There's been a lot of recent news about automakers cutting back on or delaying production of electric vehicles (EVs) due to slowing consumer demand. One of the main culprits responsible for the weakening demand is high interest rates, which have made consumers hesitant to finance big-ticket purchases like electric cars.
Luckily, a rebound could be on the horizon as the Fed’s interest rate hiking cycle appears to be at an end, which means once rates start falling, EV sales should pick back up. As a matter of fact, a recent report from Fortune Business Insights projects that the global EV market will grow from $500.48 billion in 2023 to $1.5 trillion in 2030, representing a CAGR of 17.8%, which reaffirms the industry’s solid growth prospects.
Even as the US market slows, EV adoption in other regions like Asia, the Middle East, and Africa has been rapidly increasing. In Asia, analysts expect EV sales to grow at least 22% annually until 2028, while the Middle East market will almost triple to be worth about $7.65 billion by the same time, according to Deloitte. These economies are already growing at a healthy clip, and now, thanks to increasing government incentives, EV adoption is driving massive demand. This means that EV companies with an early foothold in these regions could reap substantial gains as this trend continues to play out. Due to this fact, we have identified four EV stocks with a presence in these regions that we believe should be on your radar.
VivoPower International PLC (NASDAQ:VVPR) provides a comprehensive suite of sustainable energy solutions (SES), including electric vehicles, solar systems, battery technology, microgrids, and critical power services, through its subsidiaries.
For some background, VivoPower started out by providing solar energy for clients in the commercial, industrial, and government sectors but went public after Arowana Inc., a spac acquisition, acquired it in a transaction worth $162 million.
In October 2020, VivoPower acquired a majority shareholding in Tembo e-LV, marking its entry into the highly profitable electric vehicle market as illustrated by the double-digit revenue growth rates of top OEMs. For instance, BYD, Tesla, and NIO increased FY2023 revenues by 42%, 19%, and 10%, respectively, while Li Auto (LI) experienced an impressive 160% growth.
But unlike those companies, VivoPower’s Tembo takes a different approach to solving the EV problem, which we believe could be even more profitable. Instead of people getting rid of their current cars to buy new EVs, which inadvertently leads to more emissions, Tembo supplies conversion kits containing all the parts needed to convert a vehicle from an internal combustion engine (ICE) to an electric (EV). These parts include the batteries, an e-motor, a reduction box, a charger, software, and many other components that make the converted vehicle work safely and seamlessly.
The EV specialist offers conversion and integration capabilities and IP for ruggedized and customized off- and on-road light utility vehicle applications (for both new and second-hand vehicles) that could be used to service a diverse range of sectors, from mining, infrastructure, and utilities to government services, game safaris, and humanitarian aid.
According to the iea, there should be around 350 million EVs on the road by 2030 if we are to stay the course to reach net zero carbon emissions by 2050. The only problem is that, as of 2022, there were just over 26 million EVs on the road. It's unlikely that OEMs will fill all this demand and this is where VivoPower International PLC (NASDAQ:VVPR) comes in.
The company’s conversion kits are already resonating well with the EV market, and we believe that the company’s business model and approach have been validated based on a number of key corporate milestones achieved so far.
For starters, VivoPower International PLC (NASDAQ:VVPR) significantly expanded its distribution network after securing a commitment of 5000+ kits and an order pipeline of 10,000+ in the first half of 2023. Those included an MOU in Jordan for 1,000 kits, opening a path to the Middle East, which is the largest Landcruiser market, and a definitive agreement in Kenya for 4,000 kits, providing entry into second-hand vehicle segments, which expands the addressable market considerably.
More recently, Tembo signed a definitive joint venture agreement with Francisco Motor Corporation in September 2023 to develop and supply electric utility vehicle (“EUV”) electrification kits for a new generation of electric jeepneys (e-jeepneys) in the Philippines, which could be a major growth driver for VivoPower.
That is because the Electric Vehicle Association of the Philippines (EVAP) estimates that the cumulative sales of e-vehicles in the country will reach 6.6 million units by 2030, driven by favorable government policies. In fact, e-vehicles got an exemption from excise tax, and a recent Executive Order scrapped the tariff rates of completely built-up imported e-vehicles for five years to help them become more cost-competitive in the country.
VivoPower International PLC (NASDAQ:VVPR) also signed a joint venture with Geminum Pty Ltd in October 2023 to design, test, and implement digital twins of Tembo’s EUVs and ancillary Vivopower sustainable energy solutions (SES).
In essence, this means that VivoPower offers EV investors exposure to the fastest-growing economies in Southeast Asia, the Middle East, and Africa, which is why the company has seen strong financial support, illustrating investor interest and confidence.
Last year, in December, Vivo received a direct investment of $5 million into Tembo at a pre-money valuation of $120 million from a private investment office based by a member of the ruling Al Maktoum family of Dubai. At the moment, VVPR has a market cap of about $4.5 million, which implies that its valuation has significant upside potential even without taking into account its other subsidiaries.
Moreover, VivoPower International PLC (NASDAQ:VVPR) announced that it will spin off the majority of its Caret business unit’s portfolio, representing up to ten solar projects totaling 586 MW-DC at varying stages of development, which should further unlock shareholder value.
It’s also important to note that in February, Vivo started the delivery of its next-generation Electric Utility Vehicle (EUV) powertrain conversion kits to Access Industrial Mining Inc, Tembo’s exclusive distributor in Canada. The Tembo EUV conversion kits will transform new and second-hand diesel-powered 4×4 LandCruiser and Hilux vehicles into ruggedized EUVs that are fit for purpose for mining and other industrial applications.
VinFast Auto Ltd. (NASDAQ:VFS) is a Vietnamese EV maker which went public following the completion of its merger with the U.S.-listed spac company Black Spade Acquisition in a transaction valued at approximately $23 billion, according to a June filing with the U.S. SEC. Soon after listing, shares of the EV maker had a massive rally, topping out at an all-time high of $93 before retracing back to slightly below its listing price as demand for EVs cooled.
VFS recently reported fourth-quarter earnings, revealing it delivered a record number of 13,513 EVs globally in the period, up 35% quarter-on-quarter, with total EV deliveries for the full year coming in at 34,855, representing a 374% increase from 2022.
Going forward, the company has set its sights firmly on South Asia as its next growth frontier, which is why, at the Bangkok International Motor Show, VFS announced plans to sell its electric vehicles in Thailand, indicating it had already made arrangements with auto dealers to open showrooms in the country. This could be a huge opportunity for the company considering that Thailand has an ambitious goal to convert 30% of the 2.5 million vehicles it makes annually into EVs by 2030.
In addition to that, VFS marked its launch in Indonesia during the Indonesia International Motor Show 2024 by signing preliminary agreements with five dealers. The company also signed an MOU with three Indonesian companies for our fleet of the first 600 EVs for taxi purposes in Indonesia.
Unsurprisingly, Chardan Research has reiterated its bullish view on VinFast Auto, with analyst Briand Dobson noting the company’s Q4 results showed the company's ability to drive production growth despite supply chain headwinds. Dobson and team believe shares of VFS are undervalued at below $6 and boosted their price to $13, which implies about 133% upside from the current price.
NWTN (NASDAQ:NWTN), based in the United Arab Emirates, is a pioneering green energy company that develops new energy vehicles and is dedicated to providing passenger-focused, premium electric vehicle products and green energy solutions to customers. The company’s electric vehicles include a Supersport coupe and smart passenger vehicles, such as MUSE and ADA.
NWTN also went public via a SPAC with East Stone Acquisition back in November 2022, in a transaction that resulted in NWTN receiving gross proceeds of $400 million in PIPE investment from institutional investors and strategic partners.
According to its most recent earnings filings, the company generated just $0.6 million in revenues over the six months ending June 30, 2023, and lost $70 million in operations over the same period.
During the period, NWTN delivered ten vehicles to one customer from its electric vehicle assembly facility in Khalifa Economic Zones Abu Dhabi ("KEZAD"), which got its sales licenses from Abu Dhabi Emirate in early 2023. The company has been strengthening its distribution networks and recently established a ground-breaking collaboration with Autostrad Car Rental Company for the purchase of two hundred Rabdan One vehicles for their fleet, which would initially support the prestigious COP 28 event. According to NWTN, the partnership marks a historic moment in the evolution of sustainable transportation in the UAE as the Rabdan One is introduced into Autostrad’s prestigious fleet.
Ahmed Abood Al Yafei, Group CEO of Autostrad, highlighted the group's commitment to sustainability: "The acquisition of the Rabdan electric fleet aligns with our strategic vision for sustainable mobility. "
The company has been attracting significant investor attention, with a number of hedge funds such as Renaissance Technologies, Jane Street Group, and Mint Tower Capital Management B.V. and other institutional investors having recently increased their stakes in NWTN.
Lucid Group, Inc. (NASDAQ:LCID) is an American EV company with headquarters in California and a manufacturing plant in Arizona.
During the company’s recent earnings call, it was revealed that it produced 2,391 EVs for Q4 and a total of 8,428 electric vehicles in FY 2023, showing 17% year-over-year growth. Lucid's actual production results came in at the top end of Lucid's revised guidance for FY 2023 (8,000–8,500 EVs). The company reported revenue of $157.2 million, which was about 39% lower than Q4 2022, and the company's quarterly net loss was $653.8 million.
Despite that loss, things could be gearing up for a turnaround. One of the highlights of the call was that the management team said that the Gravity, an SUV model scheduled to launch in late 2024, would "expand [the] total addressable market from 2023 by more than 6x," while the "more affordable, high-volume midsize car," scheduled to launch in late 2026, "will expand [the] market opportunity from 2023 to nearly 20x."
That could perhaps explain why Saudi Arabia has invested immense political and economic capital for Lucid to succeed. Just recently, LCID announced that it had entered into an agreement with its majority stockholder, Ayar Third Investment Company, an affiliate of the Saudi Public Investment Fund ("PIF"), to purchase $1.0 billion of a newly created series of convertible preferred stock via private placement.
"We are extremely pleased to receive this strong, continued support from the PIF as we work to solidify our place as the world's leading EV technology company," said Peter Rawlinson, CEO and CTO, Lucid Group. "We continue to invest for the long term in both our technology and our vertically integrated manufacturing capabilities, with PIF's support as a key differentiator.”
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