ElectraMeccanica Vehicles Corp Continues Ongoing Transformation

There are dozens of electric vehicle (EV) companies competing for attention, capital, and market share, but when it comes to EVs that are geared for commuting, errands, and last-mile deliveries, ElectraMeccanica Vehicles Corp (NASDAQ:SOLO) is the go-to company.

According to the company, it's not competing with traditional car manufacturers. Instead, it's "competing with the idea that a car is always necessary, and that a scooter or a motorcycle is the only alternative to a car." (Source: “Investor Letter,” ElectraMeccanica Vehicles Corp, August 11, 2022.)

Drivers spend much of their time in their cars on relatively short trips without passengers. ElectraMeccanica contends that, for many everyday activities, we don’t need a 250-horsepower, 15-foot, two-ton, 150-cubic-foot-capacity vehicle that can go 120 miles per hour.

The company’s flagship vehicle, the "SOLO," addresses this reality. It’s a purpose-built single-seat EV that looks cool and is attractively priced.

The total cost of a SOLO vehicle is considerably less than that of its peers. The total expense for a SOLO is $38,033 (base price of $18,500 plus a total cost to own of $19,533). (Source: “Investor Presentation: August 2022,” ElectraMeccanica Vehicles Corp, last accessed August 18, 2022.)

The total expense for a "Mini Cooper SE" is $52,467 (40.7% higher than a SOLO). It's $65,449 for a "Nissan Leaf EV" (75.5% higher than a SOLO), $37,609 for a "Chevy Bolt" (91.3% higher than a SOLO), and $74,190 for a "Tesla Model 3" (99.0% higher than a SOLO).

Moreover, if you believe the hype, the Solo is fun to drive.

A Business Insider writer had this to say about it: “This adorable, attention-getting vehicle is ideal for city living. I’ve never had so many people ask me about a vehicle before, and I've driven around Manhattan in Ferraris, Lamborghinis, and Rolls Royces." (Source: “Home Page,” ElectraMeccanica Vehicles Corp, last accessed August 18, 2022.)

ElectraMeccanica Vehicles Corp began deliveries of its EVs to individual customers and fleet operators in October 2021.

Arizona Facility to Begin Operations in 2022

ElectraMeccanica Vehicles Corp currently has its vehicles manufactured in China by a subsidiary of its strategic partner, Zongshen Industrial Group.

ElectraMeccanica will soon be building the SOLO in the U.S., though. In May, it received its occupancy certificate and broke ground on an assembly facility in Phoenix, AZ.

The 235,000-square-foot facility, which will be adjacent to the Phoenix-Mesa Gateway airport, will include an assembly and manufacturing plant, a research center, office space, and lab space.

Once the Phoenix plant is operational, ElectraMeccanica Vehicles Corp will have a production capacity of up to 20,000 vehicles per year and will employ upwards of 200 to 500 people. While it will take some time to complete the buildout and meaningfully ramp production of the SOLO, the company is on track to build its first vehicles in this facility by the end of this year.

In addition to the SOLO, ElectraMeccanica has two other cars in development: the "Tofino" and the "eRoadster."

The Tofino is a sporty two-door convertible with a manufacturer's suggested retail price of $50,000. The Tofino isn't yet available, but the company has been taking pre-orders.

The eRoadster is the company's top-end vehicle. It’s an iconic, two-door convertible replica of the "Porsche 356." ElectraMeccanica has been taking pre-orders for the eRoadster with a manufacturer's suggested retail price of $150,000.

Solid Q2 Results & Balance Sheet

ElectraMeccanica Vehicles Corp announced second-quarter revenue of $1.5 million, up by 420% from the $298,796 recorded in the same period of last year. (Source: ElectraMeccanica Vehicles Corp, August 11, 2022, op. cit.)

During the second quarter of 2022, the company manufactured 193 SOLOs, up by nearly 700% year-over-year and up by 13.5% sequentially. It also delivered 68 SOLO vehicles, a 51% increase sequentially.

ElectraMeccanica Vehicles Corp reported a second-quarter 2022 net loss of $20.3 million, or $0.17 per share. That's up from a second-quarter 2021 net loss of $11.4 million, or $0.10 per share. The company still ended the second quarter of 2022 with a healthy balance sheet of just over $195.0 million.

Increased SOLO sales and deliveries, coupled with ElectraMeccanica Vehicles Corp's new U.S. manufacturing facility, have been helping juice investor optimism about SOLO stock.

Analysts' average 12-month price target for ElectraMeccanica stock is $7.50, which points to potential gains of 331%.

It's nice to see Wall Street bullish on SOLO stock, especially when you consider that the stock hasn’t exactly been doing well over the past year, down by 20% year-to-date and 47% year-over-year.

That said, recent developments have helped fuel ElectraMeccanica stock's near-term gains. SOLO stock is up by 34% over the last month and 20% over the last three months.

Chart courtesy of StockCharts.com

Analyst Take

Timing is everything with stocks, and things are falling into place nicely for ElectraMeccanica stock. Despite an exceptionally challenging economic climate, ElectraMeccanica Vehicles Corp increased its production, deliveries, and revenues during the second quarter.

During the first half of this year, the company delivered 113 vehicles, and that pace continues to gain momentum. ElectraMeccanica expects to start producing EVs at its U.S. manufacturing facility at the end of this year, which will provide the company with an increased capacity and a domestic base of operations.