Workhorse Group: Active SEC Investigation + Fake Orders + Lost to Two EVs in USPS Bid + New EVs Already Breaking Down = Glue Factory for Workhorse – Fuzzy Panda Research

Workhorse Group SEC investigation reveals massive order book fraud, vehicle reliability failures, and potential bankruptcy risk. Electric vehicle startup faces critical challenges with fabricated orders, 48% downtime, and imminent debt default.

Workhorse Group: Active SEC Investigation + Fake Orders + Lost to Two EVs in USPS Bid + New EVs Already Breaking Down = Glue Factory for Workhorse – Fuzzy Panda Research

Fuzzy Panda Research reveals Workhorse Group faces SEC investigation over fraudulent order book, critical vehicle failures, and looming $200M debt default that could bankrupt the company within months.

Stock info:

  • Ticker: WKHS (NASDAQ)
  • Position: Fuzzy Panda Research is short Workhorse Group

Why it matters:

  • Active SEC investigation targeting Workhorse for revenue recognition fraud
  • Nearly 8,000 vehicle "orders" appear fabricated or non-binding, including non-existent customers
  • Workhorse C-1000 electric vehicles deemed unsafe and unreliable with 48% downtime rate
  • Major customers UPS and FedEx abandoning Workhorse for competitors after widespread failures
  • Company burning $10M monthly with imminent debt covenant breach by March 2022
  • USPS bid failure (ranked last) after prototype failures and safety test "cheating"

Zoom in:

  • 90%+ of Workhorse vehicles at UPS Atlanta depot found abandoned or non-functional
  • DOE study found 14% of Workhorse E-Gen trips failed before reaching one mile
  • Company's "Electric Vehicle Fleet Solutions" customer appears non-existent but accounted for 92% of Q2 2020 revenue
  • Key executives (General Counsel and VP of Finance) resigned amid investigation
  • Trucks reportedly unable to drive on highways or climb hills; experience axle failures and tire issues
  • UPS, FedEx, and other major fleets shifting to Arrival, Rivian, and GM's BrightDrop
  • Workhorse took $1.4M PPP loan despite raising $200M+ from investors

FAQs:

Why is the SEC investigating Workhorse Group?

The SEC's Division of Enforcement is investigating Workhorse Group for potential securities fraud, specifically focusing on revenue recognition practices and potentially fabricated orders. FOIA requests confirmed the active investigation.

What evidence suggests Workhorse's order book is fake?

The report details how many of Workhorse's claimed 8,000 vehicle orders come from questionable sources, including companies that don't physically exist at their registered addresses, orders without deposits, and entities formed shortly before announcing large orders.

How reliable are Workhorse's electric delivery vehicles?

Multiple studies, including DOE-backed research with UPS and FedEx, found Workhorse vehicles have severe reliability issues. They demonstrated 48-60% downtime rates, with 14% of trips failing before reaching one mile. UPS depots reported over 90% of vehicles out of service.

Why did Workhorse lose the USPS contract?

Workhorse finished last in USPS testing after failing critical safety tests, including defroster tests that reportedly required "cheating" by redirecting battery power. The prototype demonstrated numerous performance and reliability issues during evaluation.

What financial challenges does Workhorse face?

The company is burning approximately $10 million monthly and faces potential default on its $200 million convertible debt by March 2022 due to covenant breaches. This could trigger asset seizure by creditors, including cash and intellectual property.

Have major customers abandoned Workhorse?

According to the report, UPS, FedEx, DHL, and other fleet operators have largely abandoned or significantly reduced their Workhorse fleets due to reliability issues. Recent reports indicate UPS in Staten Island replaced all Workhorse vehicles with Lightning eMotors trucks.

Is Workhorse at risk of bankruptcy?

The report suggests Workhorse faces imminent financial distress with approximately $245 million in cash but a $10 million monthly burn rate. The potential debt covenant breach could accelerate the financial crisis, potentially leading to bankruptcy.

Disclaimer

This summary is based on a report by Fuzzy Panda Research. For the full, detailed analysis, please refer to the original source material: https://fuzzypandaresearch.com/workhorse-group-sec-investigation-fake-order-book/

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