Tesla vs. Workhorse: Which Is a Better Buy?
Workhorse is challenging Tesla’s title of top electric vehicle company. But which stock is a better buy for your investment portfolio?
At the time of its founding nearly 20 years ago, Tesla (TSLA) seemed like a company straight out of science fiction. Fully electric cars that can drive themselves… it was stuff you’d expect from a TV show like Knight Rider.
Today, electric vehicles (EVs) are a reality. Chances are you or one of your friends might even own one. And as more EVs come onto the market, more EV manufacturers enter the investing arena.
One competitor generating a lot of buzz is Workhorse (WKHS). Headquartered in Ohio, rather than Silicon Valley, Workhorse is trying to corner the market for electric trucks.
Let’s pit Tesla vs. Workhorse and see which stock is a better buy for your investment portfolio.
At a Glance: Tesla vs. Workhorse
|Tesla Inc.||Workhorse Group Inc.|
|Focus||Electric vehicles and energy generation and storage systems||Electric trucks and drone systems|
|Ticker||NSDQ: TSLA||NSDQ: WKHS|
|Market Cap (8/12/21)||$701.23 billion||$1.23 billion|
|CEO||Elon Musk||Duane Hughes|
|Headquarters||Palo Alto, CA||Loveland, OH|
Named after legendary inventor Nikola Tesla, this EV company was the brainchild of two California entrepreneurs, Martin Eberhard and Marc Tarpenning. However, since 2008, Tesla’s CEO has been Elon Musk, an eccentric billionaire who’s just as good at stirring up controversy as he is leading a company.
Tesla currently produces electric vehicles, batteries and energy storage systems, solar panels, and solar roof tiles. The company’s subsidiary Tesla Energy develops and installs solar-power generation systems.
Workhorse has been around a few years longer than Tesla, but its original focus was on producing stepvan and motorhome chassis and selling diesel engines. Workhorse shifted to EVs in 2015.
As Workhorse’s name implies, this company’s focus is on electric vehicles driven for business rather than pleasure. The goal is to create cost-effective EVs for “last mile delivery” — the leg of the shipping process from transportation hub to destination. Think UPS (UPS) or Amazon (AMZN) delivery trucks.
Workhorse is also developing a delivery drone that can move packages from truck to doorstep.
Tesla vs. Workhorse: Products
Tesla brought out its first car, the Roadster, in 2009. In 2012, the company debuted the Model S sedan, followed by the Model X SUV in 2015, the Model 3 sedan in 2017, and the Model Y crossover in 2020. Currently, the Model 3 is the world’s top-selling plug-in electric car, with more than 800,000 vehicles on the road as of December 2020.
In 2020, Tesla rolled out its 1 millionth electric car.
In the future, Tesla plans to introduce another generation Roadster, as well as the Semi (an all-electric semi-truck) and the Cybertruck pickup. All vehicles are currently slated for production in 2022.
But of course, Tesla’s products aren’t limited to just EVs. Tesla Energy develops, builds, sells, and installs solar energy generation systems such as the Tesla Solar Roof and Solar Inverter. The subsidiary also makes storage systems like the Powerwall home energy storage device and the Powerpack and Megapack large-scale clean energy storage systems.
Workhorse’s two EV products are delivery trucks, one with 650 cubic feet of cargo volume, and the other with 1,000 cubic feet. But ironically, in its most recent fiscal quarter, the company managed to deliver only 14 vehicles.
Workhorse has also licensed its EV technology to Lordstown Motors, which is working on a fleet of electric pickup trucks.
Workhorse is also developing a custom-built truck-mounted drone called the HorseFly, which will be able to deliver packages from a truck to your doorstep. In August 2021, Workhorse entered into a drone pilot program with the United States Department of Agriculture (USDA).Workhorse had pinned its hopes on a juicy contract with the United States Postal Service (USPS) to manufacture a fleet of electric mail trucks. However, in a surprise twist, the USPS awarded the contract to Oshkosh (OSK) instead. That caused Workhorse’s shares to plummet in the spring.
Tesla is a clear winner here. With more than 1 million vehicles on the road, a bet on Tesla is a bet on fact, not rumor.
By contrast, Workhorse still faces hurdles in getting its products on the road. For example, the HorseFly must still pass the Federal Aviation Administration (FAA) certification process.
Workhorse has also shown that it’s unable to scale its business, failing to meet production targets. If Workhorse isn’t capable of producing vehicles, how can it grab lucrative large-scale contracts?
Tesla vs. Workhorse: Earnings and Profitability
For its second fiscal quarter of the year, Tesla recorded record profits of $1.1 billion on revenue of roughly $12 billion. Wall Street analysts had been expecting only $11.4 billion in revenue.
For several years, Tesla reported a profit thanks only to the clean emissions tax credits that it receives from governments and then sells to less environmentally friendly competitors.
But this quarter, Tesla’s profits came from strong sales and lower operating costs.
Workhorse released its 2021 second-quarter results on Monday, August 9. And they weren’t good.
The company posted revenue of $1.2 million for the quarter, which completely missed Wall Street’s expectations of $5.2 million. The company also reported a loss of $43.6 million.
To be honest, this was an improvement over last year’s second-quarter results. But Workhorse isn’t delivering the figures that investors and analysts want to see.
Again, Tesla. The company has finally proven that its business can be profitable. And with governments around the globe pushing for more zero-emission EVs, there’s plenty of room for Tesla’s profits to grow.
Tesla vs. Workhorse: Which Is a Better Buy?
As Tesla continues to grow in strength, Workhorse flounders. Tesla is selling products left and right, while Workhorse has failed to scale.
Even if Workhorse were to snap up some profitable contracts, it has a long way to go before it can catch up with Tesla, the EV industry leader. Workhorse’s stock is too risky for most investment portfolios.
That said, with a market cap north of $700 billion, I’d wager that Tesla is overvalued. The smart money will wait for a better (lower) entry point before grabbing shares of the world’s most famous electric car maker.