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ElectraMeccanica aiming to create a fun driving experience that is efficient, cost-effective and environmentally friendly

Snapshot

The firm is developing the all-electric SOLO, a single passenger vehicle, as well as the Tofino, a high-performance two seater electric roadster sports car

ElectraMeccanica -

Quick facts: ElectraMeccanica

Price: 2.51 USD

NASDAQ:SOLO
Market: NASDAQ
Market Cap: $160.94 m
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  • Designer and manufacturer of electric vehicles
  • All-electric SOLO is a three-wheeled single-passenger car
  • Also developing the Tofino, a two seater electric roadster sports car

What ElectraMeccanica does:

ElectraMeccanica Vehicles Corp (NASDAQ:SOLO) is a designer and manufacturer of electric vehicles established in 2015. Its subsidiary, Intermeccanica - a custom coach builder founded in Italy - has successfully been building high-end specialty cars for 60 years, including the Roadster, a replica of the 1959 Porsche 356 convertible.

ElectraMeccanica’s goal is to revolutionize the way people commute, aiming to create a fun driving experience that is efficient, cost-effective and environmentally friendly.

The Vancouver-based firm is developing the innovative, all-electric SOLO, a single passenger vehicle, as well as the Tofino, a high-performance two-seater electric roadster sports car.

The SOLO is a three-wheeled single-passenger car that boasts a top range of 100 miles and speeds of 82 miles per hour on a 17.3-kilowatt hour battery pack and sells for $16,250 – around half the price of a Tesla.

The vehicle was included in a Forbes list of the “coolest new cars” for 2020, amongst names like Aston Martin, Cadillac and Tesla.

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 October 2017, Electra Meccanica signed a manufacturing agreement with Zongshen, China’s largest manufacturer of motorcycles and motorcycle engines, which reduces the Canadian firm’s risk and the need for capital expenditure. Zongshen owns 10.6% of Electra Meccanica common stock.

The Chinese manufacturer has already constructed the SOLO manufacturing line and is contracted to produce 75,000 vehicles over a three-year period..

How is it doing:

In March this year, ElectraMeccanica said it had ended 2019 with C$11.1 million in cash and cash equivalents as the manufacturer prepares to roll out its flagship SOLO electric vehicle.

The Vancouver-based firm's 2019 results saw it pulled in fourth-quarter revenue of C$0.3 million, compared to C$0.1 million in the same quarter a year ag. Overall revenue in 2019 was C$0.8 million, compared with C$0.8 million in 2018.

The company is currently preparing for a mid-year 2020 deployment of SOLO with a strategic launch in the Los Angeles market first, followed by other west coast cities later in the year.

In April, the group unveiled the design of a new high-strength, cost-effective aluminium chassis for the SOLO EV. The aluminium chassis — the vehicle’s metal skeletal framework — will replace the company’s current composite version, making it better suited for mass production by reducing both its weight and per-unit assembly cost.

ElectraMeccanica also said it had hired a tier-one engineering partner with a global presence, which will provide the company with on-the-ground support in the US and Canada.

Later in the same month, the company announced that it had forged an agreement with retail property giant Unibail-Rodamco-Westfield (URW) to extend its lease on an existing outlet to sell SOLO electric vehicle in California, while also tacking on a new outlet in the same state.

The firm said that, “based on initial success,” it will not only extend the lease on the current storefront located at Westfield Century City, in Los Angeles, but open another storefront in “the second half of 2020” at Westfield Fashion Square, an upscale shopping center in Sherman Oaks, California.

In May, the company revealed it had begun development of a new smartphone app that it says will enable remote monitoring capabilities for SOLO owners.

The app will be available with the launch of the production vehicle and both Apple iOS and Android versions will provide owners with a connected vehicle experience, enabling remote monitoring of the vehicle status. Features will incorporate the capability to determine whether the vehicle is plugged in and connected, the battery state of charge, and length of time to completion of charge.

Inflexion points:

  • Initiation of volume production at Zongshen
  • Potential distribution partnerships
  • Opening of additional retail dealership locations

What the boss says:

“2019 was a metamorphic year for ElectraMeccanica as we laid the groundwork for the launch of our flagship, single-occupant SOLO EV,” said CEO Paul Rivera in a statement accompanying the group's fourth-quarter results for 2019.

“Since joining as CEO in August 2019, our entire team has been focused on a reboot and execution, moving the company from a concept to one that is in commercial production of the most efficient, trend-setting vehicle to move a single occupant. As part of this endeavor, we’ve re-engineered significant safety, comfort and design enhancements that are being implemented into the production-ready SOLO.”

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What the broker says:

Roth Capital Partners set a price target of US$7.50 on ElectraMeccanica shares after the 2Q financials came in ahead of its analyst’s estimates.

The research firm noted that initiating production at the firm’s Zongshen, China manufacturing facility would be a key catalyst for the company going forward.

“We do not view quarterly financial results as particularly meaningful at this pre-ramp stage and would view initiation of volume production at Zongshen as a more significant catalyst,” analyst Craig Irwin wrote in a note.

Other catalysts that Roth expects to drive the share price include updates to pre-order numbers, potential distribution partnerships and the opening of additional retail dealership locations.

ElectraMeccanica shares trade at around US$2.34, giving the Nasdaq-listed firm a market cap of around $89 million.

The company raised $10 million in August 2018 via a public offering of 2.353 million units consisting of one common shares at $4.25 per share and two warrants, exercisable at $4.25 per unit.

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