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Operator
Greetings, and welcome to the Workhorse Group Q2 2024 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. We ask that you please limit yourselves to one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Stan March, Vice President, Corporate Development and Communications. Please go ahead, Stan.
Stan
Thank you, Kevin, and I'd like to welcome all of you to our second quarter 2024 results call. Before we begin, I'd like to note that we've issued our results for the second quarter end of June 30th, 2024 via press release, and we filed our 10-Q last evening for that period. You can find the release and accompanying presentation on the investor relations section of our website. We'll be tracking along with the presentation during this call. Also joining us on today's call are Rick Douck, our CEO, and Bob Ganan, our CFO. For today's agenda, please turn to slide three. Following my opening remarks, I'll hand the call over to Rick, who'll give you an update on the success we've made on our strategic, operational, and financial actions during the quarter. Bob will then walk us through our financial results for the quarter. Rick will then wrap it up before we open the call to questions. Our disclaimer can be found on slide four. Some of the comments that we've made today are forward-looking and are subject to certain provisions and also subject to risks and uncertainties as well. You can read the full disclaimer statement in our periodic filings on file with the SEC, including the 10-Q that we just filed, as well as today's earnings release. And now with that, I'd like to turn the call over to Rick Dowd. Rick?
Rick
Thanks, Stan, and good morning, everyone. Thank you for taking the time to join us today. During the second quarter, we made important progress on our EV product roadmap. While the work we did was significant, our financial results for the quarter reflect that there still remains a lot of work ahead of us to achieve our goals for 2024 and beyond, some under our control and some outside of our control. We operate in a nascent and challenging EV market. The first half of 2024 saw slower than anticipated industry-wide electric vehicle adoption rates, driven by the lack of government policy enforcement and delays in funding incentives available to our California dealers. Other macro factors affecting the industry include slower rollouts of electric vehicle charging systems and infrastructure nationwide, and government red tape in various states to give approvals for electric vehicles in order for them to reach the end customers. The pending presidential election, with two far different views and investments in the green economy, is influencing fleet owner decisions on whether to move forward on investments in EV technology, both in terms of charging system installation and EV truck purchases may go hand in hand. Nevertheless, based on our discussion with multiple fleets, We are starting to see some early positive signs and we remain encouraged by the long-term opportunity in the class four to six work truck segment on the transition to EV vehicles. We're optimistic that demand going into 2025 and beyond will begin to materialize and grow driven by increasing federal and state admission requirements and mandates, certification of our W56 and new state level government centers and subsidies that encourage EV adoption long-term. I believe we are doing everything we can to position Workforce to capture future commercial fleet demand. Most importantly, we have and are continuing to develop reliable, capable products and have a world-class manufacturing plant with adequate capacity in which to build them. The W56 has proven to be everything we expected and everything our customers specified. The traction we are getting with customers is real. Customer feedback after multi-week demos has been extremely positive, and we're starting to see initial orders come in. Based on this direct customer feedback after the demos, we have also kicked off the design of two new variants of the W56, which would be through testing and early production by year end or in early 2025. More on that in a moment. At the same time, we have taken critical and at times extremely difficult and painful actions to reduce expenses to extend our financial runway. We divested the aerospace business, reduced headcount across the organization, furloughed workers, and delayed a future product program by 12 to 18 months in order to conserve cash. Taking it all together, we are confident in the long-term market opportunity of the EV transition. and need to fight our way through the next six to 12 months to emerge as a viable and successful EV OEM. We believe in Workhorse and our ability to win the market with our high quality people, trucks, business partners, and service capabilities, which differentiate us from the other EV OEMs in the Class 4-6 commercial segment. I'll now dive into the actions we took in the quarter. Turn to slide five to discuss the key achievements in the quarter. On the sales front, in June, we entered a strategic collaboration with our certified dealer KTS in Kingsburg, California, with the commitment to supply 141 W4CC cab chassis units in 2024 and 2025. KTS is starting to see real demand across both small private and government-funded ahead of the enforcement of CARB ACF mandates. We are hearing that some government-funded fleets are only allowed to buy EV trucks going forward in California starting late this year. Workforce received payment for the first 30 trucks from KTS in the second quarter. However, due to delays in the CARB HVAC voucher approval, audit, and payment process, KTS was unable to deliver the trucks to end customers, limiting the revenue recognized by the company in the second quarter. The positive news is we have started to see some progress in this area early in the third quarter. We also reached a major milestone with the award of a source well contract for the procurement in the category of class four to eight chassis and cabs with related equipment, accessories, and services. This significant achievement allows Workforce to expand our commercial reach to government education, and nonprofit sectors in all 50 states and in Canada, and we're starting to see interest through that source wealth contract. To support our roadmap, increase our footprint coverage in the United States, we continue to expand our commercial presence, adding three new dealer partnerships in early EV adoption regions of the country, specifically the Northwest region and the Northeast Corridor. As we continue to execute on our product roadmap and business plans, we also recognize the need for continued thoughtful decisions to conserve cash and reduce costs across the organization. With limited sales and revenue in the near term, we need to dramatically reduce our cash burn rate and conserve cash to extend our financial runaway until EV adoption rates pick up in the future, and we took those decisive actions. Last quarter, we told you that we made the difficult decisions to reduce our workforce and furlough a number of our Union City employees. Our team is the key to our near and long-term success. As we ramp up production alignment with customer orders and industry trends in the second half, our goal is to return our full team to work as soon as possible. Additionally, as part of our disciplined approach to cost management and focus on extending our financial runway, we completed the previously disclosed vestiture of the Arrow business to an affiliate of ATW Partners on June 6, 2024. The aerial divestiture provides a company with monthly cost savings and approximately $400,000 of monthly savings. Enhances the company's ability to concentrate all of our time and resources on our commercial electric vehicle truck business. As part of our earn-out provisions in the sale agreement, Workhorse will receive a portion of future aerial business proceeds on revenues from contingent sources. Moving to slide six. I want to spend just a moment framing the overall EV industry backdrop, specifically in the commercial work truck and step van segment. At times here at Workhorse, we get painted with a general EV automotive or Class 7 heavy truck brush, which is not truly applicable to the segment where we compete, where there is a compelling business case for fleets to make the transition to EV technology. The global move to reduce carbon emissions was crystallized in the Paris Accord back in 2016. China and the European-based auto and truck OEMs have moved decisively to meet strict government mandates in those regions of the world. I experienced this personally while I was the CEO of Delphi Technologies, living in London from 2019 to 2020. The growth in EV demand in China and parts of Europe was robust and far outpaced the forecasted growth of EV-powered vehicles here in North America. Here in the United States, our government position on the Paris Accord has changed at least three times at the national level. But a number of states, led by California, have been developing policies to address the Class 4A truck sector, the Clean Truck and Advanced Clean Fleet, or ACF, mandates, which were codified in 2023 with important fleet EV milestones in 24 and 25 through 2035. Currently, there are three legal actions underway seeking a redress or challenge or delay in the implementation of these California mandates designated by CARB. In addition to California, 17 other states have announced the adoption of the CARB mandates between 2024 and 2030. And to put this into perspective, when fully enacted, the number of class 4-6 trucks requiring replacement between 2024 and 2035 is more than 350,000 units. This is a target rich environment and we are prepared with the right vehicles and the internal production and supply capacity to secure a significant share of that demand if and when it materializes. While compelling use case and financial returns exist and lofty emission reduction goals have been made by major last mile fleet operators across the country, This pending demand has yet to translate into meaningful vehicle orders in the Class IV through VI EV medium duty truck segment. Let's move to Class VII and talk about the corporate ESG commitments. Following the Paris Accord announcement, major corporations across the globe that operate and compete in the last mile delivery space began publicly stating and promoting their own comprehensive ESG policies. I want to share with you some of the stated policies of some of the largest last mile fleet operators, our core targeted customers. These policy positions are found on their respective websites. As you can see, many are targeting net zero carbon emissions a full decade earlier than the Paris Accords require. 2040 is only 16 years away, which means these fleets must start making the transition soon if they are to really accomplish the stated objectives on CHG emission reduction. We have spoken and met with every one of these companies on this short list and have conducted successful product demonstrations with several of them. There is a wide range in operational and capital planning and investment decision-making underway amongst these fleets. Some fleets, like Amazon and DHL, are focused on using smaller Class III step bands. That's not where we play. Most of the others, though, have fleets that are heavily populated with what we call the P1000 version of step vans, and that is exactly where we play with the W56, the Class 56 step van segment. Many of these fleets, dating back to 2017-18, have had mixed results with early adoption of EV-powered vehicles to include range issues, especially in severe weather conditions, payload capacity issues, system durability issues, spare parts availability, service delays, and in some extreme cases, thermal events on early versions of EV trucks. We have heard and in some cases we have witnessed their stories at fleet customers. The result is that many industry players are moving slowly and cautiously into the zero emission technology transition. This generational technology transition will not happen overnight, as many industry pundits predicted and forecasted back in 2018 and 2021. It is costly, and there are many hurdles that will still need to be overcome, specifically affordability, which is mostly driven by battery costs, since most battery components are coming from offshore, and the installation of adequate EV charging infrastructure, For the larger fleets, we are talking about multi-billions of CapEx investments over multiple sites over a period of up to a decade or more. We are working closely with two to three of these fleets as a potential primary vehicle supplier going forward. We stand ready to meet their needs whenever they decide to undertake the investments necessary to start their transition to EV-powered commercial vehicles. Moving to slide eight, I want to spend a moment of providing you a snapshot of the voucher dynamics in the most important state in the country for EV adoption, California. You have heard me say in the past that the CARB HVIP program and enforcement of the Clean Fleet Mandate standards are critical to the near-term success and viability of the nascent EV commercial truck industry. As you can see, current CARB initiatives are not achieving planned goals. Less than 2% of Class IV to VI new truck registrations have received HVIP vouchers over the last two years, well below the 9% EV targeted for fleet operators in 2025. Currently, CARB has not yet leveled penalties on fleets for failing to meet ACF mandates. Until the legal challenges of the CARB mandates are resolved and fines start being leveled for fleets failing to meet the mandates, many fleets are simply taking a wait and see attitude towards investing in charging stations and EV trucks. Our focus has been on identifying those fleets that are not waiting and have approved investment plans to move forward in 2024 and 2025 to include Mission Linen, Vestas, and one of the largest global last mile fleets in the world. All three of these companies have successfully demonstrated the capability of the W56, on their actual routes in California and two other states. And two of these companies have already placed orders with us, and we are working hard to secure an order from the third fleet. I want to spend a moment on slide nine to talk about our own Stables by Workhorse program, as we are one of only a handful of third-party contractors across the country that has actually successfully executed an ICE to ED fleet transition in the past two, three years on our own nickel. I would like to share with you some of the key data we are able to share with fleet customers based on our real-world results after executing our own fleet electrification efforts. Our goal was to operate our fleet of EVs alongside our ICE fleet and compare the total cost of ownership TCO with the ACT research ICE to EV model. The real-world results we achieved on our own FedEx routes here in Ohio confirmed the ACT model's prediction. With a payback period of less than five years, without any state-level incentives or grants. And, in fact, we found actual TCO of 1.7 times the model production when dealing with the oldest, meaning age, maintenance, and test trucks, which reflected a large percentage of the step vans on the road at the largest fleets in North America today. The bottom line is that there is a financial business case to be made by transition to EV trucks in the commercial work truck segment, even without incentives. On the lower left side of the slide, we summarize the real world results ranges from our STABLES operations. And this data tracks what we are seeing in our demo truck deployments for last mile fleet operators at multiple customers. The savings are real, and we use this data during our discussion with the aforementioned fleets and targeted customers. Our own experience here in Ohio at STABLES, and during four to six customer demos across the country in California, Tennessee, Ohio, Kinetic and Massachusetts validate these facts. We often only charge our trucks every other day or every third day, except during extreme hot or cold weather situations. In one demo on a route that averaged less than 25 to 30 miles per day in a city environment, the W56 only needed to be charged one time per week. So our trucks performed very well out in the field. Moving to slide 10 and turning to our commercial vehicle programs. We continue to gain traction and positive feedback from customers, mostly for small initial purchase orders and ongoing commercial discussions with larger fleets on future truck orders tied to their investment and installation of adequate EV charging systems infrastructure with lead times of 3 to 12 months. In addition to the KTS purchase order, we also progress across a number of new commercial partnerships, including delivery of a W4CC box truck to McAbee Trucking following a successful field demonstration. This electric vehicle is set to perform a 120-mile daily round trip mail route between Blacksburg, South Carolina, and Shelby, North Carolina, in support of the U.S. Postal Service. This is our first win with a third-party contractor for U.S. Postal Service. We also announced the delivery of a W56 step van as part of an ongoing collaboration with NorCal Transports in Richmond, California, just outside of San Francisco. NorCal is a West Coast innovator and last-mile package delivery contractor, which will serve as another example of real-world EV performance. It will allow us also to go head-to-head with at least two of our key competitors in the segment, and we are confident the W56 Step Band will prove to be a more capable truck. Based on early feedback from other fleets in California, we have successfully tested our truck. We also entered an update program with SureFitters, which offers a ship-through solution to commercial EV customers. The partnership launched with 13 pre-configured up-fit packages available to workhorse dealers, specialized for last-mile delivery and vocational trucks for W56 and W750 stepdams. Additionally, full-body packages from the Toughlight, CMN truck beds, and Rugby are included for the W4CC cab chassis, with additional up-fit packages to be added throughout the remainder of 2024 and beyond. Turning to slide 11, building on the success of the W56, We will introduce a 200-inch wheelbase version and have already secured orders from a customer who was impressed by the technical superiority of the W56 platform, but required a larger cargo capacity to meet their specific daily needs. Our own experience at stables also validated the need for the longer wheelbase capable of handling a larger cubic volume. Our W56 units operating stables often cube out before they load out. The extended wheelbase version of the W56 will accommodate Workhorse's next-generation step-band body. It will span 22 feet with an impressive cargo volume of 1,200 cubic feet. Final durability testing will be completed in Q3. In initial production, the first deliveries of this product will be expected in Q4. I also want to emphasize, based on conversations with other fleets, that they are indicating that the product's mix could be up to 25% or greater for the 1,200 cubic feet step-band. which will be built across the same assembly line and paint system that we currently use for the 178-inch wheelbase, 1,000 cubic feet version of the W56. We continue to expand on slide 12 the dealer and service network and geographies in which customers can purchase workhorse vehicles, and they are working to ensure that our customers can take advantage of available incentives, which vary by state and, in some cases, cities or economic zones within a state. California is a key market as a W-56, W-750, and W-4C since all qualify for incentives offered by HVIP and ISEF programs. Through HVIP, vehicle purchasers and participating dealers are eligible to apply for a base voucher of $85,000 per W-56 purchase. If the vehicle is based in an ISEF zone, fleet owners can get additional incentive vouchers. In some cases, a fleet owner can get enough incentive money to generate a payback of less than three to six months on an EV truck investment. And we continue to add dealers, including the Ziegler Truck Group in Minnesota, Iowa and Wisconsin, Malia in New York City, and Echo Auto in North Boston. With that, let me turn the call over to Bob to discuss our financial results and the recent steps we have taken to strengthen our financial positions.
Bob
Thanks, Rick. Let's turn to slide 13. During the quarter, we enacted additional proactive measures to conserve cash and reduce costs across the organization. To continue to operate at reduced headcount, a net reduction of approximately 50% of our staff through a combination of reductions, attrition, and the aero divestiture, along with the decision to furlough 73 employees at the Union City Manufacturing Facility. I am pleased we have brought back 16 of those employees so far. As previously disclosed, we also undertook other cost-saving initiatives, including the deferral of approximately 20% of executives' cash compensation into the third quarter, delayed the W56 cab chassis launch, and completed the divestiture of the company's aero business, along with other cost-saving measures. To put a finer point on the impact of these actions and other reductions, we've reduced the cash burn rate from approximately $11 million a month to $4 million per month in just the last three months alone. Ensuring workhorse remains listed on the national exchange significantly benefits the shareholders and business as it enables a wider diversity of financing options and market availability as we move forward. Therefore, following the stockholders approval to authorize a reverse stock split, we enacted a one for 20 reverse split and officially regained NASDAQ compliance. Turning now to highlights from quarter on slide 14. During the second quarter, we continue to take steps to extend our operational runway and manage our cash flow efficiently. We had additional successful financing this quarter and continue our discussions with parties related to the sale-leaseback transaction for our Union City facility. Recent activity reinforces our optimism about our ability to drive additional purchase orders this year and grow our revenues. Sales net of returns and allowances for the second quarter of 2024 were $800,000 compared to $4 million in the same period last year. The decrease in sales was primarily due to lower W4CC vehicle sales compared to the same period a year ago, which was partially offset by an increase in other service revenue generated from operating the stables by Workhorse Road and drones as a service revenue before the divestiture and other service revenue. I want to mention that we received payment for the first 30 trucks of the previously announced purchase order of 141 trucks from a dealer in the second quarter. However, due to delays in the CARB HVAC voucher approval payment process, The dealer was unable to deliver the trucks to the end customer by June 30th, limiting the revenue recognized by the company in the second quarter. Workhorse expects to recognize most, if not all, of the $2.2 million in deferred revenue related to the sale of the W4CC trucks as revenue during the remainder of 2024. Cost of sales decreased to $7.3 million in the second quarter compared to $8.4 million in the same period last year. The decrease in cost of sales was primarily driven by a $4.4 million decrease in costs related to direct materials as a result of lower sales volume and higher volume of vehicles being capitalized into finished goods. Decrease was also due to a decrease in consulting expense of $500,000 as well as a $500,000 decrease in employee compensation and related expenses as a result of previously announced furloughs. The decrease in cost of sales was partially offset by a $2.7 million increase in inventory reserves and a $1 million increase in depreciation expense. SG&A expenses decreased to $12.1 million in the second quarter compared to $14 million in the same period last year. The decrease in SG&A expenses was primarily driven by a $2.4 million decrease in employee compensation and related expenses primarily due to lower headcount and a decrease of $600,000 in marketing expenses during the period, which was partially offset by a $200,000 increase in depreciation expense and a $300,000 increase in information technology costs. R&D expenses decreased to $2 million in the second quarter compared to $5.1 million in the same period last year. The decrease in R&D expense was primarily driven by a $2 million decrease in employee compensation and related expenses due to lower headcount and a decrease in consulting expense, which was partially offset by a $400,000 increase in prototype expense driven by the W56 208-inch wheelbase program. Net interest was $5.2 million, including a $3 million fair value adjustment compared to net interest income of $500,000 in the same period last year. Fair value loss in the second quarter was $600,000 due to the warrants issued by the company. The fair value adjustment in the prior year was nonexistent. Net loss was $26.3 million compared to $23 million in the same period last year. Turning to slide 15 to discuss our balance sheet, As of June 30, 2024, the company had $5.3 million in cash, which decreased from $6.7 million quarter over quarter and $35.8 million at the end of 2023. So far this year, we invested $3.8 million in capital expenditures, primarily for the Union City plant, down from $10.5 million in the same period last year. As we mentioned, we are taking diligent steps to strengthen our balance sheet in the equity position so we can execute on our product roadmap and deliver for our customers. We've taken significant restructuring actions and completed the development of our aero business, which allows us to 100% focus on our EV business. Looking ahead, we are confident in our ability to generate additional purchase orders and revenue for our customers while strengthening our financial position. Along with our partner in the financing side, we currently have $112.7 million of the remaining facility available to us. With that, let me turn it back over to Rick.
Rick
Thanks, Bob. Let me briefly discuss our near-term priorities, which are outlined on slide 16. Simply put, our key strategic priorities remain, one, securing new orders, two, delivering world-class products and services to more customers, and three, advancing our product portfolio roadmap. To do that, we need to continue to find ways to effectively finance the company until we can reach volumes that allow us to achieve break-even, free cash flow in the future. We hope to see the benefits from California's hybrid and zero-emission truck and voucher program, the H-5 vouchers, And other government incentives to increase number as we work through the balance of 2024, which along with federal and other state admission requirements should drive EV sales. To get the transition to EV commercial vehicles underway, this is critical to small fleet owners like those that KTS is serving out in California. We do believe that at least one or two larger national fleets are committed and have board approved CapEx plans to move forward on their EV plans. specifically in California and along the I-5 corridor in 2024 and 2025. In addition, we believe the government-funded police in California, the Pacific Northwest, and in select cities in the Northeast are looking to place orders yet this year or in early 2025 for their first tranche of Class 4-6 EV trucks. Finally, we continue to have meaningful discussions with federal agencies on both product demonstrations and pilot purchase orders. We continue to see increased interest in the W56 and, to a lesser degree, the W4CC, as more and more of our vehicles are hitting the road, demonstrating to new and existing customers the value and reliability of workhorse vehicles and how that compares to earlier versions of EV products that they experienced that had very disappointing early results. The W56 is a true workhorse, designed to withstand the workload placed on them over a 15- to 20-year lifespan. Our challenge right now is converting potential customer interests into tangible firm orders. As we navigate the current market environment, we are focused on extending our financial runway in order to emerge as a leader in the Class 4-6 segment. ATW has been an excellent financial partner for us as we work through our extended startup period and as we await the ramp-up in future EV demand. As we look ahead to the remainder of the year, we will continue to advance our EV product roadmap and work diligently to gain momentum on the revenue side of the business. We have multiple multifunctional teams on the road this week in California and Washington State, meeting with key fleets, our dealers, and attending a green truck summit in Tacoma, Washington. We look forward to providing updates as we make progress on the sales side of our business with specific customers. Being a pioneer in the commercial EV space is hard work, and we need both industry and government leaders to live up to their public commitments on addressing CHG emissions. Most importantly, we need the large last mile police to make the hard yet financially smart decision to start their transition to EV commercial vehicles. To generate revenue and establish a viable business here at Workhorse, we need customers to buy trucks. Now we'll open up the call for questions, and I'll turn it over to Kevin.
Operator
Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. As a reminder, we ask you please ask one question, one follow-up, then return to the queue, and that's star one to be placed into question queue. Our first question is coming from Craig Irwin from Rose Capital Partners. Your line is now live.
Craig Irwin
Excellent.
Craig
Morning, gentlemen. i wanted to ask um a question about the balance sheet so um at the end of the june quarter you showed 46 and a half uh in inventory can can you maybe talk about how much of that is finished goods and you know roughly how many trucks does this represent and uh i assume uh the 30 from kta is no not on there anymore but you will have um cnc trucks on the balance sheet, if you can maybe update us on where you stand there, that would be really helpful. Thank you.
Bob
Sure, Craig. So basically, as a rough breakdown of that, probably 20 to 24 million is finished trucks. About 12 million is batteries. And then the rest relates to parts that are primarily associated with the W56. And that's kind of the rough breakdown of that inventory. And of that 20 to 24 million trucks, probably 10 million is associated with the one particular purchase order, which I think was your question.
Craig
Okay, okay, excellent. Then the $4 million burn a month was the second thing I wanted to ask about. So, you know, that's nice progress, really focusing down on, you know, what you need to do to execute in the short term and in the medium term, I guess. Um, you know, in that $4 million burn a month, um, do you have the capacity to maybe respond to the RFP out there from the post office? I understand there's a 10,000 unit, um, RFP, you know, would responding to that maybe be an incremental expense for you? Um, you know, how should we expect the, uh, the, the tightness of your financial controls to impact the ability to participate there?
Bob
Hey, Rick, I'll start that and then turn it over to you to address the RFP. I think from our current burn rate, we've got the capitals in place that we need to produce. The people to produce our current orders are in place where a large purchase order then changes that burn rate is in the working capital required to buy the materials. So that would be the area of focus. And of course, we're very focused on our roadmap in terms of where our R&D dollars are going right now. So if it was something that would require a diversion away from that, then obviously that would be an incremental cash fund as well. As far as the rest of the process, Rick, I'll turn that over to you or Stan.
Rick
Yeah, it's a great question, Craig, in terms of as these potential bigger orders come in, whether it's from U.S. Postal Service or other fleets, we'll have to address, as Bob said, our need to bring in working capital to build the trucks, whether we can get down payments to help do that or we have to go out. If we get blue-chip customers and secure an ABL somehow to do that, we can talk about that. Let me start with when I got here in 2021, as you remember, Workhorse had sued the US Postal Service. We quickly dropped that lawsuit and we've worked the last three years to get back in good graces. And as that RFP is issued, I think we'll be on the bid list. It'll be our job to go out and earn that. That's true with other customers. We had other customers who refused to even pick up our calls because of the failure of the C-1000 way back in 2021. We've mended those fences, and we are in active discussion with multiple fleets on multiple size orders. And we do think our Class 5-6, based on our head-to-head demos with some of our competitors, is proven to be a very reliable and robust, capable truck. And hopefully that converts over to PO soon between now and the end of the year.
Craig
Thank you for that. I'll go ahead and hop back into the queue.
Bob
Thanks, Craig. Thanks, Craig.
Operator
Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Mike Schliske from DA Davidson. Your line is now live.
Mike Schliske
Yes. Hi. Good morning. I should take on my question. I guess I wanted to first ask about the pipeline of customers going into 2025. Given what you've signed now, I would imagine if you haven't signed anything by, you know, There won't be much to ship in the first part of 2025. I'm just curious to see how much you've got in the pipeline, at least in the final stages of being signed to kind of get onto the road in the first part of next year.
Rick
Yeah, good question, Mike. We have two orders in-house right now for about 30 trucks. which we have some of those built, and then we've got to go through the upfit process. Fifteen of those are for W56208, and 15 are for the W178 right now. We have additional pending orders that would have trucks shipped either late this year or early next year, depending on what the upfit conditions are. I used to be on the board of the shift group a long time ago. As I recall, a lot of the big fleets negotiate as part of their budgeting process for the following year. They start budgeting how many trucks they'd like to buy, and they button those orders in by October 1st, and then they get approval from their boards later in the year, then you know how many trucks you're going to build next year. So that's what we're working through right now. We're sitting here in late August, basically. We hope to get some positive news on a couple of those fleets here between now and October 1st. I know that one fleet we've tested with liked our truck, but they prefer to use our chassis only, and you put a body on that. We've worked with two of the outfitters that do those kinds of bodies for that kind of fleet. And another fleet asked if we would go to a lower range vehicle, which would cost less money to help them, their business case. And we're working on that right now as well. So most companies use the delivery vehicles, travel less than a hundred miles a day. As you knew, both our W4CC and W750 and the W56 have ranges of 150. So if you want a truck with less than 150-mile range, we need to go in, take a battery out, take out some of the cabling, and come up with a 100-mile range truck. And that's kind of what we're working on right now is one of our variants as well. Does that help you? I think that hopefully that gives you positive data. People like the truck. Those who want the W56 at place and order are pending orders. Some wanted a bigger truck with more cubic feet, specifically the industrial supply and linen companies who carry very heavy payloads. and they want to bulk out those trucks. I had a CEO tell me, I'll buy a lot of your trucks when the car mandate takes effect, and I want almost every one of my trucks to be 1,200 cubic feet, not 1,000 cubic feet. On the flip side, big, large fleet, you know who they are, I won't say who they are, said we want only 100-mile trucks. We're going to use very few trucks that are more than 100 miles. And our experience at Stables is most of our trucks travel somewhere between 50 to 80 miles a day, We do have some country routes, I'll call them, outside of the suburbs that go up to 120, 150 miles. And we've been able to handle those routes with the W750 and the W56 with ease. The only time we had some difficulties at 125 miles or more when it got to minus 20 back in Ohio back in January and February. We had to charge a couple times there. Okay? Hopefully that answers your question.
Mike Schliske
Absolutely. I appreciate all that color.
Rick
Good.
Mike Schliske
I also wanted to ask, you had mentioned – I think you mentioned putting a new project or a product on ice temporarily as part of the plan to conserve cash. How much of the departure was in that vehicle? Was it something that you would have been very complimentary in what you're doing? Or was it something kind of brand new, different class, different size? I'm just kind of curious to see.
Rick
Yeah, great question. That's a complimentary... What that whole thing meant to you.
Mike Schliske
Okay.
Rick
Yeah, it's a complimentary... class five six product based on feedback from our customers who are not using step bands okay and so it just pushes out 12 to 18 months it's more for utility type trucks and service trucks so think of a w4cc vehicle on steroids basically slightly bigger we see some open uh opportunities out there especially in california and some of the utility companies that want that so we're looking at ways how different ways how we skin that cat the first First, we have to make it through our launch and our birth, and that's based on last-mile delivery, use of step bands or strip chassis that are built into step bands, okay? So short-term, we need to survive and move forward, and longer-term, we can get the orders in here, build trucks, and then we can add that other product in the future. It doesn't hurt us in the near-term financials. It'll help us in the long-term. How's that?
Mike Schliske
Absolutely. Thanks for the assistance. I'll pass it along.
Operator
Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.
Rick
No, I appreciate everybody calling in. Craig and Mike, I appreciate your questions. I'm happy to have follow-up calls with you and Bob and Stan later today. And we'll keep fighting here at Workhorse to make sure that we survive and win. Thanks a lot. Have a great day.
Operator
Bye. Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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