contract are subject to the following risks, among others, that could have a material adverse effect on our results of operations, financial condition, and/or cash flows: • The USPS ordering fewer units than we expect which could result in an impairment of our deferred contract asset. We estimate that deferred contract costs exceed future profits on existing orders by approximately $135 million at December 31, 2025. • The ramp-up of NGDV production has taken longer and cost more than we anticipated, which has resulted in lower revenues and higher costs than we anticipated. It is possible that production may continue to lag our expectations due to equipment design issues, supplier quality issues, supplier performance issues or other challenges associated with scaling production. • Throughout the product lifecycle, discontinuation of production parts by suppliers may result in unanticipated design costs. • Warranty costs may be higher than we anticipate. • If additional orders are received, the mix of internal combustion engine and battery electric vehicles could be different from our expectations. • The USPS may exercise its right to terminate the contract for convenience. Changes in trade policies and other factors beyond our control may adversely impact our results. The United States has announced changes to U.S. trade policies, including increasing tariffs on imports and potentially renegotiating or terminating existing trade agreements. The exact scope and duration of any such tariffs that have been or will ultimately be implemented, or retaliatory tariffs that have been or could be implemented by other countries on U.S. exports, is not known, and the impacts on our business are uncertain. Tariffs implemented by the U.S. during 2025 cost us approximately $35 million in 2025, and we estimate that will increase to approximately $200 million in 2026. Geopolitical tensions and trade wars can disrupt supply chains and increase the cost of our products, which could cause our products to be more expensive for customers. Countries have adopted restrictive trade measures such as tariffs, taxation, foreign exchange controls, capital controls and controls on imports or exports of goods, technology or data, any of which could adversely affect our operations and supply chain or limit our ability to offer our products and services as intended. Countries may implement additional restrictive trade actions, including tariffs, export controls, sanctions, legislation favoring domestic investment and other actions impacting the import and export of goods in jurisdictions in which we or our suppliers operate. These kinds of restrictions could be adopted with little to no advance notice and could escalate in response to tariffs or restrictions imposed by the U.S. or other countries, and we may not be able to effectively mitigate any adverse impacts from such measures. Changes in laws or regulations governing foreign trade, particularly in countries where we manufacture products or from which we import products or raw materials, either directly or through our suppliers, including materials subject to China’s export control requirements such as rare earth minerals, could have a material adverse effect on our competitive position, results of operations, financial condition, and/or cash flows. Uncertainty surrounding trade or other international disputes has adversely impacted, and could continue to adversely impact, customer confidence, inflation, interest rates and the level of investments by our customers and on the economy in general. Any of these events could increase the cost of our products, reduce demand for our products, create disruptions to supply chains or impair our ability to effectively operate and compete in countries where we do business. Our capacity expansion plans may take longer or cost more than we expect or may not achieve the benefits we anticipate. We are pursuing initiatives to expand and optimize our manufacturing capacity. Such initiatives may include facility expansions or reconfigurations, capital investments in equipment and automation, workforce hiring and training, supplier capacity development and the implementation of new processes or systems. The execution of these capacity expansion plans is subject to a variety of risks and uncertainties, including delays in construction or equipment delivery, challenges in recruiting and retaining skilled labor, supply chain constraints, cost inflation, permitting or regulatory requirements and difficulties integrating new capacity into existing operations. In addition, our assumptions regarding demand levels, timing and product mix may change over time, which could affect the timing, scale or economic returns of these investments. If our
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