NIU vs FUV: Which stock is a better buy? – Idaho Reporter

Automotive, National

NIU vs FUV: Which stock is a better buy?

NIU Technologies and Arcimoto are both pure EV companies that are solely focused on urban mobility. They share the belief that the future of urban mobility lies in smaller, independent use, cheap and convenient vehicles rather than traditional cars.

But which stock is a better buy, FUV or NIU?

Background

NIU is a six-year-old Chinese company that produces smart two-wheelers. NIU is headquartered in Changzhou, China. The company believes that the lower costs and maintenance of electric vehicles coupled with the convenience of two-wheelers is the future of urban mobility. NIU currently offers a portfolio of six two-wheeler products in China. The company listed itself on the NASDAQ a couple of years ago after raising $63 million through ADR.

Arcimoto is an Oregon headquartered company that builds two-seater three-wheeled vehicles. It was founded by CEO Mark Frohnmayer in 2007. The company raised $19 million when from an IPO it went public in September 2017. Due to the coronavirus, the company raised $16.5 million from institutional investors earlier this year. Arcimoto has a market cap of $194 million.

Business Model

NIU currently offers customers a range of seven products that offer different range and performance combinations. The company brought Tesla’s business model to the two-wheeler market. They started by offering a high-performance electric bike to create hype and tap into high-income consumer pools and used the proceeds to offer cheaper products.

Unlike most auto-companies, NIU has not only survived but thrived through the pandemic due to their cheap products and the fear of using public transport. The company plans to enter the US and European markets with an electric-assisted bicycle, which they expect is 5 million units a year market. The company wants to dominate the global market for small distance urban mobility, which McKinsey expects will be worth $500 billion in five years. NIU is completely vertically integrated and does both design and production in-house. 

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 company expects sales to pick up as people start going back to offices as their product is amongst the cheapest options for first-time vehicle buyers and fear of using public transport is high. Arcimoto claims that apart from retail savings, customers also enjoy a TCO(Total Cost of Ownership) that is 1/3 of small-size cars.

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. This is a huge opportunity for the company as its products have far more cargo space and lesser running costs compared to gas two-wheelers, which is the current vehicle of choice for last-mile delivery. This could be a huge opportunity for the company as the food delivery market is expected to grow to $365 billion by 2030, according to UBS. The company expects the commercial versions to be in production by the end of this year.

Financial Performance

NIU is expected to release Q3 financial results by the end of the month. Impressively, the company has been reporting profits for 3 out of the last 4 quarters. The company has recorded 43% sales growth so far this year, with Q3 deliveries of nearly 261,000 units. Management expects that sales will pick up sharply as work-from-home gradually reduces. The company has a P/E of 107 and a market cap of about $2.18 billion. The company also expects great sales from its new G0 model, which starts at just $400.

As of Q3, Arcimoto has over 4000 pre-orders, equating to about $75 million in pre-orders. Arcimoto expects sales to pick up as the work-from-home trend subsides, as their product is cheap and ultra-convenient. Arcimoto also recently launched a roadster model of its FUV. 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 ordered in bulk. 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.

Conclusion

NIU is hands down the better investment due to an excellent track record of production, deliveries, and profitability. NIU is also working on a much bigger canvas than Arcimoto as the FUV is still a niche product. Despite its recent rally, NIU is still scraping the surface of the electric two-wheeler market which is poised to grow substantially over the next few years, and that combined with its dominant position could deliver big value for investors.

Other EV plays to consider:

GPV vs SOLO, XPEV vs Li Auto, AYRO vs FUV, RIDE vs FSR, NKLA vs HYLN

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