Electra Meccanica Vehicles Corp. (NASDAQ: SOLO)
Electra design and manufacture innovative and visionary electric vehicles (EVs), the goal of which is to revolutionize the way people commute, offering a fun driving experience while making commuting more efficient, cost-effective and environmentally friendly. The company’ flagship vehicle is the SOLO, a single-seat EV – for which delivery of production vehicles will begin in Q1 2019.
In the recent past, the company is rapidly reaching multiple significant milestones, and 2018 was a monumental year for Electra Meccanica in many ways, most notably that the company has built a very strong foundation for future success. With its high-volume manufacturing facility now online, combined with a solid balance sheet, Electra is on track to accelerate deliveries of SOLO’s, with an incredibly strong pre-order queue of over 64,000 units representing $2.4 billion in potential sales, there remains a massive market to address as the company scale vehicle production with its strategic manufacturing partner.
The company’ business profile is at a critical inflection point as SOLO ramps up operations to provide its valued pre-order customers with superior driving experience and while executing upon its strategic objectives at the same time.
On Feb 13th, 2019, the company hosted a virtual roadshow webinar highlighting its Key recent achievements and milestones:
- Pre-order book in excess of CAD 2.4 Billion and growing as of October 22, 2018, and this has been accomplished with limited marketing and promotion to date
- Sales and marketing rollout scheduled for Q1 2019
- Electra Meccanica’s flagship vehicle is the SOLO, a single-seat EV with a 100-mile range, starting at $15,500
- The Company acquired Intermeccanica in 2017, a widely-respected custom automotive manufacturer, leveraging its 60 years of automotive innovation and tradition in the development of its new EVs.
- In 2018, the Company produced over 40 SOLO vehicles at its first manufacturing facility in Vancouver, BC and delivered them to customers in the United States and Canada. These vehicles were delivered to paying customers and potential customers in efforts to conduct pilot tests for commercial use, as well as for use in Global Compliance testing, such as crash tests.
- In December 2018, Electra received the first two 2019 SOLO EVs from Zongshen, the company’ strategic manufacturing partner, which will be used for testing, with an additional 48 SOLO EVs to be delivered to pre-order customers in Q1 2019.
- The company expects its daily production rate to ramp considerably over the course of 2019 to deliver a total of 5,000 vehicles by year-end.
- SOLO has over 23,000 SOLO EV preorders (and growing), and hundreds of test drive requests are hugely encouraging.
- The company’ business risk profile is expected to benefit from the scale production with its strategic manufacturing partner Zongshen to deliver the initial SOLO single-seat EVs to its customers – targeting 5,000 in total by year-end 2019 and 20,000 in 2020.
- Completed $8.5M offering in November to raise proceeds to further the design and development of the Tofino
- Development of the Tofino two-seat electric sports car, for which the company has over 41,000 reservations, is well underway in SOLO’ Canadian facilities alongside its strategic design, engineering and production partners.
- The company expects to deliver its first pre-production car in late 2019 with initial customer deliveries to follow in 2020. We have several other exciting product concepts that we look forward to sharing once Tofino development has reached a more advanced stage.
- California’s EV market grew to roughly 450,000 vehicles in 2018 with a looming state mandate of 5 million zero-emission vehicles on the road by 2030. More than 100 plug-in models are projected to be available by 2022 as auto manufacturers continue to announce more affordable and practical EV options (source: greencarcongress.com)
- Industry-leading contract manufacturing partner reduces production risk, accelerates production timeline and notably minimizes capital expenditures
- Electra’ timing in entering this exciting new market could not have been better. The automotive industry is undergoing transformational changes throughout, with legacy automakers being disrupted by new EV entrants who are uniquely providing aspirational electric vehicles that consumers actually want to purchase.
- Electra’ SOLO EV is perhaps one of the most unique and distinctive vehicles ever produced. The SOLO addresses key trends by providing a compact, zero-emissions vehicle perfectly suited to the everyday urban commuter at a starting price of just USD$15,500. The vehicle has passed crucial several safety tests with flying colors and is fully certified for sale in the United States.
- In conjunction with its strategic partners, Electra is now much better positioned than ever to address these structural changes to the automotive market. In October, the company opened its first dealership in the ideal launch market, Los Angeles, California. Now that volume production is underway with its strategic manufacturing partner and the company have the infrastructure in place to distribute SOLO EVs to its consumer and commercial partners –Electra is truly on the road to success.
Upcoming Presentations: The company will commence quarterly earnings conference calls in 2019 to provide its investors with consistent communications regarding its financial and operational progress/breakthroughs. In addition, SOLO will continue to further its dialogue with the investment community worldwide at leading investment conferences, non-deal roadshows and at its “SOLO World” annual general meeting in Vancouver, Canada in 2019.
Abundant liquidity and financial flexibility due to capital/Asset light business model – Electra’s disciplined cash management and robust balance sheet substantially reduces its production and execution risk. The company is now in a stronger position than ever to deliver on its promise of delivering its first production vehicles in the fourth quarter, as well as delivering 5,000 production vehicles by the end of 2019.
About Electra Meccanica Vehicles Corp: Electra Meccanica is a designer and manufacturer of electric vehicles. The Company builds the innovative, all-electric SOLO, a single passenger vehicle developed to revolutionize the way people commute, as well as the Tofino, an elegant high-performance two seater electric roadster sports car. Both vehicles are tuned for the ultimate driving experience while making your commute more efficient, cost-effective and environmentally friendly. Intermeccanica, a subsidiary of Electra Meccanica, has successfully been building high-end specialty cars for 59 years.
Robust Industry outlook driven by rapidly growing EV market:
- About 840,000 EVs are on the road in the United States.
- 2018 sales are continuing the historical momentum; Q1 2018 sales increased 32% as compared to Q1 2017.
- California continues to play an outsized role in growing the electric vehicle market in the United States; generating approximately half of EV sales in the U.S. market in 2017
- Electric vehicles emit 54% less carbon dioxide per mile than the average new gasoline car and offer notably lower operating costs, based on U.S. EPA national electricity generation data.
- The cost of the battery is the primary driver of the higher up-front cost of EVs as compared to legacy ICE (internal combustion engine) vehicles – and this cost is rapidly dropping.
- Bloomberg New Energy Finance estimates that EV batteries cost an average of $273/kWh in 2016, as compared to $1,000/kWh in 2010.
Strong Competitive Advantage – Peer comparison:
Financial results: Revenue and Gross Margin
Total revenue for the three months ended September 30, 2018, was CAD$190k, compared with negligible revenue in the corresponding quarter ended September 30, 2017. The increase in revenue was due to the acquisition of Intermeccanica International Inc.
Operating loss for the three months ended September 30, 2018, increased to CAD$3.9 million, compared to an operating loss of $2.2 million in the corresponding quarter ended September 30, 2017.
Net loss for the three months ended September 30, 2018, was CAD$2.9 million, compared to CAD$3.0 million in the corresponding quarter ended September 30, 2017.
Liquidity: Cash and cash equivalents and short-term deposits were CAD$12.1 million as of September 30, 2018, compared with CAD$3.5 million as of September 30, 2017. Subsequent to the close of the third quarter, the Company completed an USD$8.5 million registered direct offering.
Risk Factors & Stock Influences:
- Growth in cash generation and the company’ ability to maintain liquidity/financial flexibility to support its ongoing and upcoming ventures.
- Company’ upcoming performance especially with Solo and Tofino that is likely to provide growth in 2H19
- The overall performance of the economy and the impact of the impact of the US-China trade dispute.
- Company’ performance in several of its key markets in 2019 will set the stage for the next phase of SOLO’s growth in corporate evolution.
- The company operates in a rapidly changing fast paced industry. Therefore, it must continue to launch, innovate and enhance products to maintain its substantial market share.
- On Wednesday, Feb 13th, 2019, SOLO closed at $4.33 (up by over 223%), with a robust volume of 40 million shares exchanging hands. Market capitalization is $140.137 million. The current RSI is 91.87
- In the past 52 weeks, shares of SOLO have traded as low as $0.90 and as high as $7.48
- At $4.43, shares of SOLO are trading above its 50-day moving average (MA) at $1.32 and above its 200-day moving average (MA) at $3.79
- The present support and resistance levels for the stock are at $6.28 & $2.48 respectively.
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