If you are thinking about investing in shares of AYRO and Arcimoto (NASDAQ:FUV) you should know that these two companies are niche EV manufacturers. Both companies are aiming to compete in cheaper and niche markets rather than in the ultra-competitive consumer automobile sector.
Arcimoto was founded by CEO Mark Frohnmayer in 2007. The Oregon headquartered-company builds two-seater three-wheeled vehicles. The company went public in September 2017 via IPO and raised $19 million. Due to the coronavirus, the company raised $16.5 million from institutional investors this year. As of Q3, Arcimoto has over 4000 pre-orders. Arcimoto has a market cap of $196 million.
AYRO was founded in 2015 by Christian Okonsky and Mark Adams. The company focuses on the light-utility vehicle segment. In June, AYRO was listed on the NASDAQ after it reverse-merged with a failed ride-sharing company called DropCar. Due to the slowdown caused by the pandemic, the company was forced to raise $24 million from institutional investors to maintain liquidity. The company believes that the micro-mobility and light-utility space is relatively unpenetrated and has massive potential.
Arcimoto’s flagship vehicle is the FUV, which a two-seater three-wheeled vehicle. The company is currently working on increasing its manufacturing capacity to 50000 vehicles per year by the end of 2022. The FUV has a top speed of 75mph and a range of 102 miles, which covers daily mileage for most car-buyers. The company’s current capacity is only 2 models a day and they have delivered about 200 FUV’s so far.
The FUV starts at about $18000. The company has a heavy focus on selling commercial-versions of the FUV, Rapid Responder, and last-mile delivery, the Deliverator, and where their production costs are lower and their product-fit are better as it is economical than conventional vehicles. The company expects the commercial versions to be in production by the end of this year.
AYRO aims at the niche sector of light-utility and micro-mobility(low distance) commercial vehicles. Their products are very specific-use vehicles. The company believes the commercial light-utility market will be $24 billion a year by 2025.
The company recently entered into a strategic partnership with Karma Auto, which is a bigger consumer EV company with vast domain knowledge, manufacturing expertise, and funding. AYRO has recently completed a factory expansion at Austin, where they can now produce 600 vehicles a month. AYRO currently offers two vehicles, the 311 and 411, that cost between $10000-$30000 depending on the configuration.
Arcimoto currently has a $75 million pre-order backlog. Arcimoto expects sales to pick up as the work-from-home trend subsides, as their product is cheap and ultra-convenient. The company expects to breakeven after hitting production levels of 3000-5000 units. The company believes that commercial-use vehicles are crucial to hitting these production levels as they are cheaper to make, have a higher profit margin, and are high-volume products.
The company has partnered with DHL for directly shipping the vehicle to customers across the US. This will help the company save on sales and retail network and use resources to scale production.
AYRO recently entered into a partnership with Karma Automotive to produce 20000 vehicles over the 3 years and project $300 million in revenue. The company also just signed a $600,000 inaugural deal with Gallery Carts, one of the US’s largest food-cart operators.
AYRO claims that their proprietary manufacturing process can yield 20% gross margins on the 411 and 30% on the 311, which are impressive numbers for the automobile space. The pandemic has been particularly harsh on AYRO as most of its product use cases have been halted due to social distancing.
While both companies are in a very nascent stage right now, it is very difficult to say which one will be able to scale and become a proper brand. However, for investors with a high risk-appetite, FUV stock is definitely the better option as their product has much bigger mass-market potential.