A $15 Billion Electric Vehicle Niche Is Flying Under Wall Street’s Radar

FN Media Group Presents Oilprice.com Market Commentary

LONDON, Aug. 3, 2023 /PRNewswire/ — The EV industry is simultaneously a wildly rewarding and wildly risky ride for investors. EV manufacturers are now struggling to stay profitable unless they are Tesla or China’s biggest players. Companies mentioned in this release include: Stellantis N.V. (NYSE: STLA), Li Auto Inc. (NASDAQ: LI), Nio Inc (NYSE: NIO), BlueBird (NYSE: BLBD), General Motors Company (NYSE: GM).

In 2022, we saw overall car sales plummet by 8%, but at the same time, EV sales soared by 65%, according to Kelley Blue Book. Still, despite the fact that electric vehicles are now the clear future, growing pains, cash burn and a brutal price war have rendered this a snake pit for investors. 

While EV sales are set for a 35% year-on-year increase in 2023, bolstered by national policies and incentives providing further impetus for producers and consumers, some companies are dealing with missed deadlines, lagging production and serious fiscal problems, including bankruptcy. 

The over-crowded, brutally competitive EV car space is now undergoing a price war that many won’t survive. But this isn’t the only EV segment investors should be looking at. There is another $15-billion opportunity in this space, and it means going off-road. 

Prime Time for Electrifying the Waterways

Now, the EV revolution is unfolding on the waterways, but the lessons of the crowded roadways have been learned. This time, it’s not about cash burn. It’s smarter, if you know where to look. 

The recreational boat market is worth nearly $19 billion today, and it’s projected to reach nearly $26 billion by 2028—in just four-and-a-half years. That’s an astounding growth rate, and it’s all because of a push to go electric, including the adoption of emissions-free transportation and government policies that are hyper-advantageous to this segment. 

The smart and first-mover advantage goes to Vision Marine Technologies (VMAR), with its proprietary E-Motion powertrain outboard motor that can turn any speedboat into the fastest electric version in its class on the market.

The cash-burn is not there because VMAR is selling directly to OEMs (original equipment manufacturers). It’s not trying to build boats. It’s making smart partnerships with battery makers and engineers and tapping into a boat-building market that has to do only one thing to make this viral: Fit an award-winning electric motor on the back, instead of a noisy, polluting and expensively maintained gasoline-powered outboard. 

The Electric Boat Motor That Changes Everything

In partnership with VMAR, veteran boat maker Four Winns unveiled the new H2e Bowrider speed boat at the Paris Boat Show in December, and then made its official debut in February in Miami, with deliveries to start this summer. 

The speedboat showcases VMAR’s E-Motion 180 HP electric outboard motor with proprietary powertrain technology. That motor makes the H2e Bowrider the first all-electric series production bowrider on the market. And VMAR’s E-Motion is the first fully electric, production-ready, high-performance 180 HP outboard motor on the market, as well.

The powertrain can provide a consistent 180 HP of pure electric power, with cutting-edge high voltage power when you need it most, and a completely scalable power bank. The proprietary technology is end-to-end: It includes the batteries, the engine, and the software, making it the only turn-key solution for boat manufacturers in its class. 

The E-Motion outboard motor can fully charge overnight with no additional infrastructure and boasts the highest horsepower engine in its class. And from a price perspective, it out-competes everyone else, which should help it to capture new market share. 

This month, Vision Marine (VMAR) is busy equipping a pontoon with electric propulsion and solar panels for the longest known electric boat run in America (and possibly in the world). VMAR’s Zenith pontoon with set off in Virginia on a 1,050-nautical-mile journey to Miami, Florida, to showcase the capabilities of sustainable electric power. 

Last September, right out of the gate, VMAR received an initial purchase order from the North America’s Limestone Boat Company for $2 million worth (25 units) of E-Motion 180E outboard motors and powertrain systems. Limestone is now moving into scheduled production, with delivery target to dealers set to begin in 2024. Vision Marine is expecting its first revenues from powertrain this year. 

The $18 Billon Global Boat Rental Market, Ripe for Electrification

The global boat rental market (across all boat types) was valued at $18.2 billion in 2021, and is projected to reach $31.2 billion by 2031, growing at a CAGR of 5.7% from 2022 to 2031. It’s a huge market that is about to go electric. And it’s not just about the environment … Electric boats are considered a better experience all around, from the noise-less enjoyment to the ease of maintenance and lower operating costs in the longer-term. 

VMAR’s flagship Newport Beach business managed to serve 300,000 clients in the first three years, annualizing $4 million in revenues with a 35% profit margin. In March, the company opened its second electric boat rental operation in Portside Ventura Harbor, California. Later this year, VMAR will roll out a third fully owned electric boat rental location and launch their franchise model. Next year is also out scaling up with speed. 

A Brilliant Outlook for Marine Batteries

EV battery maker stocks are soaring, unlike their chaotic car manufacturing counterparts. Just this week, Chinese battery maker CATL reported earnings showing a 63% spike in profits and excellent guidance. 

The same positive fate looks set for the marine battery market, where Vision Marine (VMAR)  boasts proprietary technology that it has quietly been developing for a decade, with certified battery cells and custom designed marine-grade battery packs. It also has a partnership deal with Octillion, which has a production capacity of up to 5,000 batteries per day. 

The EV Boom Is Well Under Way 

Stellantis N.V. (NYSE: STLA) is an automotive conglomerate that was formed in 2021 by the merger of Fiat Chrysler Automobiles and PSA Group. This multinational corporation, which operates 14 different brands, including Jeep, Peugeot, and Maserati, is committed to the development of electric vehicles and has announced that it aims to invest over €30 billion through 2025 in electrification and software development. The company has set ambitious goals, planning to achieve sales of low-emission vehicles of 70% in Europe and 40% in the US by 2030.

Stellantis’s strategy revolves around four electric vehicle platforms designed to cover all market segments, from small city cars to performance vehicles. By leveraging the strengths of its diverse brand portfolio and targeting investment in EV technology, Stellantis aims to capture a significant share of the expanding EV market. As an investor, it’s worth watching Stellantis’ progress in EV adoption and its broader push towards electrification.

Li Auto Inc. (NASDAQ: LI) is a pioneer in the Chinese electric vehicle market. The company’s Li 9 SUV, a plug-in hybrid that can run on electricity and gasoline, has resonated with consumers who have concerns about range anxiety. The vehicle’s success has allowed Li Auto to compete with other Chinese EV startups, including Nio and XPeng.

The company’s focus on Extended-Range Electric Vehicles (EREVs) differentiates it from competitors who are focused on pure electric models. This allows it to cater to a unique customer segment in the Chinese auto market. Li Auto’s sales growth has been impressive and shows that its hybrid approach to EVs is gaining traction.

Nio Inc (NYSE: NIO) has emerged as a prominent player in the EV sector. The Chinese-based automaker has carved a niche for itself in the premium electric vehicle market, with a strong lineup of SUVs and the ET7 luxury sedan. The company’s innovative “Battery as a Service” model and battery swap technology have helped to distinguish Nio from its competitors.

Nio’s business model is about more than just selling cars. It’s focused on providing a lifestyle brand to its users, including Nio Houses that serve as showrooms, lounges, and gathering places for Nio users. The company’s focus on user experience and community sets it apart in a crowded EV market and provides a unique value proposition for customers.

BlueBird (NYSE: BLBD) is a leading designer and manufacturer of school buses. The company’s portfolio includes both conventional combustion engine buses and a growing lineup of electric models. The company has a substantial share of the North American school bus market and is making significant strides in the adoption of electric buses.

BlueBird’s emphasis on producing zero-emission vehicles is a significant part of its growth strategy. The company’s electric buses, with their lower total cost of ownership, are appealing to school districts looking to cut operational costs and reduce their environmental impact.

General Motors Company (NYSE: GM) is a staple in the American automotive industry. They’ve made significant commitments towards an all-electric future, announcing a $27 billion investment plan in electric and autonomous vehicles through 2025, aiming to launch 30 electric models globally. GM’s Ultium battery technology is central to these ambitions, promising high energy capacity and versatile applications across different vehicle designs.

GM’s commitment to electric and autonomous vehicles signals a significant shift for the traditional automaker, laying the groundwork for a sustainable future in the automotive industry. The company’s plans don’t just involve passenger vehicles but extend to commercial vehicles and even electric air taxis, demonstrating an encompassing strategy in electric mobility.

Investors should monitor GM’s ambitious strategies to transform its portfolio and seize a significant portion of the booming EV market. GM’s past performance and experience in the industry provide a strong base for this transition, making it a notable contender in the EV race.

By. Josh Owens

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