Competition Increasing In The EV Space

While Nikola NKLA is struggling to regain its. credibility at hydrogen summit, new players are entering the EV field. Hyliion HYLN made its debut on Wednesday after the electric-vehicle startup closed its merger with blank-check company Tortoise Acquisition.

Hyllion

Hyliion has completed its business combination with Tortoise Acquisition which was approved by TortoiseCorp stockholders on September 28.  Hyliion plans to make the all-electric ERX Hypertruck. With intense competition in the EV field, Hyllion did not waste its time and resources on an IPO and opted for SPAC, just like Nikola last year. The merger provided Hyliion with $560 million to develop and commercialize its electric trucks.

Since it was founded in 2015,  Hyllion's focus was on selling components that make commercial trucks increase their efficiency and reduce their emissions. But its aim is to build electric powertrain systems that will revolutionize commercial transport industry. It is set to compete directly with Tesla to be one of the first companies to bring electric trucks to market at scale, although it is following a different path to this goal. Many investors believe that HYLN has superior technology given that its engines are designed to have more range and carry a heavier load compared to prototypes of other EV makers.

One of the most impressive parts of this new public company is that its founder and CEO, Thomas Healy is 28 years old. With this listing, his stake in HYLN is worth $1.4 billion, making him one of the youngest self-made billionaires.

An additional source of revenue

But HYLN has another future source of revenue, its cloud-based, software system that it's developing for trucks that collect data, provide analytics updates in real-time. This system should result in increased optimization for each vehicle. It adds its business model a subscription package while also reducing issues with maintenance and leading to longer lifetime value in addition to improved battery efficiency and savings on fuel costs. What Hyllion is bringing to the table does sound revolutionary.

For now, despite pre-orders, HYLN is only expected to generate $1 million in revenue with $8 million expected next year. Its electric powertrain won't be widely available until 2022, but its internal forecasts expect revenue of $344 million in 2023. Moreover, once it scales up production of its powertrains, revenue is expected to reach $2.1 billion in 2024.

Fisker

Fellow EV startup Fisker is awaiting a key shareholder vote on October 28 on its proposed merger with Spartan Energy Acquisition SPAQ. Fisker plans to produce the all-electric Ocean SUV. If the deal goes through, Fisker's trade ticker will be FSR. On Wednesday, Fisker also announced that it will shift headquarters from Austin, Texas, to Manhattan Beach, California.

Ideanomics

Ideanomics IDEX is a global company that merges the power of EVs and fintech. It facilitates the adoption of commercial EVs as well as supports next-generation financial services. Its electric vehicle division, Mobile Energy Global (MEG) provides group purchasing discounts on commercial electric vehicles, EV batteries and electricity as well as financing and charging solutions.

The company coined this model as sales to financing to charging (S2F2C). Ideacom just announced this morning that its MEG business experienced sequential growth throughout Q3.

Ideanomics is expected to deliver its Q3 earnings November 12, following up a Q2 report that showed the company generate $4.692M in sales but -$0.15 in per-share earnings.

Nio has been exciting investors this week

Nio NIO stock climbed 23% on Wednesday after JPMorgan JPM forecast that it will take a 30% share of the premium EV market that Tesla dominates. Today, it has been labelled as a ‘buy' by Citigroup Inc C and is rising to a new record.

Outlook

Newcomers will face significant challenges in scaling production. In order to be successful, they must produce their EV offering at a scale so within the next couple of years given the number of competitors aiming for this massive market opportunity.

History has taught us that it's not an easy task to achieve these targets. We don't even know whether Nikola will successfully produce its Badger at scale to justify its valuation. Tesla, Inc. TSLA has been on a crazy ride this year with its shares are up about 435% year to date, but there were many bumps along the road when success did not seem to be in the cards.

Overall, this is an opportune time for a debut in the EV field as many companies have seen massive gains. Investors are valuing them based on their total addressable market, future revenue growth, the strength of their technology and powertrain system as well as to where they stand in comparison to Tesla. But they are still in their infancy and only time will tell if they will be able to gain a legitimate foothold in the EV playfield.

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