Workhorse Stock Vs Nikola: Which Is Best? - Financhill

Workhorse Stock Vs Nikola: Which Is Best?

Workhorse Stock Vs Nikola: The popularity of electric vehicles (EVs) has ebbed and flowed for more than a century.

In the late 1960s and early 1970s, consumers showed interest for the first time in decades. That occurred in response to rising oil prices, and when those prices came down, so the appetite for investing in research and development of EVs. 

In the 1990s, concerns about the environment took center stage, and EVs became a top priority again. General Motors (GM) developed the EV1 and produced about 1100 cars in total.

Unfortunately, it cost a small fortune to manufacture EV1s, which made the venture all but impossible. Once again, EVs took a backseat to gasoline-powered vehicles, which was fine with consumers enjoying the financial benefits of a booming economy. 

The real turning point for EVs came in the late 1990s when the Toyota Prius was introduced. By the time it was available worldwide, smart marketing had everyone wanting one.

Now it’s the turn of two less well known companies but between the two which is best: Nikola stock vs Workhorse?

Tesla Led The Pack But Competition Is Growing Fast

In 2006, Tesla Motors took up the challenge of creating EVs that rivaled the performance and feel of luxury sports cars. Chevrolet and Nissan followed with the Volt and the LEAF, spurred on by the government’s nationwide investment in EV charging infrastructure. 

Dramatic improvements in battery technology have changed the narrative around EVs, and many consumers are open to the option – particularly given the reduced cost of ownership. The final hurdle is the initial purchase price, which is still substantially higher than traditional gas-powered vehicles.

There are some federal and state programs that attempt to offset the extra expense through tax incentives, which has encouraged a certain amount of progress. 

Today, it is clear that EVs are here to stay, and everyone is trying to get in on the trend. The market has potential to be massive, with passenger EV sales hitting 1.7 million in 2020, 26 million in 2030, and 54 million by 2040. Compare that to the mere 450,000 sold in 2015. 

More than 60 companies are working in the global EV space, ranging from the well-established Tesla to Croatia’s relatively obscure Rimac Automobili. Two that are currently getting a lot of attention from industry analysts include Workhorse and Nikola. 

Adding EV to a diversified portfolio gets complicated for investors, because there are so many companies to choose from. Each has a different history and a different goal, which makes valid comparisons all but impossible. 

The key is to begin with comparing top contenders to narrow down the options. In this case, the question at hand is Workhorse stock vs. Nikola stock: which is best?

Workhorse 101

Workhorse Group wasn’t always known as Workhorse Group. That’s important, because some of the company’s biggest accomplishments were achieved under its original name: AMP Electric Vehicles. AMP launched in 2007 with the goal of designing two-seat cars that operated under battery electric power.

It succeeded with the fully electric GM Sky, which proved to be four times more efficient than gas-powered vehicles of the same size.

Better still, the Sky had no emissions. AMP went on to create technology capable of transitioning certain SUVs from gasoline to electric power. 

When the outlook for converting existing passenger vehicles from gasoline to electric became questionable, AMP rethought its entire approach. Instead of passenger vehicles, business leaders decided that it was time to look at other types of vehicles.

AMP acquired Workhorse, along with its assets, and officially changed its name to Workhouse Group. 

Is Workhorse Stock A Buy?

Today, Workhorse has more electric delivery vehicles in service than its competitors, and it is focused on the next logical step. In addition to delivery vans, Workhorse is leading in the development of delivery drones, as well as technology capable of monitoring entire fleets of electric vehicles. 

Despite its successes, Workhorse hasn’t been popular with investors until very recently. Stock sold at less than a dollar in early 2019, and it started 2020 at just over $3 per share.

The last week of June brought important news, and Workhorse’s stock price went up at a nearly 90-degree angle. Suddenly, shares that had been trading around $6 per share rose to a stunning $20.91.

There have been a few minor drops since, but as of early October, Workhorse traded at $26.77 per share. Overall, year-to-date, Workhorse stock is up 781 percent, and many analysts believe that’s just the start. 

Workhorse is competing for a major contract with the US Postal Service. If it wins the job, Workhorse will be in charge of a $6 billion-plus project intended to upgrade the USPS fleet.

However, even if not selected, many analysts still consider Workhorse a buy. While this particular contract would put Workhorse on the map right away, without it, the company will still be in a good position to build out its client base over the next few years.

Obstacles Ahead For Workhorse [Share Price]

Workhorse has added the infrastructure, partnerships, and supply chain necessary to grow at a rapid rate. That’s promising, but there are obstacles that may derail its progress.

The most basic is around Workhorse technology. Some EV companies have run into disasters like battery fires, which led to extensive and costly recalls. While Workhorse doesn’t have anything so dramatic on its record, there is always the possibility of a problem. 

The second area of concern is around competition. Now that EVs are catching on, a long list of companies are pushing and shoving for the title of industry leader.

Some are better established, have stronger brands, and enjoy extensive resources that give them an edge. If such a competitor chooses to take Workhorse on directly, it could be deadly for Workhorse stock.

Should You Invest in Nikola?

There are 15.5 million trucks on US roads, and two million of those are the heavy-duty tractor trailers that carry big loads.

Between 200,000 and 300,000 of these vehicles are decommissioned every year, and Nikola wants to replace them with hydrogen-electric and fully-electric alternatives.

That could mean critical improvements in air quality, particularly in heavily-traveled areas. According to the Environmental Protection Agency, trucks generate approximately eight percent of the nation’s greenhouse gas emissions. 

Nikola isn’t just focused on big rigs. It also wants to reinvent motorsports. However, the most important news – at least for the moment – is a proposed partnership between Nikola and General Motors to produce a mainstream pickup truck.

If the GM deal goes through, Nikola stock could be a hot commodity. Unfortunately, there has been some controversy associated with the deal, which puts Nikola’s entire future into question.

Dangers Of Buying Nikola

Nikola Founder and Chairman Trevor Milton left the company abruptly in September. It was a shock, after he had enthusiastically announced the potentially lucrative partnership with GM on September 8th.

Milton’s sudden departure was the result of a damning report that claimed years of deceit by the company. The writers of the report showed evidence that Nikola claimed to have certain technology before it was developed, and more alarmingly, that it doesn’t yet have proprietary hydrogen fuel cells as it had implied.

The allegations disrupted the GM deal and sent Nikola stock on a roller coaster of ups and downs. 

For the time being, it appears that the GM deal may still close, though it obviously missed the original September 30th target.

Right now, the two companies are back in negotiations. It is likely that if there is a new deal, the terms will be far more favorable to GM.

It’s important to note that if the GM deal ultimately falls through, Nikola’s share prices are likely to hit rock bottom and stay there for quite some time. That makes Nikola too risky for all but the most adventurous investors. 

Nikola Vs Workhorse Stock: The Bottom Line

Consumers have very little tolerance for companies that mislead them, and it seems Nikola has broken that crucial covenant. While there is a path back for the organization right now, it is unclear whether Nikola will find it.

That makes Workhorse stock a far better choice for investors who want to add EV to their portfolios.

With or without the USPS contract, Workhouse is in a better position to realize profits – at least in the near future. 


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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.