Single-seat EVs will help businesses cut costs: ElectraMeccanica CFO

Reporting by Arjun Vijay

It’s a weekend and you are about to grab a cup of coffee with friends. But neither do you want to ride the bike in the hot sun, nor are you interested in scouting for parking space. ElectraMeccanica (NASDAQ: SOLO), an automaker based out of Vancouver, aims to carve a niche market out of this very pain point.

The company had recently unveiled Solo, a tiny electric car that focuses on efficiency over space. With its single-seat EV that runs on three wheels, ElectraMeccanics plans to become a pioneer in the ultra-compact car space. According to what the company claims, the Solo has a range of 100 miles and a top speed of 80 miles per hour. Being a closed vehicle, riders are also likely to feel safer as compared with a two-wheeler.  

So is it going to replace the two-wheeler market?

Speaking to AlphaStreet at Planet MicroCap virtual event,  ElectraMeccanica CFO Bal Bhullar said the Solo is a custom-built product for consumers who are looking for an economical single-drive option, as well as for businesses with specific transportation requirements such as delivery services.  A slew of features – including Bluetooth, air conditioning, heated seats, and traction control – have been incorporated into the vehicle, keeping in view the specific requirements of the market.

 “We have created a niche market that offers businesses a lower cost of vehicle ownership. For example, if they have a fleet of some of the other EVs that are out there, they are going to be significantly more expensive than the Solo over a five-year timeframe,” Bal said.

A crowding ultra-compact car space

Beyond any reasonable doubts, ElectraMeccanica operates in a market that is garnering a lot of global interest. Both in the US and abroad, numerous companies are creating prototypes of vehicles that are suitable for single or dual passengers. Even large automakers such as Toyota are preparing prototypes of ultra-small electric cars, highlighting the prospects it offers to early adopters.

Despite the availability of other three-wheeled vehicles in the global market, Bal insists that Solo stands out due to its features and safety standards at a pocket-friendly price tag of $18,500.

Last month, ElectraMeccanica announced its decision to open an assembly plant in Arizona, which will work alongside its factory in China to roll out the initial set of Solo cars. The facility, which could take a year for completion, is aimed to cater to the North American market while the Chinese factory would service more of Southeast Asia and Europe. Apart from helping achieve the “American-made” status, the Arizona facility would also significantly mitigate political and supply chain risks, the executive added.

Direct-to-consumer model

The Vancouver-based company has ditched the widely-followed dealership distribution model for a direct-to-consumer one. To showcase the vehicle and to build awareness, the company has opened 11 kiosks in California, Arizona, and Oregon, with plans to expand into Washington and Colorado.  

The company is yet to start the commercial sales of Solo. Meanwhile, customers can pre-book the vehicle through the website by paying $250.   

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“This current production model of Solo is strictly for the US market. We are looking at the next evolution of the Solo, which will be the global vehicle that would cater to the entire North American market, Asia and Europe,” Bal said. The CFO added that the company is expecting breakeven margins from the production model, as creating brand recognition takes a higher priority for the short term. The company would start looking at higher gross margins with the launch of the global version.

SOLO stock has been performing on par with its EV rivals over the past year, tripling in valuation to a little above $4. Meanwhile, the stock’s 12-month average price target is more than double its trading price on April 22, suggesting plenty of upside. If ElectraMeccanica manages to deliver on its promises, SOLO stock could be a major winner.

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