Workhorse Group (NASDAQ: WKHS) positions itself as an electric truck maker capable of using a truck-mounted drone for package delivery. With its composite body electric delivery vans in early production, the company’s aircraft business is closer to taking off.
“Last-mile transportation is hard, aerospace transportation is harder and integrating the two even harder,” Workhorse aerospace lead John Graber said on Monday during the company’s second-quarter earnings call.
But it’s doable. In four years, the Workhorse HorseFly drone counts hundreds of package deliveries in three states. Workhorse filed for patents in April covering key components and capabilities, including its ground control station, winch deliveries and aircraft structure.
In 2017, Workhorse posted a video of its HorseFly drone launching in a rural area from the roof of a United Parcel Service (NYSE: UPS) truck, successfully delivering a package and returning to the truck. UPS has a pending order for 950 Workhorse C-Series trucks.
In 2018, the company posted another video, played more for laughs, of the HorseFly delivering classic sneakers from StockX, an online marketplace for sneakers, streetwear, watches and designer handbags.
HorseFly outlasts SureFly
As financial hard times hit Cincinnati-based Workhorse, investment in drones slowed. That included the SureFly, a two-seat hybrid-electric vertical takeoff and landing (eVTOL) octocopter invented by former Workhorse CEO Steve Burns.
With no money to develop SureFly and the project distracting Workhorse from focusing on building electric trucks, Burns stepped down as CEO in February 2019 and became a consultant, focusing on finding a buyer for the SureFly. Defense contractor Moog Inc. paid Workhorse $4 million in December 2019.
While a Workhorse consultant, Burns created Lordstown Motors Corp. (LMC) to build commercial fleet-focused electric pickups — originally a Workhorse plan — in a former General Motors (NYSE: GM) factory. Burns licensed the pickup technology from Workhorse in exchange for a 10% equity stake in LMC and royalty payments on the first 200,000 electric pickups sold.
HorseFly stayed with Workhorse. Moog (NYSE:MOG.A) became a joint venture technology partner to help development. Graber, a former aviation executive who worked with Burns on SureFly, moved over to the HorseFly.
“We’re closing in on the final design of our HorseFly 1.0 system and an improved root system for launching and recovering HorseFly from a Workhorse truck,” Graber said. “We’ve designed our aircraft to be quiet and unobtrusive.”
That means lowering packages by winch from 20 feet or more above a residential driveway or backyard. No worries about unintended drone encounters with pets, children and plants.
“No one wants hundreds of annoying gnats flying over their homes every day,” Graber said. “But very few people will care if our aircraft flies over because they won’t hear it. And unless they’re looking, they won’t see it.”
One operator instead of three
With government officials watching, the HorseFly participated in a demonstration in April in Lawrenceville, Virginia, with UPS and DroneUp. The goal was to validate drone use for emergency and medical situations. HorseFly’s near-autonomous operation required one operator. The others needed three, Graber said.
Workhorse is seeking U.S. Federal Aviation Administration (FAA) certification, critical to commercial viability. That takes 12 to 18 months.
The FAA requires redundant communications and controls, transport standards, structural strength, and reserve power capabilities.
“We have an expert aerospace team with a deep understanding of the FAA’s process and regulatory requirements, and we’ve teamed with Moog aerospace to leverage their decades of aviation experience in the development of our systems,” Graber said.
The right combination — if it works
Danny Ellis, CEO of SkySpecs, an Ann Arbor, Michigan, company whose drones autonomously inspect offshore and land-based wind turbines, said combining a truck and a drone is the right approach for deliveries of 100 feet to 1 mile from the destination.
“If they are able to prove the technology, prove the safety and the coordination, I think it is the future for sure; far more than warehouse-to-doorstep [drone] delivery,” Ellis told FreightWaves.
“I see drone package delivery from warehouse to doorstep to be absolutely absurd,” Ellis said. “My argument has been, why fight gravity if you don’t have to. It will remain a bit gimmicky for a while, but it is the perfect combination of [mobility and] robotics.”
Truck-drone integration is a “theoretical selling point,” said Michael Ramsey, a vice president and analyst in Gartner’s CIO Research Group.
“At a fundamental level, the idea is not bad,” Ramsey told FreightWaves. “The real question is going to be ‘Does it work?’ If you put it on there and it ends up being more trouble than it’s worth, it sort of becomes a gimmick.”
Payload, practicality and precision
The HorseFly can carry “significant payload for [a] practical distance with a high degree of precision and reliability,” Graber said.
“We found the marketplace requires safely and reliably [and] carrying a meaningful payload a meaningful distance simply and autonomously seven days a week, 365 days a year.”
The HorseFly allows package recipients to opt into delivery, choose their own delivery points for packages at their homes, and accept or reject packages and deliveries in real time. The HorseFly also can launch from fixed bases like drugstores, post offices and hardware stores.
But when combined with the battery-electric C-1000 delivery van, the HorsefFy costs only 3 cents per mile to operate, an 80% reduction in delivery cost.
“The applications are many and growing,” Graber said. “[The] long-term business case and economics are compelling.”