Electrification is big business.
Electric vehicle (EV) stalwart Tesla has only been profitable for a fraction of its existence, and this year marked the first in the company’s 17 year history that its strung together four (and later five) consecutive positive quarters. Yet it will be added to the S&P 500 this month, standing alongside some companies that have raked in profits for generations.
Battery electric is the “it” thing right now, and Tesla is king.
There are billions – billions – of dollars up for grabs as investors chase the kind of gains that Tesla has delivered to its early shareholders. If you pumped money into Tesla early for around $30, you’re probably reading this post from your hammock in Fiji right now.
That kind of promise has drawn would-be EV competitors out of the woodwork.
Most notable, Nikola Motors went from nascent EV player to 2020’s darling of the NASDAQ almost overnight. It was briefly more valuable than Ford Motor Company before crashing back to reality nearly as quickly as it rose.
Just in the last few years we’ve had numerous companies set their sights on electrified trucking, chasing zero emissions and maximum returns. Legacy manufacturers are part of this pool, which also includes Tesla (calling Tesla a legacy almost feels dirty, but I think it’s accurate), but the EV battlefield is mostly populated with startups looking to cash in on technologies and solutions that seem incrementally better than the ones released yesterday.
Lion electric early last year pulled its electric heavy truck into ATA‘s Technology & Maintenance Council (TMC) Annual Meeting in Atlanta. The company also plans to make a run at the New York Stock Exchange (NYSE) via merger with special purpose acquisition company (SPAC) Northern Genesis Acquisition Corp. Nikola also took the SPAC route to the NASDAQ. Upstarts Arrival, Canoo, Fisker and Lordstown Motors have all announced similar deals, with the last two already having benefited from Wall Street’s thirst for the crowning of the news EV emperor.
Arrival’s deal has yet to close, but its SPAC (CIIG Merger) is currently enjoying a value pop in the meantime. Ditto for Hennessy Capital, the SPAC destined to become Canoo.
Having just announced its release today, Canoo’s electric commercial delivery van isn’t even available yet. With an anticipated sticker price of approximately $33,000, the van is based on the company’s skateboard platform.
Most electric upstarts are targeting the final mile for their entry into trucking for a few reasons. Commercial orders tend to be more predictable and transportation emissions are under siege. Two, the mileage range and payload involved are a lot lower, in turn lowering the bar to clear for battery power. Three, I don’t think a lot tech investors fully understand how OTR freight flows from Point A to Point B but can wrap their mind around a box leaving an Amazon distribution center and landing on a porch a few hours later. If you can attach yourself to Amazon, you get instant street cred.
Lastly, I think there’s more design flexibility in this space and you can’t underestimate the appeal of looking cool.
There’s a scene in the first Karate Kid movie where Daniel asks Mr. Miyagi to teach him the more sophisticated crane technique, despite that Daniel has yet to master even the basics of karate. Mr. Miyagi responds, “First learn stand, then learn fly. Nature rule, Daniel-san, not mine.”
Many of the knocks on Nikola’s tractor and Tesla’s Semi are about how they look. Trucking is a traditional space where you can easily over-innovate. I think that’s part of the reason why Freightliner’s eCascadia and Volvo’s electric VNR look like conventional models. It’s more relatable for the consumer – but it’s not as sexy. International, with its medium duty eMV concept, manages to dance the line between pushing the design envelope and shoving it completely out of the box.
Part of the one upmanship that is happening in the EV space centers around the wow factor, and exterior design, for the late entrants, means throwing nature’s rule out the window.
Tesla’s Cybertruck is one of the ugliest things I’ve ever seen (and that’s saying a lot because I have been to SEMA), yet apparently, more than half a million people have pre-ordered one. Canoo’s multi-purpose delivery vehicle looks like a wheeled loaf of bread, but with a $30,000 sticker, I think it could get some traction with urban delivery fleets. Interestingly enough, Arrival’s electric looks a lot like a toaster, yet UPS has ordered 10,000 vehicles for rollout in the UK, Europe and North America through 2024.
The coming year could be an EV D-Day of sorts, with Tesla’s Semi, Nikola’s Tre, Freightliner’s eCascadia and Volvo’s VNR Electric all expected to enter commercial production – and those are just the models we know about right now. I expect handfuls of others to be announced throughout next year. These debuts would put us squarely in the “leaning to stand” phase of electrification, restoring some measure of order back into nature’s rule.