tooling....
Assembly equipment and painting equipment as we move into full production of the W56 step van, hopefully by the end of September or early October. Right now, we're at a point where there's a funding gap in order to continue with our plans and grow the company. While our first wave of new products are finally ready for the market, we have a full product line. We need to have a full product lineup to be successful long term. Think about the auto companies you know or the truck companies. They don't live on one vehicle, they have multiple platforms of vehicles, and they've got to refresh those vehicles every two or three years. That's exactly what we're creating here, a real automotive OEM company. In addition, the overall adoption of EV technology is going slower across the industry than was forecast by industry analysts.
Big factor in that is the charging infrastructure or the lack thereof. Also, I'd say there's some people who are a little bit shy of how electric vehicles will work, especially in the commercial vehicle space, in terms of range anxiety and payload capacity. They've had some failures in the past. That's why we've been so hard on ourselves to making sure our trucks are well designed, tested, and ready for production before we put them out in the market. We don't want to get a truck out there that doesn't work. We've had other people in the industry do that. We did that ourselves with the C-1000. That's in the past, we're focused on the future. So we've been very strategic on how we cleaned up our balance sheet when we first got here and financed our efforts today. We've been good stewards of your capital.
The financing options we are looking at today, now require to be able to issue more shares. As we mentioned, these include raising money through convertible debt, but we can't access that financing without being able to issue more equity. We set up a website you've likely seen, www.votewkhs.com, with information on how to vote on the share authorization proposal. We encourage you to visit it and learn how to get your vote for the proposal today. With that, I turn it over to Stan to kick off the Q&A portion, and Bob and I look forward to answering your questions.
Thanks, Rick. As Rick mentioned, we received over 100 questions. It was 113, to be exact. Many were duplicates because there's a common alignment, so we bucketed those, and I'll be going through your questions, almost verbatim in y'all's words, the shareholders who sent those in. Now I'm going to ask Rick the questions. So let's start with number one. In the category of additional authorized share or use of proceeds, the first question is, and I think, Rick, I'll throw this one to you.
Okay.
What is Workhorse's plan with the additional 200 million authorized shares and the proceeds you intend to raise from the share issuance?
Well, Stan, we need the additional CapEx or capital, as you say, to fund our next phase of execution, primarily on the product engineering side of the house, on our next wave of vehicles, and to run our day-to-day business. We have working capital needs. Now, we have inventory coming out. We have finished goods, et cetera. Pay our people, pay our suppliers, develop our products. From a position of strength, we're exploring several financing options, but those options will only be available to us if the shareholders vote for the proposal. Primarily, we'll use the proceeds to finance and advance our expanded product roadmaps, continue to support our aerospace business that goes into production, and continue to invest in the supplier tooling, assembly, and paint equipment as we move into production of the W56.
As we said, we'll plan to use the financing towards working capital, operating expenses, and some capital expenditure needs.
Okay, thanks. So, Bob, one of the questions that came in was: Why did you wait so long to raise funds?
Well, Stan, we've been raising funds throughout 2023. Needing more shares is different. We have the resources to run the business in the near term, and now we're looking for financing from a front foot and from a position of strength.
Okay. Bob, I'll throw this one to you, too. Will these additional shares be counted as voting shares while sitting in our ATM apparatus? People are worried about the board controlling over 50% of the voting shares.
Until the shares are actually issued, nobody votes them. In the ATM, they are not issued and non-voting. We're not giving controlling interest in the company to the board. This is about maintaining flexibility. We are only asking for authorization to issue new shares. We aren't issuing them. The proceeds are not going to the board of directors or management. As you mentioned, any new shares would be used to help us obtain new financing so we can fund our execution and growth plans.
Okay. On that same thread, Bob, you said that the intent is to sell the shares in the open market as needed. How many shares will you sell at any given time?
We can't really speculate on the specific number of shares we will issue at any given time. We're evaluating a range of financing options. The goal is to fund the business while protecting our shareholders, enabling us to create the most value for them. As always, we will be prudent about the nature of the financing pursued to ensure it is in the best interest of all stockholders.
Okay, and I think another related question here, Bob, for you is: We heard there are different types of offerings the company could do, such as selling restricted shares to current stockholders at a discount to offering preferred equity shares. What options are you considering?
Well, the only shares we can issue from this request, once authorized, are common shares. As we said, the goal is to ensure we get the financing we need while protecting our shareholders and enable us to create the most value for them.
Okay. Rick, I think I'll turn to you because this is a follow-up to the questions just asked to Bob. Can you definitely state that the funds raised from the share issuance will not be used for any of the following: to facilitate a sale or buyout, to facilitate taking the company private, for executive or board compensation?
Yes, Stan. As I've already mentioned, we fully intend to use the proceeds from the share issuances to run the business. Product development, tooling, capital investment, pay for our engineering team. As I said, we need to expand our product roadmaps. As you guys know, the W56 will come in three different versions, and three different lengths, and we got some more work to do there, so. As the shareholders' representatives are your representatives on the board of directors, and any transaction require their approval. We have no intention to sell the company or take it private as part of this process.
As a general matter, if we wanted to do something like that, or so facilitate a sale or buy out, we would not be looking to increase the number of shares. That's the last thing we want to do, so.
Okay. Bob, I want to throw it back to you, because there are several questions that came in about why are you asking to authorize 200 million shares instead of a smaller amount? It doesn't seem like you should need this many to reach 2025 when you get, when you've stated you expect to be breakeven. Couldn't we authorize 100 million to get us through 2024, then authorize more if needed and warranted at that time?
Well, Stan, we've considered a number of different options in terms of financing and the number of additional shares we need to issue. In addition, the process to get authorization is time-consuming and costly. We believe it's better for stockholders if we do this once now, then focus our time and research on building and selling commercially these drugs.
Another follow-up to that one, Bob, is how big of a hit will the issuance of the additional shares be to the shares I own now? Will increasing the number of authorized shares of Workhorse common stock further dilute the current share price?
Well, as of the record date, there were 210,793,111 shares of Workhorse common stock issued and outstanding under our current authorization of 250 million shares. We're looking to increase the number of authorized shares of common stock to 450 million shares. If the company issues additional shares, the ownership interest of holders of our common stock will be diluted accordingly. We take any aspect of this incredibly seriously, and we wouldn't do it if it wasn't necessary, and we didn't think it was ultimately good for our stockholders in the long term.
Okay. A follow-up on that, Bob. How will stockholders see value creation with dilution, given the stock is trading at multi-year lows?
Simply put, we need our stockholders to help us build a bridge to long-term growth and stockholder value. We need to be able to issue shares to get financing, so we can fund our execution of our growth plans. We're confident the important work underway and the progress we are making across our EV portfolio will deliver value to shareholders over the long term.
Okay. A bunch of questions came in, Bob, because in the filings that were made as part of the process, the proxy statement as well as the S-3 statement, why does the company want to have options of selling shares directly or indirectly to those who are shorting the stock?
Well, on August 21st, we filed a prospectus supplement to our Form S-3, removing references to all short sales transactions, as we do not contemplate them in our plans for distribution. We intend to obtain new financing to advance our commercial EV product roadmap to support A ero business and fund our operations.
Okay. Rick, I'm going to throw this one to you.
All right.
Why, why does the vote referendum not have a clause saying that Workhorse will buy back shares once profitable?
Well, first of all, our board regularly reviews our capital allocation priorities, and I'm sure that they'll in the future consider implementing a stock buyback or capital return program in the future. But our clear focus is, first, we need to launch our company. We need to design, build, and sell trucks and drones to generate revenue of this company to get to a point where we have positive free cash flow. We do that, then we have more options. I've been around that before. It takes a while to get a company up and running. So back in my days at American Axle, we took 3 or 4 years, spending over $500 million in capital a year before we could actually get the company up and running, so we could return share to our customers.
We went from $0.01 a share to $42 a share in the stock.
Okay. How does the recent stock performance affect the proposal, Rick?
Hey, of course, we see the daily fluctuations in our stock price. Some are explainable, some are not, and there's plenty of reasons for those dynamics. Some are inside our control and some are not. But our stock price doesn't affect the proposal. We're doing what is needed right now, so we can execute on our business plans. We believe we can create long-term values as we advance and expand our product roadmap to sell trucks and drones.
Okay. Rick, if you don't receive stockholder approval for the proposal, what are your plans to raise capital to fund the business?
Well, that'd be disappointing, but we're not going to speculate right now. What I will say is that if it doesn't, the proposal ultimately does not go through, it will limit our financing options to the detriment of all our stockholders, all of us. So we encourage all our stockholders to get their votes in and to vote for the proposal.
Okay. Bob, I'm going to throw this one to you. Does Workhorse have a plan to reverse split shares of common stock in the event the company becomes deficient per Nasdaq's listing requirements? Does Workhorse have a plan in place to prevent delisting on the Nasdaq, that does not require a reverse split of any kind?
Well, as Rick said, we are aware of our stock price, and we're also aware of the Nasdaq listing requirements. We continue to monitor it and prepare accordingly.
Okay. I'm gonna go to a new bucket now, which is about financials and the guidance that we most recently updated-
Sure
-with our earnings. So Rick, I'll throw this to you. What's your confidence level on achieving the lower end of the revised guidance at $65 million, given the significant sales required despite the delays to date?
Yeah, Bob and I sit down with our sales teams, both on the CV side and the drone side, every month, and go through their perspectives. We actually get an update every week. Every Monday, we get an update. And so I think we have a solid plan to meet or beat it. We've got about 170 W4 CC units in our finished goods right now, ready to sell. We're ramping up the W750 production. We've already doubled from 1 to 2 a week, and we're moving towards 4 or 5 a week. We have multiple demos now out in the fields with customers, and they're getting good, positive reviews that help to turn those demos into real orders and firm orders. And again, we're launching the W56 next week.
We have 6 of our 12 dealers now signed up and through the certification process, and we're close to signing up another 2 or 3 dealers. Of course, when you sign up a dealer, they get stocking orders, anywhere from 10-30 trucks, depending on how many dealer sites they have. We hope to have those signed up yet this quarter. We have finished goods, we've got production capability now, finally, after 2 years, and we can build and sell trucks. We also have some drones out in the field being demoed right now, and we hope to get some more drone orders yet this quarter. We're also working with the government.
We've done a very good job over in the drone business in the last two years at exercising our drones, and we're getting more and more confident, we're getting more confidence with the government that they'll help support us going forward. So the one challenge we have, we talked about the last earnings calls, we don't have the HVIP voucher down in California. I'm personally going out there next week myself to meet with the CARB officials and CALSTART officials to see if we can get that resolved. It's really an administrative issue. It's kind of bureaucratic. We have orders out there. We have trucks in Indiana. We want to figure out how to get the paperwork, so we can get those trucks shipped out there and serve the needs of the California market, especially with the pending California Clean Fleet rules to take effect next year.
People are going to start buying electric trucks. They have to, by law. So we wouldn't put out the guidance if we weren't confident or didn't have a plan to get there. I'll caveat that with the risk of the HVIP vouchers, which could be 60 or 80 trucks.
Let's drill down a little bit further, because one of the shareholders asked, "Can you please explain how the 2023 revenue goals can reasonably be achieved, given the revenue miss on your last earnings call?
Yeah, our Q2 results were lower than we expected, primarily because of some of the ramp-up challenges we had with the W750, but primarily because of the HVIP voucher availability. So, once we get that resolved, then we can do it. We've got three clear, actionable priorities for the remainder of the year. One, secure the HVIP voucher process in California. That's a critical enabler for us. Sell the W4 CCs based on input from dealer meetings we've had in the last few weeks, we think we can do so. And obviously, ramp up the W750 production and then get W56 going down the line next week and all the way to step van. So, by the end of the year, we'll have full fleet, 200-300 W4 CCs, 50 W750s, and close to 100-130 W56s.
That will more than cover the $65 million minimum guidance we have out there, so.
Okay. Bob, a question about what are the drivers of revenue growth, and what is the best use of the cash on Workhorse's balance sheet? Will Workhorse consider some share buyback at these low levels?
Well, the drivers of revenue growth are going to be vehicle and drone sales. We're looking to sell the W4 CCs we have in inventory, ramp up production of the sales for W750s, launch the W56 chassis in August and the step in in September, and get demos in the hands of our key customers. The best use for cash is to fund our growth plans and invest in the company. We are not buying back shares right now.
Okay. All right, Rick, what cost-cutting measures are being put in place to reduce the cash burn at a time when the economy is weak and expenses remain elevated?
Yeah, in terms of cash, the first priority is selling the trucks we have in finished goods inventory. I think, Bob, we have $25-$30 million in inventory-
Correct.
in purchasing GreenPower. We process through the plant in the city waiting to go. So that's our number one source of cash. Second, we are pretty cashed in consulting cash CapEx spending and consulting heavy in the first half of the year as we were doing the development of the W56, tooling up suppliers, getting the plant ready to go, and putting the assembly lines in for the drone business. That's gonna, that's gonna slow down. It has already slowed down in the second, so that's going to help us out. We're also looking at all of our spends, obviously, right? So we've also already talked to GreenPower about slowing the delivery of the next tranche of GreenPower chassis.
We think we have sufficient product on the ground in Union City, either finished goods in the plant or raw material status, to cover the needs we have in the balance of the year. And we're working with them to make sure we have enough trucks good and ready for next year, so. We always take a look at how we're going to control the variable spend over the course of the year, without impacting our ability to design and launch our products, that won't impact our sales efforts or our future product development efforts. So again, we expect our cash burn rate to slow down and decrease in the rest of 2023, and we're absolutely committed to making sure we demonstrate a disciplined capital spend process as we execute our go-forward plans.
I've seen plenty of examples in the auto industry where people pull back on their spending or slash their spending. It only leads to more trouble. You got to fight your way through that and go forward to grow the company, so.
Okay. Rick, another one for you. If the proposal for more shares is approved, can you give a firm answer on the number of trucks that will be sold by the end of the year 2023?
Yeah, I'd love to give you a firm number, but there's a lot of factors that are, some are in our control, and some are outside of our control, right? We don't control customer demand, we don't control voucher approvals, we don't control infrastructure spending or the connection to the grid. So, we have our targets. We need to sell 60-80 trucks in the Q3 , and about 300-350 by the end of the year to make our $65 million-$85 million guidance. Based on the conversations we've had with customers, we think we can do that. Again, we don't control some of the things outside of our control, but where we can sell trucks, we're going to sell the hell out of trucks.
Okay. I'm going to go to another category of questions, guys, production and future development. So, Rick, first question to you: With only $10 million of revenue generated through 8 months, why shouldn't we still consider Workhorse a PowerPoint company, to use your term?
Well, that's a good zinger, and I appreciate it. I'll take that one right in the chin here. So let me tell you why. We have 350 dedicated associates in this company across the aerospace business, commercial vehicle business, and here at headquarters, right? We got over 400,000 sq ft of manufacturing space up in Indiana, and another 75,000 sq ft here in Ohio to build trucks and drones. We got real products, Class 4, Class 5, Class 6, and two types of drones. That's real, that's real hard work we've put in place in the last few years. So we've learned many lessons along the way. Building products that we think are great, that aren't selling right now, we got to figure out that commercial gap between our production engineering process to the customers....
We didn't quite understand some of the interesting challenges we had in terms of manufacturing licenses, et cetera, and getting all the dealer agreements in place. We have that now. So I think we're gonna be ready to go in just a matter of time. So-
Okay. Rick, moving to another related question: Workhorse seems to have a large management team. Do you currently have enough hands-on assemblers to produce a W56?
Yeah, sure. At Union City, we have about 106 employees. 34 of them are salaried. That would be your finance team, your HR team, your engineering team, your materials team, your quality team. We have 72 hourly people, either direct or indirect positions. Direct are the people on the assembly line, putting the products together, and the balance are either the quality inspectors, the material handlers, or the maintenance. So we have plenty of people to build W56. We're actually in the process of adding 10-20 new hourly assemblers in the plant, about 5 per week over the next 4 weeks, so we already have those people lined up. So, as we ramp up, W56 further, we'll add further staff to the plant, and we think we have the ability to get those people on board.
Outside of the plant, remember when we got here, I think we doubled our engineering staff, both at CV and Aero. We built our own supply chain team. We built our own manufacturing team. When we got here two years ago, 100% of our manufacturing engineers were outside consultants. Only had two people in supply chain. We're really a supply chain company. We're buying parts from suppliers and assembling them into trucks and drones. You can't run a company with just two supply chain people, okay? We didn't have a big finance staff or an HR staff. As a public company, we didn't have the systems in place. We didn't have the IT systems, so we've had to build some of that. That's part of being a public company. We have that in place, and we have the staff in place to grow to be a large OEM.
Okay. Another question on the plant. What are the working hours of the factories currently? How many people do you have that are building trucks versus people in management positions? Are we utilizing all the empty space in the factory properly?
Yeah, we're set up about 4 days a week, 10 hours a day shifts, on Monday through Thursday. We use Friday for installation of equipment or doing some tweaks, doing some repairs if we need to, as we learn how to build the trucks. Very small crew on the weekends. At Union City, as I said, we have about 106, and that'll ramp up to 150 later on this year. In terms of floor space, about half the Union City plant is set up for the W56. Got 12 stations for the chassis assembly line, followed by the dyno, the trucks then leave the plant, go down the test track, they come back in if they're gonna have a box put on. Then we're still putting together the stations to build the cab and the body.
It goes right back up the other side of the plant, and we're ready to go. Across from our plant, we leased about a 160,000 sq ft facility. We've upgraded it. That's where our maintenance is at. It's where we bring our raw materials in, minus batteries. We bring our batteries to a separate place from a safety standpoint. We do bring some parts directly to the assembly line, and we're also right now in the process of installing a new paint line there. Takes up about a third of the warehouse building. All the materials are on site to build the paint line, it will be up and rolling, commissioned in October, so. The plant has the capacity at Union City, with no building expansion, to add one or two more product lines and build up to 10,000 vehicles a year.
You can do the math, 10,000 vehicles a year at a sales price of somewhere between $130,000-$200,000 per truck, that's a lot of revenue. That's what we're building here at Workhorse. We're not building a baby startup. We're building a startup that's gonna turn into a real OEM and drive free cash flow, so.
Okay. Well, on that, in that same vein, Rick, once in production, if the demand is there, how quickly will we be able to build a second shift of assemblers, right?
One of the great things about being up in the Union City is it's a small town, about 8,000 people, and we have high access to a good workforce. We already have over 400 applicants that inquired to join the Workhorse team, and we're in the process of screening those and see who's really qualified and wants to come in and work. We're confident in our ability to scale up.
It's one of the key questions almost every fleet customer asks us: "If we give you our business, can you meet our demand?" I was with a customer yesterday, he said, "I have orders backlogged for 6 or 12 months from the existing OEMs, not even just for EV products, just for regular production ICE vehicles." He said, "We're looking for an EV company that's gonna be here, and be here long term, and have the ability to ramp up and grow with us." We think we can do that. In its heyday, the Union City factory had over 800 people, so almost 10% of the city was employed at Workhorse. When we got here, I think we had less than 50 people there. That's an example of the devastation that happened across the Midwest as people outsourced work down to Mexico and China.
We're building a plant back in the heart of the United States of America. It's a great place to work. We've cleaned it up. We've made the great facilities. We've got proper break rooms. We've got the safety features. It's well-lit. We've got good parking lots. It's secure, fenced in. It's gonna be a world-class EV operation here in Heartland.
Okay. Another question there, Rick. Rick's latest production update is the beginning of September for the W56. Realistically, how many might roll out of the assembly plant each week by November 1st?
Yeah, we start the launch officially next week. We have a program review every two weeks. At my level, and Bob's level, we gave them the green light to go. Our teams told us we're ready from a safety standpoint, we're ready from a quality controls and tooling standpoint. The fixtures are in place for 95% of the assembly line for the chassis line. We got a few more things due in this week. We got quite a few things left to go through the step down, but we think we'll build at least 1 next week, and then we're gonna ramp up based on the some available parts from our suppliers. Our goal is to have 12-15 chassis built over the first 3 or 4 weeks of September, so we're ready to start putting boxes and cabs on when we get our final tooling in there.
It takes time. We're getting to the final engineering designs based on the feedback from the test tracks. We're tweaking that. The suppliers are changing their tooling. We're running those parts off of PPAP, and we're modifying work instructions accordingly, so.
Okay.
... Rick, received another question that said: "You've consistently said you can sell every truck you make. Is that still true?"
I believe that, and I say that based on not my opinion or my dream. It's based on the feedback we're getting from our dealers. And I'll give you a couple examples that we had last week from California dealers. One of them told me, "If you get those vouchers, I can sell you fifteen to twenty W4 CCs a month." Do the math, that's 180, 240 trucks alone. Just one dealer in the San Joaquin Valley. He's got multiple opportunities out there, and we're gonna meet with some of his customers next week. One is a large last-mile delivery, industrial supplies company.
Another one is a moving company that wants to be the very first company in all of California to be 100% green fleet, and it can use our W750 things, right? The other dealer we just signed up, I think we announced a few weeks ago, Western Truck. They're down in the LA County area. They said they have numerous quotes that have come in from government-funded agencies who have the money, that are getting ahead of the curve for the clean fleet. They wanna buy EV trucks. He said, "Rick, you get us trucks, we'll sell trucks." So we have meetings with both dealers next week and with multiple customers. Again, I'll be in California next week to help try to resolve this HDV issue, to meet with some of the dealers, to meet with some of the customers firsthand and really get some feedback.
But we have strong demand, and right now, based on the CARB rules as they go into effect, California is the motherlode. That's where we need to be successful. That's where we can have trucks, and we've already got three dealers up in California, so they can sell trucks up there, so.
Okay. A very specific question came in. "Did you redesign the W56 so the brackets do not break during driving tests?
Absolutely, sir. Hey, one of the reasons we put these trucks through such a rigorous test, and they should be, is they're designed to last 15-20 years, which is the expectation of people like UPS and FedEx. This is not like a car that you or I would buy that we drive for 3 or 5 years. This is not a big Class A truck that something like Penske Logistics or a Ryder truck holds for 3-6 years. These are trucks that are built, that make 100-150 stops a day, and they gotta do that in hot weather, cold weather, nice weather, stormy weather, like Cincinnati today, over 15-20 years. We're testing the hell out of our trucks. And yes, we've had a few break. It's part of the test.
In fact, that's. I think I told you, I went up personally to get on the test track to understand just how hard that test is. Let me tell you, it's a jaw-rattling test. Our trucks are performing very well, as our engineers have been very quick to remake some design changes. Our supplies show up quickly. We've had trucks turned around in less than 72 hours, taken from Navistar's test track in the north part of Indiana, brought back to Cincinnati, old parts torn off, new parts back on in less than 48 hours and back on the test track, and we're back up and running.
Even as late as last couple of weeks, we've had some issues that came up well into over 150-160,000 miles of real-world testing, well past the warranty, but we're making sure our tests, our trucks are bulletproof. That's what we're doing, so.
Okay. I'm gonna shift to a different, different product here, but same product focus. "Have you already delivered W750s to potential customers for demo? What's the current production ability of Workhorse for W750s in terms of units over time?
Yeah, great question, Stan. We're really happy with the W750. It was a hell of a truck to design and get into production. It took us longer than we thought. We have 5 trucks operating every day on Stables, which Stan runs every day. We're getting really good feedback from our drivers there, and they're performing magnificently. Typically, coming back to the shop at the end of the day, with still 50% of their charge. We plug them in, and we're 100% charged the next day. That's one of the great things. One of our big potential customers asked if he can personally go visit the stables himself and see what we're doing there because he's gotta do that if he crosses fleet. And again, remind you that we're doing that with the FedEx Ground route in Lebanon, Ohio. So we have a W750.
It's starting to test on Monday this week with a large merchandiser on the East Coast. So far, so good. The feedback I got from one of our dealers last night, that the W750 is by far outperforming all the other trucks on the test right now. So we also have demo trucks now, finally in the hands of our, our sales teams, both East Coast and West Coast, and getting out to dealers and fleets, showing those trucks. We actually had one over in Columbus, Indiana, yesterday, where I gave a presentation, and we had probably 120 people at an industry conference, mostly suppliers, but also some customers, like Ryder Truck, were there yesterday, driving our W56 and our W750.
So our capacity's ramped up on W750 from one a day, one a week, I should say, to two, and we're working towards a goal of four or five, and we'll be able to build about 50-60 of those trucks this year. So...
Okay. All right, I'm gonna shift a little bit, but Kip still into the facilities question. "With all the money being put into the factory, has any gone towards automating some of the building process in order to be able to ramp up production? If not, why not? If we aim to ramp production, how do we intend to do that, Rick?
Yeah, it's a great question. So let me say we're blessed with the fact that when we got here, we had a facility that had good bones, or what I call good infrastructure. We had good walls, we had good roofs, we didn't have leaks, we had good utility connections, we have excess power to the plants, we have lots of land. So that's really great. That's the good news. The bad news was the inside was old equipment, tired, dirty, unlit, disorganized, not well-maintained. We've cleaned that up. I ask any one of you, if you wanna come up, let us know. We'll host you at the plant, and we're happy to show off our plant. We're really proud of it. So we had a potential customer come in this week. Stan hosted them up there.
They've been here three years ago, and they were shocked with the differences. I can't wait to get some of the big fleets who were here two or three years ago and show them. They'll see we're a real company here, so. We've expanded the footprint up there, again, from 200,000 sq ft to over, just over 400,000. We've leased the battery building. We put the test track in. We're in good shape up there, so. Right now, in the stage we're at right now, we don't need broad automation or sophisticated automation. The volumes are too low. We're gonna. Our tack times will be around 21 minutes. If you were up in a big automotive OEM and you're building one truck a minute, then you need automation. We're building one every 21 minutes, and we have plenty of time.
We also have most of the parts we can handle with what we call jigs or fixtures to pick up, put the parts in place. The one area place we're gonna have automations is in October. Our automatic ground vehicles will come in, and they'll move the station, from station 10 up through station 120. By station 120, now we have the batteries in, we have the axles in, we have the steering wheel, and we can drive the truck off the line onto the dyno. So that's the one area where we're gonna do that, okay? In the short start up of the ramp, we can push those trucks with 5 or 6 people down the line there, so. We may automate down the line in areas where either quality requirements or safety requirements dictate we do so.
I've done that in every plant I've had around the world, whether it's in Mexico, Romania, China, wherever, okay? So today, we have. We only need to have our employees, they have all the right tools. We got all the right safety devices in the plant, and we have all the quality control processes. Really critical in the assembly process is the torquing of the nuts and bolts. Well over 50% of the warranty costs in the automotive industry, in general, are because people don't torque the nuts and bolts correctly, and things get loose and fall off. So again, we're not a class one or two automotive high volume plant at 60 jobs an hour. We're basically looking about, you know, 21, every 20 minutes, every three minute, every three, 3 trucks an hour basis, we'll be able to build, so, okay.
Rick, what are Workhorse's plans to enter the civilian truck market?
Yeah, we don't have any plans to enter the civilian truck market, okay? That's not where we play. That's for the big boys like General Motors, Ram Truck, Toyota, Ford, et cetera. So we're talking about building class 4-6 work trucks in three versions: strip chassis, cab chassis, or full step vans. Different variations and lengths, different classes, class 4, 5, 6.
Okay. Did the plant pause production? If not, what are the current production rates of the W4 CC and W750? Also, how many finished W4 CCs are there in inventory? Based on the past rates provided, it seems like there should be a lot more finished inventory.
Yeah. Right now, we're sitting at 175 W4 CCs as of last night. We're building those right now, 2 a day rather than 4 a day. We did pause production for a few weeks to move some people over to some of the production of the W56 program builds and to help on the W56 launch back in May and June. So, but right now, we have sufficient inventory at 175 to meet our current customer demands. We have another 125 trucks on site that we can process through the plant, be in production, and out the door by end of December. Regarding the W750, we've gone from 1 a week to 2 a week, which is, you know, okay, not, not very fast, but okay, we're getting there.
I can tell you every truck is getting just a little bit better. Our guys are becoming much more efficient in how they put the truck together. We're hoping to ramp it up to four or five trucks a week by the end of the year, sometime late October, December.
Okay. Rick, you've discussed meeting with the big three of the last mile delivery sector. How come we've barely received any updates? Why haven't contracts been struck?
Those relationships take time. Some of those relationships were made before I even got here. To be quite honest, at least two of them are very strained. One of them said they had no interest in Workhorse trucks. They didn't think they were gonna be capable. That's been cleaned up. Now, they're coming back in to see us. I have a phone call with one of their top leaders today, and we expect to have them in the site sometime here in September. Another one told me, "You have orders from us, but your trucks don't meet our needs." Now, our trucks do meet their needs. Their needs are very specific. They want an 8,000-pound payload. They want a 120-mile range. W56 can carry 10,000 pounds, and the range is 150 miles plus.
The W4 CC and the W750 do not meet those requirements. They can only carry 5,000-pound payload. They do have a 150-mile range. So it's basically customer dependent. I'm confident that when we have these trucks, as they've told us, "You get your trucks through the durability test, and show us the test results, and bring us to the factory when you're actually doing production and not one-off builds, we'll be ready to start talking about orders." And so when people start asking me about, "What's your production plan for the balance of the year in 2024 and 2025?" That tells me they're thinking about putting a big order for us, and we hope to land that. Also important for us is we're gonna bring in a new national accounts director. He starts September 5th, someone I've worked with in the past.
He's got deep relations, about 15-20 years, with over 40-50 of the major fleets here in North America. You know their names, FedEx, UPS, DHL, Frito-Lay, PepsiCo, Amazon, et cetera. Okay? So we're building the right sales team now that we have the right products.
Okay. Another question came in, Rick, and asked: Why have you not had more luck getting contract manufacturing, well, work like the current golf cart contract? You say other companies do not have a manufacturing plant. Can't you show them the savings inherent in your building, in your building their product?
Yeah, we're being very judicious on how we allocate our space. First and foremost, we take care of our own products first, W56, W4 CC, W750, and then obviously, the WX in the future. So, we have adequate space to produce 4 or 5 different versions of trucks. We took on the Tropos contract, and we think it has upside this year and next year. They've had some launch issues, specific supply chain issues in terms of getting the full build materials in the box. They're getting some quality issues there. We're pretty - most of those issues are behind us. The last 16 trucks we built went together almost flawlessly. They've been building up their order bank, and we expect to be ramping up to about 50 units a month.
You know, the long-term target is to get that up to about 150-200, 200 a month. That would be a good business for us. So good money for us to get paid for our labor, so. We passed on two opportunities to date... One was a Class 1-2 vehicle, pretty significant volumes. We're taking up a large portion of the warehouse. We decided, no, we'd rather put the paint line there and use that for raw materials. That product also required complete homologation to U.S. safety standards in the Class 1-2 sector. That would have taken about 18-20 months, and we didn't want to do that, okay? So we turned them down. They also want us to invest $25 million in their company.
We said, "No, we'd prefer to keep the $25 million in our company, invest in Workhorse." We have another opportunity that we are still in the running for. It's for a larger class 6-8 type vehicle. I won't say who it's with. We think we're down to one of the last two contract manufacturer considering. They chose to delay that sourcing for up to 12 or 18 months, which actually benefited us because it didn't distract our manufacturing team or engineering team from what we had to do with the W56. If that opportunity comes our way, we'll have to consider how we deploy engineers or hire additional engineers or manufacture to handle it. We will not do the design requirement, people, but we will have responsibility to localize sourcing. We have to run off that those parts and to build the parts.
We won't have the materials either. They'll be responsible for the materials, so wouldn't get an issue with this.
Okay.
Again, there's several OEMs out there in the EV space who have products, but they don't have manufacturing floor space. As I've told people countless times, you can't build a plant in 6 months or 12 months. It takes 2 or 3 years. So those who need to build products, if we think we can build it efficiently, and we can find the right manpower, and we make money doing so, we'll take a look at it. If we don't have the people, we're not gonna make money, it's gonna be a distraction to our main programs, we're not gonna do it, so.
All right. Rick, how many GreenPower trucks are we shipping to customers?
Yeah, good, good question. As many as we can. So every vehicle we've shipped to date is almost, I think, now we're up to about 80 or 90 have been GreenPower trucks. So we're happy to have chosen GreenPower as our partner. Together, we've had a lot of learning experiences. I can tell you our meetings sometimes are pretty tough, but we end up the day shaking hands, and we go forward and solve the problems. What we have to find in those, get those HVIP vouchers, that's really the opening for us to really ship a lot of those trucks over to the California area. So, in terms of W4 CC, we remember we had to ship those out to custom body builders, and then they get upfitted out there.
Those custom body builders, we already have a strong relationship with the Pritchard family and do a lot of our custom body building upfitting for us. They're prepared to go, and so we have those build slots. When we added Smyrna Truck to our dealer network, now they're called ECV for dealers and Smyrna for trucks. They've got a 700,000 sq ft factory. They can do 100 trucks a week. They do 100 trucks a week, and they've opened up some custom body building for us. We have 30 trucks on the way down there right now, that have bodies built on 12-, 14-, 16-foot boxes. That gives our sales team finished trucks they can sell rather than just some cab chassis. On the 750, once we build those, we can ship those directly to customers.
As we ramp up, we'll be able to sell those. W56 chassis, we'll have to put boxes on them ourselves. That's our primary source of revenue will be for W56, but we'll also have a few stripped chassis. The way this industry works is the end customer decides which chassis they want and which box we want. One of the strategic advantages of Workhorse, we'll be the only company, the only company in the EV class 5, 6 space that can build a full EV powered chassis and the cabin body. Everybody else in this space has to buy a chassis or has to buy a body. No one else does the whole thing. That should be an advantage for us from a material standpoint and a cost standpoint in the marketplace.
Okay. If Workhorse is going to get a fleet contract for next year, wouldn't they have already signed the paperwork by now?
Not necessarily. The big truck guys basically look at their needs for next year. They're doing that right now. They're building their budgets for 2024, and they decide how much money they're gonna allocate to do those purchases. So we should probably have be able to sit down with those customers. Again, they're coming to our plant in September and early October. They get a test drive, new demos with our vehicles, sometimes for up to 30 days. I think the demo we're doing on the East Coast for now is a two-week or four-week demo, and I get an update every Monday from our sales team and our engineers in the meeting. We know how our trucks are performing so far, so good. So I'd expect we should be in a position to land some contracts here in October.
Okay. Changing gears a little bit, why did Workhorse not try to sell the mail truck to other countries? The company had a truck that was designed and tested, and other countries have a mail service.
Yeah, that decision was made before I got here. But quite frankly, our trucks that we had didn't perform very well in the test data that I've seen. I think we had 5 or 6 trucks in the government. We got our hands on the test data, and our truck had some faults, okay? When the new leadership team got here, we decided, you know what? Let's not pursue that Class 2 avenue. They've already awarded the contract to Oshkosh by then anyways, and we decided to keep our focus here on the last mile delivery workspace, okay? If and when the post office wants us to come back in and either sell them W56s or get involved, you know, I do see that they're gonna commit...
They committed to convert 75% of the U.S. Postal Service fleet to EVs over the next 5 or 10 years. That opportunity might come back, but there's nothing for us to report on today.
Okay. So when do you expect the fleet contract or contract for significant volumes for either trucks or drones?
Yeah, I'd be disappointed if we don't have a couple of those contracts again by the fourth quarter of this year, so both on the truck and drone side of the house, but-
Okay. Last question in this category is, what is W Next? What is about it—what about it is next generation? Is it a vehicle for confidential special purpose? How important is it to the future, projected share of production revenues of the development status?
Yeah, when we got here, and we assessed pretty quickly what we had when we got here in terms of products. We knew it wasn't capable of lasting 15-20 years out in the rugged environment of the last mile delivery space. We sat down, and we looked at the benchmark of where the competitors were, what the customers wanted, and we sorted out we want the W56 first. Specifically, we want the W56 178-inch step van first. That's the biggest volume in the sector. We also then prioritized the 208, which comes next, and the 168. Those are the three main variants of the Class 5, 6 step van that meet the needs of the big last mile delivery people. The W Next, which we originally called the W34, we've morphed that into W Next.
We think we're gonna move more towards the W, a Class 4 vehicle. We found a niche in the segment with the GreenPower vehicles that isn't served by other people. The W Next will be a special vehicle. We're gonna take some of the lessons learned we have from our old E-GENs that are still in operation, about 280 out in the field, with 9 million miles on it, low floor board, and we're sorting out what kind of ADAS, the safety features, the lane change, et cetera, cameras in the front and back. And that product is earmarked for the Class 4 sector. It'll replace the W4 CC and W750, but it won't come out until late 2025 or early 2026. To answer your question, Susan, it is not for confidential special purpose.
It's for a commercial purpose out in the field, in a niche that's these trucks will be a little bit more rugged and capable of higher payloads than a Class 3, that you have, like a Transit or a Daimler Sprinter, and a little bit less costly and a little bit less cubic space than a W56.
Okay. I'm gonna go to another category now, it's called EV demand and sales. First question in this category: When do you anticipate achieving qualification for HVIP vouchers on the W4 CC, the W750, and the W56?
Yeah, that's the $65 million question in the room, right? And so that's the highest priority here at Workhorse, is to go out and secure those vouchers. I hope we get that done. We're working two different channels, one through GreenPower and one directly with CALSTART and CARB, up to including the CARB director. So we'll hope to have that resolved very quickly. But we're on track right now for the W56. That's a manufactured vehicle ourselves. We gotta finish up our EPA certification. We have all the paperwork. I know in the last week, we've passed brake testing, we've got the range certification. We've got almost every subsystem now, 100% signed off. We just dot the I's, cross the T's. We'll submit our documentation, and we'll get that voucher for the 2023 model year for W56.
One of the complications on the vouchers is because GreenPower imports that truck, called the EV Star, and we convert it into W4CC and W750, GreenPower is the manufacturer of record, so they have the licenses and the vouchers. So we need those vouchers from them, or we gotta get them directly from CARB. They allow us to do that, so that's what we're working on, so.
Okay. Well, you actually answered the other question, the next question, which was: What happened to the HVIP vouchers on the W4 CC and the W750?
Okay, good.
I'll move to a follow-on question then. Did Workhorse get the EV voucher program in all states? Did Workhorse get manufacturer certifications in all states?
Yeah, I think we've reported to you before. I think we have a manufacturer license now in 23 states. There are four states required us to have a dealer before we can get our manufacturer license, submit our request for that. We're lining that up. We have two dealers, groups that we're lining up that have dealer sites in those locations. I think we'll get that done. So, we have the way to get vouchers in New York, New Jersey, which are critical, Texas. The only place we don't have one now is California. And I tell you, we have a lot of our leadership team here working on that. We have an outside legal team helping us work on that in California.
We have dealers helping us work that in California, and we have GreenPower helping us do that in California. It drives me crazy to know that we have customers that wanna order EVs. We have dealers who wanna sell those EVs, we have upfitters who are ready to upfit those EVs, and we have finished goods, and the only thing holding us up right now is administrative bureaucracy.
Okay.
Be careful what I say on this.
All right. Well, then we'll move to Bob for a couple of questions.
All right.
All right, Bob, who gets the rebates on these vouchers? Do they go directly to Workhorse, the retail dealer, or the end purchaser? And what about the vehicles leased? How does that work?
Well, they don't go to Workhorse. The dealer's required to reduce the sales price of the vehicle by the amount of the voucher, and then it's reimbursed by HVIP. Once the dealer at the site purchases from the buyer, they will apply for reimbursement with HVIP. The vendor is reimbursed by HVIP at the time of delivery of the vehicle. In the case of leasing, the process works pretty much the same, except for, the buyer in this case is the leasing company. This reduction will benefit your monthly lease cost.
Okay. And in that vein, Bob, what's the timeline for having some sort of boilerplate set up for all federal, state, and local government rebates? It needs to be exact and understandable and, and almost filled out when presented to the buyer, doesn't it?
Well, it's really between the dealer and the buyer, and it varies by state. Our dealer portal does include instructions, information for all of our qualified dealers, including eligible incentives.
Okay, good. All right. Next bucket is aerospace for the drone business. So, Rick, I'll ask you why haven't you submitted the final paperwork for FAA certification? There were no updates provided during the recent earnings call on the aerospace division regarding certification status.
Yeah, so I'll have to refer to my notes. I'm just gonna stand because this is not my forte. Let me start by saying John Graber and his team, people like Mike Gerdes, combined, they have well over 100 years of experience working with the FAA. They're, they're accomplished pilots. They've run big aero airlines. They know how they work, so I'm not. We're still participating in the FAA type certification process. However, the FAA has selected Workhorse Aerospace to participate in a program based on the Section 44807 Special authority for search and unmanned systems that the FAA recently revised and updated. The process allows OEMs to complete a thorough questionnaire and flight test hours similar to Type 135 certification, but in an expedited manner.
After submitting the completed questionnaire, providing our test results and documentation, the FAA will sign us the 44807. We've had multiple meetings, John and the guys have had multiple meetings with the FAA for guidance and clarification on the program, and have begun the process to submit the 44807, with the goal of completing by the end of 2023 with the WA4-100, or what we call a Horsefly, a UAS. How's that? All right.
There you go. That's all-
Sounds like the government may be involved in the certification process.
It does. So when do you anticipate applying for the FAA certification on drones, and why haven't you applied yet, was a related question?
Yeah, it's typically taken some other people in the industry up to 4 years. We've already been in the process for up to 2 years right now. The 44807 give Aero and our customers the benefits of documentation in a fraction of that time. So hopefully again, hopefully this year.
Okay. A more detailed question on the drones. With our drones being the only drones with a patented winch system rather than what other companies use, which are parachutes or drop and go style delivery systems, why is it that no other company that are using drones for delivery have reached out to us for our drones, for their business? If it's the safest way to deliver a package and twice the weight of what everybody else can deliver, then why hasn't anybody bitten? Seems like a shoo-in.
Yeah, good question. That's a really good question. So we're really proud of our winch system. Not only can it deliver a package up to 10 pounds, it can also pull that package back up 30 feet, and from an engineering standpoint, that's pretty crazy. I didn't think they could do it at first when I got here, but they can. They've proven it. So, the winch system is what earned us the Valqari business. If you've seen the videos online or on Reddit, et cetera, basically, the drone comes in, it hovers above the mailbox station, it drops the drone onto the location. The box is then centered, and it goes down an elevator, and it goes into a box where a customer can drive up and pick it up.
Pretty, pretty sophisticated, and Valkyrie is extremely happy based on the 6 or 7 weeks they've been testing our system. We're working with another customer, and I'm not allowed to disclose who that customer is. They do have our drone, they purchased it, and we're the only drone company that they're working with right now for packages under 10 pounds. That company tells us they have about 5%-10% of their overall global packages delivered that are less than 5 pounds, and we can figure out how to deliver that to houses with a drone. With the FAA's permission, it'll be a game changer and reduce the delivery cost by over 95%.
There are unique locations in the country, as we've said before, out in the country where it's a long way between farm homes or across riverways, where you got to go through a bridge, or a bridge gets backed up. You can deliver a drone much more efficient than with a truck. They can deliver five or six more packages in 20 minutes than they can by doing it by truck or drone, so.
Okay. So a broader question: Why continue with the Aero business, Rick?
Yeah, I think there's potential in the aerospace business. I think I've been pretty up front. When I got here, I had some doubts about that. I went and met with people like UPS Flight Forward, met with the government officials, and there's something here. We're in the very early stages. I'd say we're even in the preseason innings of the drone delivery space. And so, I think there's going to be a marketplace for that. We see other companies are doing that outside the United States. We chose to stay here with our resources in North America. We also think that the opportunity to use the drones for scanning and with the government for multiple applications has real upside opportunity. We've seen multiple grants around that, multimillion-dollar grants already, both at the federal and state level.
We think there's an opportunity to grow the business as a drones for a service, which is also a good business for us.
Okay. Have you talked to Homeland Security about selling the drones to monitor the border?
We're in discussions with a number of government agencies. Some we're allowed to talk about, some we're not, but that includes Homeland Security about our drone capabilities. The DJI replacement is needed. DJI is a Chinese-made drone, the biggest drone company in the world, and there's been some states who outlawed the DJI, and so we're moving very quickly where that has happened to see if we can pick up that slack, and then that could create some opportunities for us on the drone side.
Okay. Workhorse has clearly shown an interest in selling drones to other countries and even built a new drone model to cater to specific needs of those, that we're trying to sell, but no one's bitten yet. Why have we only sold 2 drones with all the events, demos, and use cases that have been presented? Is it flawed somehow, Rick?
No, we're very confident in our technology and drone capabilities. We've had some of the best drone people in the world, in around the country, come in and take a look at the drone, and they say it's a rock-solid design, both from a structural standpoint and from a software standpoint. The fact that it can go up to 10 or 12 miles, it can carry 5-10 pounds, and it can do so autonomously with no controls, just you program the grid, and it goes and drops in. It's got a very set pattern, so very, very sophisticated technology. High tech, for sure. There are certain applications that will have to be customized. We're working with some customers on that, of what they want to see changed.
You know, some things we've done since I got here is that we got feedback we want a parachute recovery system, control the descent if something happens to the drone. We need to have the winch not just drop a package down, it needs to be able to pull the package back up. And we want a flight time of 45-50 minutes out of every hour, okay? You have to quick change the batteries. We've accomplished all this engineering feats. I tell you, given the engineering team and the pilot teams over at Aero, they are doing a great job, and we're ready. We've just got to break through and get these orders. Okay? So...
All right. Moving to the next bucket, which is about corporate governance.... Bob, I think I'll throw this question to you.
Yeah.
A lot of stockholders are asking for more transparency from Workhorse, including a periodic investor newsletter separate from earnings and ongoing investor communications updates. Would you consider this?
We recognize you follow us closely and you want as much information as possible. We're committed to providing regular updates to the market. As we're sure you can appreciate, we have been focused on stabilizing, fixing, and growing the business. We've announced a number of recent milestones and achievements across our business and look forward to continuing to provide these notable updates to our stockholders. We also continue to look for ways to engage our stockholders and keep them informed and engaged in our growth and developments.
Okay, thanks, Bob. Rick, will the management team commit to buying more shares of Workhorse?
We don't force our management to buy shares. As you can see from the Proxy Statement, our management already owns stock, and their interests are strongly aligned with our Workhorse stockholders. I personally will offer my wife a meaningful honor of Workhorse shares. We have, like every public company, we have stock ownership guidelines, which are publicly available. We review them annually with the board of directors and our comp committee, and all of our executives are moved in the right direction to own the right shares of Workhorse stock. You know, I bought some shares at $3.10, I bought some shares at $1.87, so I, I feel your pain. Trust me.
Rick, why should stockholders remain confident in current leadership, given product delays and reduced guidance?
Yeah. Okay, that's great. No one said the transition from being a technology startup to a full-service OEM in the EV technology would be easy, and let me tell you for sure, it's not. All right? We've had some of the hiccups along the way. We've stopped them quickly. We've had some lessons learned, we've addressed those. We had some unexpected issues on some of the trucks. We inherited some issues that we've addressed. I'm damn proud of our team. We announced the W56 launch over two... About three months into my tenure here, we decided we had to pivot to a new product strategy. We had to hire a team. We really didn't start that product process until January of 2022. Here we are, 18 months later, and we're within one month of our original target for the W56.
After having some engineering testing issues that we had to address with our suppliers, we pulled ahead of the step van launch by 4 months, when we started realizing the customers really want the step van, not just the cab, just the chassis, okay? So, we're proud of that. Tell me any other company that's gone from start to production in 18 months. Let me know, and I'll go visit and see what I can learn from them, okay? I'm proud of our team, okay? We had some difficulties with GreenPower, which we have pivoted to, to bring in a class 4 truck, so we at least have a product to sell in the marketplace. And together, working with GreenPower and their supplier, we've engineered many advancements in that product. I think we're putting on 85-90 parts on the W4 CC, to create the W4 CC.
Over 700 parts on the W750. We did all that in less than a year, okay? And I and some of the guys have done herculean tasks. We had some issues to get parts done. Guys were driving their personal trucks down to and from North Carolina or up to Elkhart, Indiana, and that's the kind of commitment we have here at Workhorse to get the job done.
Okay. Different subject, same bucket. Will executive leadership and or members of the board of directors be receiving a reduction in compensation as part of cost-cutting efforts until the company is profitable?
Hey, unfortunately, I've had that experience in my life. First week I became a VP at American Axle, and next week there was a strike at GM, and the officers of the company took no pay for about 30 days. Got it. And during the COVID, during the Great Recession, I was the first person at Acument to reduce my pay 20% for almost a year, and I was the last person to get my pay back. And we know what we had to do during the COVID period, so we understand, and that includes not just as executives of the company, but potentially board members. I've been on a board before of a company that had some struggles, and the board, along with the management team, reduced their pay for a short period until we could get the company stable.
If we have to do that, we can do that.
Okay. All right, and then the last category is something I'll call other. Bob, I'll throw this question to you. In 2022, Tesla made $1.7 billion selling their car credits to companies that sell ICE vehicles. Has Workhorse explored this income stream? If so, will Workhorse or GreenPower be getting any credit for the GreenPower trucks that we sell?
The OEM may be eligible to sell carbon offsets in one of several of the cap and trade programs. GreenPower would be eligible for the GreenPower vehicles. Workhorse has investigated the potential and will participate in these programs once the W56 is available in the public.
Okay. Bob, another one for you. Have you considered a Delaware statutory trust or sale and lease back for Workhorse's manufacturing complex?
Well, we are exploring a broad range of financing options to best fund our operations and drive stockholder value. We have looked at these options and a number of others. The fact is, it would only go so far. We still need to authorize more shares to get financing and funding that we need to build a bridge to long-term growth and stockholder value creation.
Okay.
Can I jump in on that?
I think, please.
One of the great assets we have, we got here, we knew it right from the start, is our Union City facility. We've converted it into a world-class plant, and if we can do something with that on a sale and lease back, it helps us finance the company to do so. But as Bob said, it's not enough. We need to do both the shares and something like that, Bob.
Okay. Rick, have you considered buying the GreenPower school bus chassis and converting that to a Workhorse EV?
No, we have not. We are 100% focused on just on the last mile delivery. We understand what GreenPower is doing there. We understand the money that's put forward in the infrastructure bill for the buses, but that's not something we're doing today.
Okay. Bob, this one I think is for you. Why doesn't Workhorse take a portion of its savings and invest in Bitcoin to make Workhorse a crypto play?
Well, no, cryptocurrency is not one of our investment options. Our investments will be in the core business.
... Last two questions came up, Rick, was, "If I already voted no, can I change my vote to yes?
The answer is yes, you can, and you should. All right? Please go to www.votewkhs.com for more information on how to vote, and reach out to your proxy solicitor if you have any questions. If you can't, you can't get that done, let us know, and we'll figure out how to do it with you. So, all right?
All right. Then I guess the last question is the, the question that was kind of the start: "Why should I vote for the proposal, Rick?
Yeah. I think we're on the precipice of success here at Workhorse. The market shift to EV is coming. It's coming slower than we thought or anybody forecast, and we need your help to extend our runway to get there. If you look at the CARB rules and the Clean Fleet rules specifically, by 2030, 50% of all the Class 4 through 6 step van deliveries will be EV. We are positioning ourselves to ride that wave. I've never been in an industry before where the government's had such an influence on what's going to happen in the industry going forward.
17 states have already adopted those same CARB rules that will be rolled out in 2024 through 2030, and we're talking now on the I-5 corridor, the entire West Coast from Seattle to San Diego, the entire New York metroplex around New York, New Jersey, and all the way out from Boston to Washington, D.C. The federal government is committed to converting 100% of the fleets over to EVs. A large portion of those are right in our our segments, okay? So, it's coming our way. We've just got to find a way to get there, and we need your help. That's why we're asking you for a yes vote on the shareholder proposal, so.
Okay. Actually, that concludes us answering all of the questions that came in from the shareholders. Well, I guess we conclude by saying we encourage you to vote now, if you haven't done so, to help us continue advancing the work, the significant work that's underway to create long-term value for our stockholders. The board of directors recommends shareholders vote yes, as well as the two leading proxy advisory services, Glass Lewis and ISS, also recommend voting yes. If you have any questions on how to vote your shares or need a telephone number on who to call to do that, then please visit the website Rick mentioned, www.votewkhs.com, and get your question answered. Reach out to our proxy solicitor if necessary, and they'll be happy to help you.
I want to thank you once again for your support and interest in, in Workhorse. Thank you very much, and have a great day.
Thank you, guys.