Proterra Inc: Undervalued EV Play Could Soar 150%

With 50% Market Share, Outlook for PTRA Stock is Bullish

When it comes to electric vehicle (EV) stocks, most people gravitate toward flashy names like Tesla Inc (NASDAQ:TSLA) and Lucid Group Inc (NASDAQ:LCID). But those EV stocks have already made huge gains over the past year.

Investors who are looking for untapped gains from an EV stock over the coming quarters might want to consider the far less ostentatious Proterra Inc (NASDAQ:PTRA).

An electric transit bus maker, Proterra isn’t as glamorous as Tesla or Lucid. On the other hand, many people use public transit, and more and more municipalities and businesses are looking to electrify their infrastructure.

Better yet, Proterra Inc doesn’t really have any competition in its field.

With 5,000 to 6,000 transit buses sold every year in North America, Proterra has an excellent chance to become the name in EV buses. They might not be as exciting as gull-winged Teslas, but Proterra’s electric buses might be a better opportunity for growth investors.

Proterra has more than 130 customers in 43 U.S. states and Canadian provinces. (Source: “Our Story,” Proterra Inc, last accessed January 19, 2022.)

Proterra’s customers include Duke University, Greater Portland Metro, JFK International Airport, LaGuardia Airport, Miami-Dade County, Toronto Transit Commission, and the National Park Service. (Source: “Our Customers,” Proterra Inc, last accessed January 19, 2022.)

The company’s three main business units are Proterra Powered, Proterra Energy, and Proterra Transit.

Through Proterra Powered, the company designs and develops battery systems and electrification solutions for customers in the Class 3 to Class 8 vehicle segment. That includes delivery trucks, school buses, coach buses, construction equipment, and mining equipment.

Proterra Energy provides fleet and energy management software as a service (SaaS), fleet planning, hardware, infrastructure, installation, utility engagement, and charging optimization.

Through Proterra Transit, the company has placed more than 750 EVs on the road, delivering 20 million cumulative service miles. This has given the company an over-50% market share.

Wall Street analysts are bullish on Proterra Inc’s outlook. Their average 12-month price target for Proterra stock is roughly $16.00, with a high estimate of $24.75. That points to potential upside of 60% to 150% for PTRA stock.

Plans for New Battery Plant

Proterra Inc currently has two battery facilities with an annual capacity of about one gigawatt hour, which is enough to make a few thousand EVs.

But in December 2021, it announced plans to build a third and larger battery facility in South Carolina to meet the soaring demand for commercial EVs. (Source: “Proterra Announces EV Battery Factory in South Carolina as Demand for Commercial Electric Vehicles Grows,” Proterra Inc, December 14, 2021.)

The new 327,000-square-foot facility is expected to open in the second half of 2022, with multiple gigawatt hours of annual production capacity.

Strategically located on the east coast, the new battery system manufacturing facility is near the company’s electric bus manufacturing facility, Proterra Powered’s customers, and Proterra Transit’s electric bus manufacturing operations.

Proterra Inc’s new battery plant will certainly help increase the number of electric buses the company can deliver.

Proterra Inc Inks New Electric Bus Deals in U.S. & Europe

On November 10, 2021, Proterra expanded its partnership with Lightning eMotors Inc (NYSE:ZEV) to power up to 10,000 commercial EVs between 2022 and 2025. (Source: “Proterra to Supply Battery Technology for Up to 10,000 Lightning eMotors Electric Commercial Vehicles,” Proterra Inc, November 10, 2021.)

Also in November 2021, Proterra announced a new collaboration to power Anadolu Isuzu’s all-electric “Citi VOLT” public transit buses in Europe. Proterra’s battery system will enable a driving range of 200 to 405 km (125 to 251 miles) on a single charge. (Source: “Anadolu Isuzu and Proterra Announce Collaboration for Next-Generation Citi VOLT Battery-Electric Buses in Europe,” Proterra Inc, November 16, 2021.)

On January 13, 2022, Proterra announced a collaboration to provide Vicinity Motor Corp (NASDAQ:VEV) with battery systems to power a minimum of 600 electric transit buses and work trucks through 2024. Production is expected to begin in the third quarter of 2022. (Source: “Proterra Battery Technology to Power Vicinity Motor Corp. Electric Transit Buses and Work Trucks,” Proterra Inc, January 13, 2022.)

Fabulous Q3 Results

For the third quarter ended September 30, 2021, Proterra’s revenue grew by 30% year-over-year to $62.0 million. (Source: “Q3 2021 Quarterly Letter,” Proterra Inc, November 10, 2021.)

Its battery production increased by 95% from 32 to 62 megawatt hours.

Proterra Powered’s deliveries jumped by 144% year-over-year to 78 vehicles, Proterra Transit’s deliveries grew by 58% to 52 electric transit buses, and Proterra Energy installed 3 megawatts of charging infrastructure.

For the full year of 2021, Proterra Inc reiterated its revenue guidance of $246.0 million.

Analyst Take

Proterra Inc is a leader in zero-emission electric transit vehicles.

With its electric school buses, delivery trucks, coach buses, and shuttle buses, Proterra is already competing with global automakers. And with the development of its third electric battery facility, the company is about to get bigger.

Like the broader EV industry, Proterra is still in its infancy. That said, the company already has a 50% market share and little competition, which positions the company (and Proterra stock) for sustained long-term growth.