USA – Two American companies – Motiv Power Systems Inc of Foster City, California and Workhorse Group Inc of Cincinnati, Ohio – have signed a definitive agreement to merge their businesses, with the intent of creating a “leading” North American manufacturer of medium-duty electric vehicles.

Following the completion of an all-stock transaction towards the end of this year, Motiv will be merged with a subsidiary of Workhorse in exchange for newly-issued shares of Workhorse common stock. Consequently, Motiv’s controlling investor will become the majority owner of the combined company, with a 62.5% stake. Existing Workhorse shareholders will retain 26.5% ownership, while Workhorse’s senior secured lender will be offered common stock amounting to 11% of the total. Certain holders of Motiv debt will also have the opportunity to exchange debt for shares in the combined company. Motiv’s chief executive officer, Scott Griffith, will lead the company, whereas Workhorse CEO Rick Dauch will take on an advisory role.

The companies claim that the business combination will create a medium-duty manufacturer valued at USD105m with a full range of battery electric vehicles in the Class 4-6 categories. These include Motiv’s ‘Argo Series’ truck cab and medium-duty platform and Workhorse’s ‘W56’ range of step vans. The transaction will bring together Motiv’s “diverse product portfolio and top fleet relationships” and Workhorse’s “proven vehicles, manufacturing capabilities and national dealer network”, according to the press release.

Workhorse’s manufacturing facility in Union City, Indiana will eventually be capable of producing up to 5,000 vehicles per year once fully ramped up. The company negotiated two separate transactions “with entities affiliated with Motiv’s controlling investor”, providing USD20m from a sale leaseback for the Union City facility and USD5m from secured, convertible note financing. These will fund Workhorse’s operations up until the combination and pay down debt it owes to its senior secured lender. Upon completion, the combined company will receive USD20m in debt financing from Motiv’s controlling investor.

Bringing together two leading OEMs in the medium-duty space strengthens our ability to reduce the cost of electric trucks and make the total cost of ownership even more compelling,

said Scott Griffith. The companies believe they can reduce their development and manufacturing costs by USD20m by the end of 2026 through the combination of their respective operations.