Competitive Advantages of EV Stock GreenPower Motor Company (NASDAQ:GP)
GreenPower Motor Company (NASDAQ: GP) manufactures a range of all-electric commercial vehicles for public transit, schools, charter buses, delivery, vanpooling, and shuttles. Their assembly plant is in Porterville, CA and corporate headquarters in Vancouver, Canada.
As a follow-up to my introductory article, GreenPower Motor Company (GP) a High Growth Standout in EV Stocks, this article will focus on what I believe are the strong, competitive advantages that Green Power has in the commercial electric cargo van and shuttle/transit/school bus space. These are distinct advantages that I believe will further accelerate sales and drive share prices higher.
Sales showing a strong ramp for the GreenPower Motor FY 2021 which started in April
For the fiscal year 2020, GreenPower sold a total of 68 vehicles. For the FY 2021 which began in April, they’ve already reported orders for 313 vehicles. These include three orders from California’s Green Commuter, (North America’s largest zero emissions vanpool), totaling 203 EV Stars, 10 all-electric B.E.A.S.T. school buses, and an order for 100 vehicles from ABC Bus Inc. in New York.
Should they continue on this trajectory for the remainder of FY 2021, they’ll have booked sales of over 600 electric buses, shuttles, and cargo/delivery vans. By comparison, Proterra, the largest EV bus manufacturer in the U.S. has sold about 950 vehicles throughout their entire history, according to their web site. And Proterra, (which is privately held), is valued at over $1B based on their last round of funding in August of 2019.
Now, some of these recently-announced orders are spread over a 1-3 year period, and there’s no way of knowing how many additional EV orders GreenPower Motor will book during the second half of FY 2021, but I’m very confident in saying the numbers will be strong…and it all has to do with the competitive advantages GreenPower Motors has.
Click on pics for enlarged slides
Competitive Advantages of GreenPower Motor EVs
First, every commercial EV GreenPower builds is designed from the ground up to be all-electric from day one. By placing the battery and propulsion in optimized locations, GreenPower Motor EVs gain an increase in chassis strength while reducing weight. The weight savings in turn provides longer ranges than most competitors have.
The 40 ft EV 350 transit bus has a range > 200 miles, and even the behemoth EV 550 double decker (pictured top, left) has a range over 175 miles. With the forthcoming addition of wireless charging which GP is working on with Momentum Dynamics, range anxiety will be minimized if not eliminated altogether.
Competitive Advantages from The Big Kahuna, Altoona
(I hear groans). So what’s an Altoona anyway, and why does this give GreenPower a big competitive advantage in the commercial EV space?
I’m referring to the Altoona Bus Research and Testing Center, (named after its location in Altoona, PA), which is funded by the Federal Transit Administration (FTA).
Testing of vehicles at Altoona is extremely rigorous, and includes the areas of maintainability, reliability, safety, performance, structural integrity, energy economy, noise and emissions. It is the gold standard test used by the FTA to determine which EV manufacturers qualify for federal grant money. In fact it’s pretty much the only standard.
And here’s the HUGE competitive advantage for GreenPower:
GreenPower’s flagship model, the EV Star, received a score of 92.2. This is the highest score of any medium or heavy-duty vehicle that has been tested and this includes diesel or any conventional fuel vehicles.
HIGHEST. SCORE. OF. ANY. VEHICLE.(gas or electric). IN. ITS. CLASS.
The EV Star also received a 49 MPGe rating on the UDDS duty cycle and had zero issues with the motor or battery pack during the entire test. Here are the specific results for GreenPower’s flagship EV Star.
Make no mistake, the Altoona test result is game-changing. GreenPower has already seen a spike in sales since April, and that momentum should continue. For buyers who aren’t seeking, or don’t qualify for an FTA grant, the Altoona testing results are still a major consideration when purchasing an EV. Even the FTA notes the bus scores use a numerical system based on a 100-point scale so that buyers can more effectively compare vehicles (see Section A. Executive Summary).
Ryne Shetterly, VP of Sales and Marketing at GreenPower explained:
GreenPower is quickly positioning the EV Star as the only class 4 vehicle that conforms to federal transit standards. From a sales perspective, this is monumental. The EV Star is now the only Zero Emission vehicle in its class that can bid for transit contracts with federal requirements in place which could result in thousands of unit sales over the next few years.
I don’t say a stock is a “table pounding buy” very often. I’m not a big fan of hyperbole and respect my subscribers’ ability to come to their own conclusions. But in this case I’m going to say GreenPower Motor Company is a table pounding buy right now.
GreenPower will have 1st Mover Advantages in autonomous transit vehicles
As I wrote in my initial article on GreenPower, the Company is working with Perrone Robotics and the Jacksonville Transit Authority to launch “the nation’s first public transportation network powered by autonomous vehicles”, by the end of this year, using the EV Star. Autonomous electric vehicles are coming, and GreenPower is ahead of the curve.
So here’s some simple math: EV Star’s #1 Altoona bus rating of all vehicles in its class + EV Star’s use in launching the nations first public, autonomous vehicle transport network = more recognition, more sales and higher share prices.
Investors should also keep in mind the fact that GreenPower Motor has been building commercial EVs since 2014, establishing all-important relationships and channel sales networks with multiple sellers and with technology partners like Perrone Robotics and Momentum Dynamics.
Meanwhile, battery technology has improved to the point that rapid adoption of EVs in commercial fleets is upon us. Commercial EVs are projected to have a compound annual growth rate as high as 32.7%, and electric buses will comprise 67% of the global bus fleet by 2040 according to this year’s BloombergNEF summary.
GreenPower Motor is perfectly positioned to capitalize on that growth.
Other competitive advantages GreenPower Motor has include a $37M cash induction from the recent IPO, allowing the Company to ramp production.
“GreenPower intends to use the net proceeds from this offering for the production of all-electric vehicles, including EV Stars, EV Star plus, EV Star cab and chassis, and B.E.A.S.T. school buses, EV250 thirty foot low floor transit style buses, product development and geographic expansion with the remainder, if any, for working capital.”
GreenPower’s management team has extensive experience and a track record of success in launching new EV lines at BYD, Thor Trucks, CCW and others. For example, Brendan Riley, President, was North American Vice-President of Fleet Sales for BYD Motors and secured the largest privately funded electric bus contract in North America two years in a row.
Analyst Coverage
There are currently 4 analysts following GreenPower, all with a BUY rating. The median price target is $24.50. On the high end is Roth Capital, who recently increased their target to $31.
Now that the stock is trading on NASDAQ, and with the recent Altoona bus scores as well as a ramp in recently announced sales contracts, I expect additional analysts to begin covering GreenPower in the near term.
Summary
To gain outsized returns when investing in emerging cleantech stocks like EVs, a company’s competitive advantages are often the difference between a strikeout and a grand slam.
GreenPower has an undeniable competitive advantage with their EV Star after the model scored best in class at the Altoona bus test. That advantage is being realized now, as there’s been a surge in new orders for the EV Star since the results were made public. And with the EV Star’s use “in the nation’s first public transportation network powered by autonomous vehicles”, more press, more exposure, and more sales will undoubtedly follow.
Strength of management and cash position from the August IPO round out the strong competitive advantages I believe GreenPower has in the rapidly emerging commercial EV space.
Best wishes for profitable investing!
Disclosure
I am long shares of GreenPower Motor Company (GP) and have a 6-12 month price target of $25. I have not been paid by GreenPower Motor Company or any third party for this article.
Gary Anderson
Publisher
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