Stock Markets

The S&P 500 rallied 4.4% as stocks finished higher for the best weekly gain in the last six months. However, bond yields declined to the lowest levels in nearly two years. Increased expectations of a Fed rate cut, positive response to the U.S. and Mexico reaching a resolution to avoid tariffs, and improved valuations, all helped stocks move higher.

In terms of economic data, signals were mixed with strength from the services sector mostly offset by weakness in the manufacturing sector. While job gains for the month of May came in below expectations, the unemployment rate is still very healthy at a 50-year low. Analysts expect a more balanced mix of positive and negative moves this season and feel confident about rising corporate profits, strong economic growth, combined with low interest rates creating a positive fundamental base that outweighs risks.

This also offers an opportunity to enhance diversification. Reviewers call for appropriate global stock-market allocations, with diversification across asset classes, including small- and mid-cap stocks, that will likely benefit from increased trade fears or renewed economic signals.

U.S Economy

There remains continued evidence of a slowdown in the U.S. economy, which in turn boosted hopes for a turn in Fed’s policy. Numbers from ADP showed that private sector payrolls had grown by the smallest monthly amount in over nine years for the month of May. Alongside that news, the Labor Department reported overall, payrolls had expanded by only 75,000 in May. The saving grace: May’s unemployment rate held steady at of 3.6%, its lowest in five decades. Almost immediately after the figures were issued, futures markets began pricing in over a 98% probability of a rate cut in 2019, which they say has a 90% chance taking place by July (source: CME Group data).

Economist suggest that ultimately, the determination of whether the economy continues to grow or falls into recession will be determined by the labor market and household spending. By most estimates, these are expected to remain healthy enough to support moderate GDP growth this year. This is heavily weighted in favor of the still-healthy labor market that is driving several key metrics.

Mexico On Hold

Expected tariffs planned to come into effect on June 10th were averted in a last-minute deal reached between the U.S. and Mexico. In a joint declaration released by the U.S. state department, the two countries said Mexico would take “unprecedented steps” to curb irregular migration and human trafficking.

The U.S. did not however, get one of its key demands that would have required Mexico to take in asylum seekers heading for the U.S. and process their claims on its own soil.

Mexico agreed to:

• Deploy up to 6,000 additional troops along Mexico’s southern border with Guatemala using its National Guard beginning Monday
• Take “decisive action” to tackle human smuggling networks

The US agreed to:

• Expand its program of sending asylum seekers back to Mexico while they await reviews of their claims.
• “work to accelerate” the adjudication process

Both countries have offered pledges to “strengthen bilateral co-operation” over border security, including what they have called “coordinated actions” and information sharing.

These actions, while not inferring a long-term solution, have arrested the immediate actions of the intended tariff going into place and offered some signs of confidence that the two parties can work out terms that will give the markets breathing room.

Metals and Mining

The precious metals markets were given a lift this week by geopolitical issues that continue to plague investors who then seek out the metals as safe havens. At the forefront was the gold market, which saw its best weekly performance in more than a year. Some leading analysts have predicted that the precious metal has enough momentum now to snap the critical long-term resistance barrier in the near-term. Lower U.S. employment growth helped push gold prices back to within close breaking distance of the all critical $1,350 level. During the week, August gold futures traded at $1,347.10 an ounce, up 2.7% compared to the previous Friday.

Gold faces some strong technical headwinds. Since hitting its 2015 low, it has tested resistance at or near $1,350 a total of eight times. Silver is taking some signals here, following gold’s lead on Friday. It added gains on the back of ongoing geopolitical concerns too, trading just under the US$15 per ounce level on track for its best week since late January. The others in the precious group were also up: platinum was up close to 1 percent for the week and on track for its first weekly gain in the last seven weeks. Palladium also climbed, edging up 1.05 percent for the week. As of 10:05 a.m. EDT Friday, palladium was trading at US$1,346 — a gain of close to US$20 from the previous week.

Energy and Oil

Once again, energy shares lagged, weighed down by continued weakness in oil prices, and the typically defensive utilities and real estate sectors also underperformed. Oil futures climbed for a second straight session Friday, with U.S. prices erasing their loss for the week just two days after dipping into a bear market. Natural gas spot prices fell at most locations this week. Henry Hub spot prices fell from $2.63 per million British thermal units (MMBtu) last Wednesday to $2.39/MMBtu. Temperatures were close to normal across much of the Lower 48 states, with warmer-than-normal temperatures in the Pacific Northwest and cooler-than-normal temperatures in the Southwest and Northeast. At the Chicago Citygate, prices decreased 22¢ from a high of $2.43/MMBtu last Wednesday to $2.21/MMBtu yesterday. Traders will be watching updates on a production-cut agreement between the Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers ahead of the deal’s expiration at the end of this month.

World Markets

European stocks rose as investors began pricing in expectations for rate cuts as both the U.S. Federal Reserve and the European Central Bank (ECB) indicated that they could possibly intervene if trade tensions hit the global economy. The pan-European STOXX Europe 600 Index and the UK’s FTSE 100 Index gained more than 2%. The exporter-heavy German DAX Index and Italy’s FTSE MIB Index both gained almost 3%. Germany, which leads European economies, reported that its Bundesbank data showed weak exports are taking a toll on the German economy and cut its economic output forecast to 0.6%, down from 1.6% in December. The central bank also slightly lowered forecasts for 2020 and 2021. Meanwhile, signs of China’s slowing economic growth continued to accumulate. Clearly this is raising hopes for stimulus from Beijing. The International Monetary Fund trimmed its 2019 growth forecast for China to 6.2% from a prior 6.3% estimate and projected 6.0% growth next year.

The Week Ahead

This coming week is a relatively light week for reporting, but some areas to focus on include inflation numbers to be released on Wednesday, along with May retail sales and consumer sentiment reported this coming Friday.

Key Topics to Watch

–           Mexican Tariffs relaxation

–           China Trade War changes based on Mexico

–           U.S. Retail Sales Report for May

–           U.S. inflation figures reported by the Fed

–           Gold to test the $1350 per ounce mark

Markets Index Wrap Up

Stock Markets

Stocks declined for the 4th straight week impacted by rising trade tensions and continued geopolitical uncertainty. With the White House announcing that the U.S. will impose tariffs on Mexico in order to quell illegal entry, concerns increased on unresolved U.S.-China trade issues. These have a serious impact on global growth. May showed the largest stock market pullback this year, but in counterpoint, bonds rallied significantly.  Overall, both the U.S. and global yields showed declines; the 10-year Treasury ended at its lowest point in 21 months at just 2.13%. German yields followed suit moving into negative territory.

U.S Economy

The leading US economic news surrounded the proposed tariffs on all imports from Mexico in a bid to force Mexico to deal with its illegal immigration problem. It’s hard to tell if higher tariffs on China and Mexico are short-term tactics aiming to spur on specific actions, or they are more long-term strategies that could stay in place after any goal is achieved. Both of those things have occurred in past tariff bouts. Higher tariffs on U.S. imports generally lead to higher prices in the U.S. and slower economic growth for the countries involved. But the impacts are also typically small when compared to the overall U.S. economy. Most analyst are still looking at economic growth to continue at 2% to 2.5% in 2019. That’s thanks to strong job numbers, slowly rising wages, low inflation, low interest rates and aggressive fiscal policy.

Tariffs on Mexican Imports

The surprise tariff increase on Mexican imports is a 5% tariff slated to begin June 10 and to increase monthly to cap at 25%. The plan is to pressure Mexico over its inaction in dealing with stopping illegal immigration flows to the U.S. Leading imports from Mexico include autos and electronics, with the overall import figure at about $350 billion. Stocks in the leading sectors declined in response. It’s hard to tell if these tariffs will prompt a response from Mexico, but most analysts don’t expect tariffs to rise to 25% on imports from Mexico. However, ongoing threats of higher tariffs and trade disruptions are expected to add to stock market volatility.

Metals and Mining

The gold market is living up to its potential as a safe-haven asset this week with prices pushing back above $1,300 an ounce. Gold is seen as attractive because it is considered one of the cheapest safe-haven assets out of all the financial markets. The U.S. dollar index has struggled to hold gains above 98 points, but it continues to trade near a two-year high. Meanwhile, the U.S. 10-year bond yields are trading at around 2.16%. The inverse is true for gold, which is trading at a two-week high. The August gold futures last traded at $1,309.20 an ounce. That is up over 1% from last week. Geopolitical tensions always come to bear on the metals markets, and especially gold. Some analysts think they have reached a tipping point with President Donald Trump adding a 5% tariff on Mexico in his efforts to halt illegal immigration into the U.S.

Energy and Oil

U.S. oil futures dropped by more than 5% on Friday to settle at their lowest since February as another market saw affects of the Trump administration’s plans for tariffs on Mexican goods. The concern is that the tariffs may affect economic growth and therefore, energy demand. Overall, energy shares performed worst for the second consecutive week as domestic oil prices tumbled to their lowest level since February. The prices were dragged lower by a smaller-than-expected decline in U.S. crude inventories. In a move not widely reported, the Trump administration has decided to approve expanded use of ethanol fuel. That is expected to help corn farmers hurt by the trade conflict with China. According to data from PointLogic Energy, the average total supply of natural gas rose by 1% compared with the previous week. Dry natural gas production grew by 1% compared with the previous report. Average net imports from Canada were down 2% from last week.

World Markets

This week, both the U.S.-China trade tensions and President Trump’s new plan to impose tariffs on Mexico pushed equity markets in Europe down as investors moved to lessen risk. The pan-European STOXX Europe 600 fell about 2%, the UK’s FTSE 100 lost about 1.6%, and the export-heavy German DAX index dropped 2.4%. Tensions are increasing in Italy between the euroskeptic government and the European Union (EU). As a sign, the FTSE MIB Index lost almost 3%. Investors sold Italian government debt likely due to growing fears of a showdown between Rome and Brussels over Italy’s high debt levels. Over the week, the benchmark Shanghai Composite Index added 1.6%, and the large-cap CSI 300 Index added just under 1%. The CSI 300 is notable as it tracks all bluechip stocks listed on the Shanghai and Shenzhen exchanges.

The Week Ahead

There’s plenty of economic data to watch this week: the Manufacturing Purchasing Managers’ Index comes out, along with auto sales and construction spending from the month of May. A bigger factor will be May’s jobs report, which will be released this week, with most market watchers and economist expecting the unemployment rate to stay right in line with the cyclical lows.

Key Topics to Watch

• Mexican Tariffs by the US
• China Trade War with the US
• ADP National Employment Report
• U.S. International Trade in Goods & Services Report
• ISM Manufacturing Report on Business
• Revised Productivity & Costs

Markets Index Wrap Up

Walking into any concert venue, sports arena, or secure government building today, and the first thing you now must do is empty your pockets and walk through a metal detector. Thanks to a rise in mass shootings and terror alert levels, this clumsy and cumbersome process has slowly become the new normal for any entry into a busy place.

However, this era of slow security entry may finally be coming to an end, as the future of security could soon merely involve a casual stroll through a gate that safely and swiftly scans waves of people in real time.

Meet HEXWAVE^TM from Liberty Defense Technologies – a brand new threat detection technology developed at MIT that uses real-time Active 3D Image processing to detect metallic and non-metallic threat objects and location, such as a gun, or guns, carried near a school or place of worship prior to the criminal even entering the building. The detection system, can now be as overt as a typical screening gateway, or covert as installing devices into the walls or other hidden fixtures on the way into the venue.

“What we’re targeting is the urban security market,” said Bill Riker, CEO of Liberty Defense in an interview with WIRED. 

Developed to provide a key part of a layered threat detection defense  Liberty Defense is looking beyond airports to other scenarios where people need to be scanned quickly and unobtrusively—such as concerts, sporting events, and large outdoor gatherings.

Upon detection, the system can tie into security infrastructure to instantly begin setting off alarms, locking doors and putting people inside on alert to enhance safety in a scenario where every second counts.

“What we’re offering is an attack prevention system,” said Liberty Defense COO and President of US Operations, Aman Bhardwaj, in an interview with Forbes. “We’re preventing someone with a weapon from entering.”

Speed + Stealth = Safety

The Liberty Defense Technologies HEXWAVE^TM system is the racing to become the security protection of the future—and it couldn’t come soon enough.

Since 2015 there have been over 1,700 mass shootings in the USA, with an average of over 350 shootings happening per year. In high-traffic scenarios, dense gatherings of people are soft targets. Currently there are no means to counter threats beyond entry point solutions, which have limitations in terms of a combined criteria for accuracy, throughput and even location around or within the perimeter of a facility.

Beyond just sporting events and concerts, places like hotels, schools, and places of worship tend to have a lot of patrons always entering and exiting.

A system such as HEXWAVE^TM might have prevented a scenario such as the Las Vegas shooter successfully bringing a cache of weapons up to his room, veiled under common luggage pieces. HEXWAVE^TM is designed to discreetly spot metallic and non-metallic objects of interest, such as guns or other weaponry.

Tourism in Las Vegas took a noticeable hit in the aftermath of the shooting atrocity. Hotels have been forced to look at new methods to protect their patrons, while refraining from installing obtrusive gate of entry checkpoints that would further add to the feeling of uneasiness left after the horrible event.

Where HEXWAVE^TM aims to help such venues, is to utilize discreet hidden sensors amid entry points, that could perhaps be hidden behind posters, in hotel furniture or in the light fixture—allowing people to be scanned unaware. Through communication from the sensors to central controls, a tripped alarm could alert police or local security officers, while giving its clients instant notification in order to act accordingly, based on the information provided by the scanners.

Advanced Privacy

Much of the resistance towards security systems, such as those employed by the TSA in airports and terminals, is directed towards the intrusiveness of their nature. Privacy advocates and civil libertarians have raised concerns about some of the more prominent systems in places such as Dulles International Airport, where facial recognition scanners are in use.

“Right now, there is very little federal law that provides any type of protections or limitations with respect to the use of biometrics in general and the use of facial recognition in particular,” said Jeramie D. Scott, national security counsel for the Electronic Privacy Information Center in an interview with the Washington Post. Scott’s organization has filed Freedom of Information Act requests seeking details about the program.

Unlike visual recognition technology that is currently in use at many venues, the HEXWAVE^TM offers a much less intrusive solution.

This is achieved by several “game changing” advancements in the technology, which were developed at MIT Lincoln Labs and are exclusive to Liberty Defense Technologies.

Due to its unique antenna design and embedded computing power, HEXWAVE’s^TM  creates 3D images that are virtually analyzed in real time using an artificial intelligence architecture.. The system’s advanced antenna design provides the capability for the sensors to  be distributed in a way that is covert.  Further, the modular, self-contained design can be deployed across the entry paths of a venue thus enabling it to be scalable to the needs of a responsive security operation.

Personnel for Rollout

Beyond developing an effective technology, the challenge for stakeholders such as Liberty Defense Technologies is to get their system into as many venues as possible. Key to the company’s future successes are the people behind the scenes.

Bill Riker was brought on as CEO in August 2018, after a storied career with Smiths Detection, DRS Technologies, General Dynamics, and the US Department of Defense. COO and President of US Operations, Aman Bhardwaj compliments Riker’s security background, with a tech and manufacturing career that includes over 20 years of experience working with leading global teams for both major and startup companies, including Panasonic, Flextronics/Imerj, Educo and Hisense.

Riker and Bhardwaj are joined by a highly-qualified management team of leaders from the security industry, product development, government technology and manufacturing sectors. Assisting the management team is a highly experienced advisory board.

Notable among the advisory board is Francesco Aquilini, owner of the Vancouver Canucks NHL hockey team, and the team’s home, Rogers Arena which seats nearly 19,000 people. Aquilini also sits as the team’s main representative on the NHL Board of Governors, among a group that has at least 13 arenas privately owned by members of the board.

Aquilini is not the lone sports presence on the advisory board, as current President of Concacaf (the continental soccer governing body in North and Central America) Victor Montagliani is also advising the company.  As well, John May, former member of the Live Nation Canada management team, helped grow that event promotion company through to a successful joint venture with Maple Leaf Sports and Entertainment—owners of all the major professional sports teams in Toronto (NBA, NHL, MLB, MLS, CFL).

Meeting Demand

Liberty Defense has an exclusive license with MIT and a Technology Transfer Agreement with MIT Lincoln Laboratory for active millimeter imagining technology originally developed in the MIT Lincoln Laboratory for weapon detection.  They are continuing to support the effort through a cooperative research and development agreement for both the commercialization of the design and that includes other development to continue progressing the technology.

This capability was developed.   in response to the growing threat from terrorism, especially after a wave of subway and train attacks witnessed around the world in places like Madrid and London.  Prior to the HEXWAVE^TM innovation, it was practically impossible to develop security systems with existing technology for busy public spaces without grinding pedestrian traffic to a near halt.

The demand is there: According to a Homeland Security Research Corp. study, the global explosives and weapons systems market is projected to be more than $8 billion by 2020 and more than $11 billion by 2025.

Liberty Defense Technologies is targeting the urban security which generally consists of 4 vertical markets.   The market is segmented into four verticals that include public venues, secured perimeters and buildings, land transportation and a category called “other” that includes everything from schools through places of worship, hospitality fclities and even hospitals.  Thesehave been projected to reach $1.5-$2.0B in North America by 2020.

Projections for each component include: Public Venues ($283-$428M, CAGR to 8.8%); Secured Perimeters ($820M-$1.03B, CAGR to 4.7%); Land Transportation ($174-$257M, CAGR to 8.2%); Other/Schools/Hotels ($201-$228M, CAGR to 2.7%).

In late 2018, Liberty Defense Technologies secured a C$7 million fundraising, in order to commercialize the HEXWAVE^TM system.

“The response from the investment community has been overwhelmingly positive,” said Bill Riker, CEO of Liberty Defense. “There is real commitment to solve the issues surrounding public safety that have proliferated in recent years, and this detection system offers an innovative approach for this challenge with the HEXWAVE product.”

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Electric Car Makers, Electrameccanica Vehicles Corp. (NASDAQ:SOLO), Are Riding SOLO, Hitting Market with Innovative 3-Wheel Micro EV.

Demand for Electric Vehicles (EVs) is sharply on the rise, leading to initiates both private and publicly-backed to incentivize an electric revolution on the roads, including a $50 billion pledge from Volkswagen to embark on an electric car ‘offensive’.[1]

In the United States, there are currently approximately 840,000 EVs on the road, according to the Edison Electric Institute’s report from June 2018. Between Q1 of 2017 and Q1 of 2018, sales increased 32%.[2]

The proportionate number of EVs on the road is set to increase, with electric options becoming more economic to own and run—even compared to gasoline and diesel engines.[3]

That gap is about to widen more so, with the launch of the SOLO from veteran Italian carmakers, Intermeccanica, which in 2017 was acquired by Vancouver-based Electrameccanica Vehicles Corp. (NASDAQ:SOLO).

Meet the Market’s Lowest Cost Electric Vehicle

Eye catching with its unique three-wheeled, single-seat design,[4] the game-changing EV currently has another advantage that even the majors can’t currently touch—its price.

Retailing at ~$15,500 USD, the SOLO is the least expensive EV on the market. Now with a manufacturing agreement with China’s largest motorcycle manufacturer in place, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) is set to further reduce its production risk, and capex, and increase it profit margins.

“Electrameccanica has a total of 64,154 vehicle pre-orders across all models, representing $2.4 billion in potential sales orders”

The company has two other EV’s in various stages of development, including the Tofino, an all-electric two-seat sports car, and the eRoadster, an electric evolution of Intermeccanica’s widely renowned classic vehicle design.

With the SOLO and Tofino, Electra Meccanica brings a unique, winning EV formula for 2019.

Pre-Orders Galore: Billions in Potential Sales in Play

As of December 20, 2018, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) had a total of 64,154 vehicle pre-orders across all models, representing $2.4 billion in potential sales at the targeted MSRP.

Pre-orders consist of 23,030 pre-orders for the SOLO single-passenger electric vehicle, which has a $15,500 target MSRP, and 41,124 pre-orders for the Tofino two-seat roadster sports car, which has a $50,000 target MSRP. 

Over a three-year period commencing Q1 2019, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) anticipates the delivery of 75,000 SOLOs. Capitalizing on an established sales, distribution and service model, the company will partner with existing dealership networks to drive sales of the SOLO in non-core markets where the company doesn’t maintain a dealership presence.

Electrameccanica Vehicles Corp. (NASDAQ:SOLO) will begin its deliveries through existing dealerships in Los Angeles, and Vancouver. So far there has been significant dealer interest worldwide—evidenced by dealer letters of intent for over 21,000 SOLOs.

Electrameccanica Offers First Look From Its China Facility

Adding Major Industry Experience to Its Board

Electrameccanica has begun adding strategic members to its board to strengthen its automotive industry experience. Most recently, the company appointed Peter Savagian as an Independent Director.

Mr. Savagian is a pioneer in automotive electrification, with a broad expertise in the technology, development, launch and production of electric vehicles. In 1990 he began work on the General Motors EV1, the first modern electric vehicle and was named Chief Engineer of Electric Propulsion Systems in 1998. Later, as General Director of Electrified Propulsion, he built and led multiple teams to innovate, engineer and execute the full range of electrified vehicle propulsion systems. His accomplishments at General Motors include 13 electrified autos brought to production. Notably, these include the first modern Electric Vehicle, the GM EV1, the first plug-in hybrid, the Chevy Volt, and the industry’s first long-range value EV, the Chevy Bolt.

Strong Macroeconomic Markers for the EV Market

As the world begins to make the steady shift into the EV market, some jurisdictions are more eager than others.

There’s likely no market more eager to get rolling than the state of California. As the nation’s largest EV market, the Golden State has recently considered nearly doubling its subsidy for each pure electric vehicle sold in the state—moving up to $4,500 from $2,500. This is on top of the federal government’s currently offered $7,500 tax credit on each electric vehicle sold.[5]

Given this environment, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has targeted California as the ideal Initial Target Market.

California is a trend-setter market, with a predilection towards adopting new technologies and adhering to increasingly progressive policies. With its extremely high cost of commuting, California has a state-wide goal for EV adoption, supported by subsidies and investment in charging infrastructure.

With its $15,500 USD price tag, a buyer in California could possibly see up to $12,000 USD in tax incentives already taken care of for the SOLO—an overall out-of-pocket discount of more than 77%.

Manufacturing a Chinese EV Advantage

In order to scale production to achieve a strong margin profile, automakers seeking an advantage in the EV market are looking for a Chinese manufacturing advantage. Even industry leader Tesla Motors is becoming forthright in its need for China, the world’s largest auto market, in order to succeed.

Not only is Chinese customer demand and government support for EVs skyrocketing, but the economic advantage of producing in the country is major.

Tesla CEO Elon Musk has expressed his concern that without manufacturing in China, Tesla won’t be able to produce the company’s goal of 10,000 Model 3 electric sedans per week nor be able to offer the eagerly awaited base model at a price of $35,000.[6]

“Bottom line is we need the Shanghai factory to achieve that,” said Musk.

There’s been a lot of interest for EV makers surrounding China. Volkswagen’s and GM’s SAIC Motor, Warren Buffett-backed BYD, and the recently public NIO are a few among the companies that are already up and running in the country.

For Electrameccanica Vehicles Corp. (NASDAQ:SOLO), a deal with shareholder and strategic partners, Chongqing Zongshen Automobile Co., Ltd, has set the SOLO manufacturing line in motion.

Zongshen is China’s largest manufacturer of motorcycles and motorcycle engines. The company already produces over 2 million units annually, across 130 models of two-wheeled and three-wheeled motorcycles, including electric models.

Together, the Electra Meccanica and Zongshen agreement should yield a level of scalability that would deliver a massive manufacturing advantage for SOLO and the other models. Zongshen has already constructed the SOLO manufacturing line, and has been contracted to produce 75,000 vehicles over a three-year period, with initial deliveries commencing in Q1 2019.

The economic advantage of this arrangement is quite clear, with scaled gross margins expected in the ~25% range.

This industry-leading contract with a manufacturing partner reduces production risk for Electrameccanica Vehicles Corp. (NASDAQ:SOLO), while accelerating production, and notably minimizes capital expenditures.

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MAJOR EV-AUTOMAKER COMPARABLES

So far, the majors in the EV space are working diligently to secure production for their upcoming lines of vehicles. Each has a unique struggle in the lead-up to the eventual EV revolution, including getting costs down, making profitable lines, and securing materials

With a simple line of two offerings, and more to come in the future, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has already hit the ground running with the lowest cost EV on the market.

Here are a few of the ongoing stories in the EV space happening right now:

Tesla, Inc. (NASDAQ:TSLA)

Market Cap: $52.516 billion

Recent Headline: Tesla is staking its future on China — here’s what it’s up against

The Nevada-based Tesla Motors gigafactory made headlines over the last few years, as the premiere EV brand name became an American success story. However, the company has recently made clear its intentions to enter the Chinese market, and attempt to compete with foreign and Chinese automakers that are already manufacturing and selling EVs in the country. CEO Elon Musk admits his company won’t be able to produce 10,000 Model 3 electric sedans per week, as originally aimed. Ahead of Musk’s company, Electra Meccanica has ramped up production at a new Zongshen factory, for both its SOLO and Tofino models.

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Kandi Technologies (NASDAQ:KNDI)

Market Cap: $276.77 Million

Kandi Technologies Group, Inc., through its subsidiaries, designs, develops, manufactures, and commercializes electric vehicle (EV) products and parts and off-road vehicles in the People’s Republic of China and internationally. It offers off-road vehicles, including go-karts, all-terrain vehicles, utility vehicles, and other vehicles for sale to distributors or consumers; and EV parts comprising battery packs, EV drive motors, EV controllers, air conditioners, and other electric products. 

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NIO Inc. (NYSE:NIO)

Market Cap: $1.461 billion

NIO Inc. designs, manufactures, and sells electric vehicles in the People’s Republic of China, Hong Kong, the United States, the United Kingdom, and Germany. The company offers five, six, and seven-seater electric SUVs. It is also involved in the provision of energy and service packages to its users; marketing, design, and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after sales management activities.

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General Motors Company (NYSE:GM)

Market Cap: $54.621 billion

Recent Headline: GM is going ‘all-electric,’ but it doesn’t expect to make money off battery-powered cars until early next decade

The largest US automaker, General Motors,is committed to eventually make its entire vehicle lineup “all-electric,” but doesn’t expect to make them profitably until “early next decade”. While pouring money into EV technology, looking to capture a market that’s garnered much excitement thanks to Tesla, General Motors has made it clear that the company is committed to an all-electric future, with its luxury brand Cadillac being the lead brand for its electrification efforts. While such changes are cumbersome for massive automakers, groups like Electra Meccanica are able to capture the early market advantage with pre-orders and an early run at scalability. As of October, 2018, Electra Meccanica has booked pre-orders in excess of CAD $2.4 billion and is growing.

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Strong Leadership Team At The Cutting Edge Of The EV Space

“I am very pleased with our team’s progress to date. Having driven the 2019 SOLO myself, I’m convinced we have a winning car on our hands.”

 – Electra Meccanica Founder and President, Henry Reisner

On the road to achieving its goals, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has been steered by an experienced leadership team. In order to navigate the rollout of both the SOLO and the Tofino to a customer base that’s hungry for a new experience behind the wheel, the Electra Meccanica team has been crucial to the brand’s successes.

Paul Rivera joined Electra Meccanica as Chief Executive Officer in August 2019. Before joining Electra Meccanica, Rivera most recently served as President of Ricardo, USA, a division of Ricardo, PLC (LON: RCDO), a 100-year-old global engineering, strategic, and environmental consultancy business with a value chain that includes the design, engineering, testing, and product launch, of vehicle systems, as well as the niche manufacture of high performance products.  Previous to that, as Executive VP of Hybrid & Electric Systems at Ricardo, Rivera led the company’s evolution towards an efficient and sustainable low carbon future. Ricardo’s engineering and design solutions have had a significant impact on technical developments throughout the auto sector, providing innovative solutions across engines, drivelines and hybrid systems, as well as supporting the development of emerging technologies such as autonomous and connected vehicles.

Henry Reisner has served as the President of Intermeccanica since 2001. Intermeccanica is an Italian automobile manufacturer in operation for over 60 years, which Electrameccanica acquired in 2017. Reisner’s background includes extensive experience in the automotive industry with a background in manufacturing. Having overseen early production of the SOLO, he’s expressed his confidence in the company achieving its goals.

With the international aspirations and multinational production and sales goals for the company, Rivera and Reisner are joined by Chief Administrative Officer Isaac Moss. With over 27 years of international business, multi-jurisdictional investment banking and corporate finance experience, Moss’ expertise has ranged across several industries, including specialty chemicals, tech and green energy.

The management team is rounded out by CFO Bal Bhullar, and General Manager Ed Theobald. Bhullar is an accomplished financial executive with over 25 years of experience, that includes CFO experience at several public and private companies. Theobald has over 40 years of experience across several industries, including 19 years as General Manager at Envirotest Canada, a subsidiary of ESP Global.

5 Reasons Investors Should Put Electrameccanica Vehicles Corp. (NASDAQ:SOLO) on Their Radar

1. Lowest-Cost EV on the Market: In this new era of electric vehicles, to hold the distinction of the lowest cost EV on the market is a significant advantage for Electrameccanica Vehicles Corp. (NASDAQ:SOLO). Where the next lowest cost EV at the moment is the Smart Electric, which is nearly double the price at $28,750, the EMV SOLO stands in an economic class of its own at an MSRP of $15,500 USD.

2. Over 64,000 Pre-Orders, Worth Billions in Value: As of December 20, 2018, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has accrued a total of 64,154 vehicle pre-orders across all models, representing $2.4 billion in potential sales at the targeted MSRP. With delivery commencing in Q1 2019, the company will begin with deliveries through existing dealerships in Los Angeles, and Vancouver—with significant dealer interest worldwide, evidenced by dealer letters of intent for over 21,000 SOLOs.

3. Strong Macroeconomic Markers for EV Market: The EV market is growing at a rapid pace, supported by government incentives, and increased customer demand to move away from fossil fuels. Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has targeted California as the IDEAL Initial Target Market. California is a trend-setter market, with a predilection towards adopting new technologies and adhering to increasingly progressive policies. With its $15,500 USD price tag, a buyer in California could possibly see up to $12,000 USD in tax incentives already taken care of for the SOLO. 

4. Industry-Leading Contract with Chinese Manufacturing Partner: Ahead of major comparables, such as Tesla, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has secured a major manufacturing contract with leading Chinese motorcycle manufacturer, Zongshen. As per the contract, Zongshen will produce 75,000 vehicles over a three-year period, with initial deliveries commencing in Q1 2019. The economic advantage of this arrangement is expected to return gross margins of ~25%  at scale.

5. Strong Leadership Team At The Cutting Edge Of The Lithium Technology Space: The Electrameccanica Vehicles Corp. (NASDAQ:SOLO) team is built to produce vehicles on an international scale. Led by founders CEO Jerry Kroll, and President Henry Reisner, the Intermeccanica/Electrameccanica team has the experience to compete in the automotive industry. With several decades of experience that span multiple industries and countries, the Electrameccanica team is set to rollout both the SOLO and the Tofino models and to exploit deep connections within the automobile industry built through over 60 years of automobile legacy through Intermeccanica.

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[1] https://www.cnn.com/2018/11/16/business/volkswagen-electric-cars/index.html

[2] https://www.eei.org/resourcesandmedia/energytalk/Pages/Issue-In-Depth.aspx?i=5-1-2018

[3] https://www.theguardian.com/environment/2019/feb/12/electric-cars-already-cheaper-own-run-study

[4] https://www.digitaltrends.com/cars/three-wheel-evs-motorcycles-work-like-cars/

[5] https://www.bloomberg.com/news/articles/2018-09-25/california-mulls-an-additional-2-000-subsidy-for-electric-cars

[6] https://www.cnbc.com/2019/02/11/tesla-faces-steep-competition-in-china.html

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