Will This $4 Stock Change the Future of Electric Cars?

ElectraMeccanica Vehicles Corp Is an EV Stock You Likely Haven’t Considered

Whether you like electric vehicles (EV) or not, it’s hard to deny that the industry has become an investor favorite. It wasn’t that long ago that Tesla Inc (NASDAQ:TSLA) stock was trading at around $200.00 apiece. Now it’s over $1,300.

But not all EV stocks command such impressive price tags. For instance, there is a company called ElectraMeccanica Vehicles Corp (NASDAQ:SOLO) that trades at just over $4.00 per share, but it could be about to do something big.

Headquartered in Vancouver, British Columbia, ElectraMeccanica is a Canadian company that designs and builds electric vehicles. Its flagship is a single-seat, three-wheeled EV named the “SOLO.”

Now, you are probably wondering why the company would make a single-seater. Well, the idea is that, in North America, 199 million people commute using personal vehicles every day, and 105 million of them commute alone. (Source: “Solo, Your +1,” ElectraMeccanica Vehicles Corp, last accessed July 8, 2020.)

ElectraMeccanica’s single-seater EV is substantially smaller than a regular coupe or sedan, making it much easier to navigate through traffic and find parking spots. In some areas, it also allows the driver to use high-occupancy vehicle (HOV) lanes.

Moreover, smaller cars usually cost less to build than bigger cars. And because the SOLO is a very small car, ElectraMeccanica has priced it very competitively.

The SOLO has a base manufacturer’s suggested retail price (MSRP) of $18,500. As the table below shows, that’s substantially less expensive than the other compact electric cars on the market.

(Source: “Investor Presentation July 2020,” ElectraMeccanica Vehicles Corp, last accessed July 8, 2020.)

Another reason why the company can offer such competitive pricing is its strategic partnership with Zongshen Industrial Group in Chongqing, China. Zongshen is one of the largest manufacturers of motorcycles and three-wheeled vehicles in China, producing more than two million units annually.

Automobile manufacturing is known for being a capital-intensive industry. By having a contract manufacturing partner, ElectraMeccanica can keep the cost of the SOLO down.

And even though the SOLO is inexpensive, it does not skimp on amenities. The EV is equipped with an LCD digital instrument cluster, remote keyless entry, power windows, power mirrors, AM/FM/Bluetooth/USB, air conditioning, optional heated seat, rearview camera, power steering, and power brakes.

When it comes to powertrain, the SOLO has a 60-horsepower liquid-cooled motor that produces 103 foot-pounds of torque. The car uses a 17.3-kilowatt hour nickel cobalt aluminum oxide (NCA) liquid-cooled battery and can deliver a range of up to 100 miles. The SOLO can accelerate from zero to 60 miles an hour in around 10 seconds and will reach a top speed of 80 miles per hour.

These figures are not particularly impressive compared to other EVs. However, considering that the SOLO is geared toward urban commuters—and that it is attractively priced—this powertrain should be enough for its target audience.

Speaking of target audience, ElectraMeccanica Vehicles Corp has chosen Los Angeles as the location for the launch of the SOLO. This is because the city has 4.6 million commuters with an average 30-minute commute, making it an ideal market for the three-wheeled EV.

The company runs a SOLO EV storefront at Westfield Century City in Los Angeles and has a location under contract at Westfield Fashion Square, a premier shopping mall in Sherman Oaks. (Source: “ElectraMeccanica Responds to Economic Re-Opening with Planned Retail Expansion of its Flagship SOLO EV into Arizona and Oregon,” ElectraMeccanica Vehicles Corp, June 16, 2020.)

In June, the company announced an expansion of its retail footprint, with plans to open new locations in Arizona and Oregon.

“To continue to build awareness and meet consumer demand, we are pleased to announce that we are accelerating our expansion into key markets – Arizona and Oregon – by bringing our SOLO EV to Macerich’s upscale Scottsdale Fashion Square and next, Portland,” said the company’s Chief Executive Officer Paul Rivera.

“Our updated plan to open new direct-to-consumer retail locations at high-traffic retail centers in EV-friendly cities provides a unique opportunity for potential customers to learn more about ElectraMeccanica and the SOLO,” he added. (Source: Ibid.)

Analyst Take

At the time of this writing, ElectraMeccanica Vehicles Corp has a stock price of $4.15 and a market capitalization of more than $250.0 million.

Once production of the SOLO starts and the sales begin rolling in, this penny stock could get a lot more investor attention.