Workhorse Group (NASDAQ: WKHS), the Ohio-based EV manufacturer, has had an eternal ramp up in recent weeks amid a general euphoria surrounding electric vehicles. Based on the current price action before the market, the share has risen no less than 512.93 percent since June 1!
Today, the shares of Workhorse have been revitalized as Lordstown Motors entered to a definitive merger agreement with DiamondPeak Holdings Corp. (NASDAQ: DPHC) – a Special Purpose Acquisition Company (SPAC). The merger will result in Lordstown becoming a wholly owned subsidiary of DiamondPeak, with the combined entity expected to be listed on the stock exchange under the symbol RIDE after the closing of the deal. For refreshment, an SPAC is formed for the sole purpose of raising capital through an IPO and then channeling these proceeds to take over an existing business.
So, why is Workhorse rising over the revelation of this development? Well, Workhorse owns a 10 percent stake in Lordstown, providing significant upside for the Ohio-based EV manufacturer. The deal provides Lordstown with a value of $ 1.6 billion, bringing the value of Workhorse’s stake to $ 160 million. Keep in mind that Lordstown will use $ 675 million in proceeds from the deal to fund its production Durable model, an electric pick-up expected to be launched in 2021.
The deal doesn’t just impact Workhorse. It also enters Nikola Badger’s premises, which is expected to launch in 2022. Nikola’s distinguishing feature, of course, is the ability of its products to use both batteries and hydrogen fuel cells to power the drivetrain. Essentially, the concept combines a pure battery electric vehicle (BEV) and a fuel cell electric vehicle (FCEV). This of course offers enormous advantages, such as faster refueling, less weight due to the need to carry a smaller amount of batteries and a longer range. Nikola has even claimed that the Badger electric pickup will provide a range of 600 miles by combining the two power modes.
As mentioned earlier, Workhorse is taking advantage of today’s announcement. To illustrate, the stock is up more than 7 percent today, and is currently trading at $ 16.72 from 9:41 ET. This has come on the heels of a series of positive announcements lately. For example, on July 28, the company announced that the C-Series all-electric vans were eligible for the Hybrid and zero-emission Truck and Bus Voucher Incentive Project program through the California Air Resources Board (CARB). Duane Hughes, Workhorse CEO, comments on the implications of this designation noted:
“We are expected to qualify for the HVIP program to dramatically reduce purchasing costs for potential customers in California when additional financing becomes available, expected in the fall of this year.”
Likewise, on July 23, Workhorse announced that it received an initial purchase order of 20 all-electric C-1000 vans from freight transport company eTrucks, allowing the company to expand its order book and sales reach. With today’s announcement, Workhorse investors have regained new optimism after an interruption in the rally of the past few days.