The Disrupters: Three-Wheeler Pointer to Wheels Coming Off EV Wagon?

By Robert Gray

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4th January 2019

It’s not exactly a reinvention of the wheel but the three-wheeled car has returned as a Canadian EV maker launched a new model.

Electra Meccanica from Vancouver has opened its first US showroom in Los Angeles and has begun selling its three-wheeled EV into the American market. The single-seater is designed for commuters and is aptly called the Solo. The vehicle, which is being built in China, promises a range of 100 miles and a top speed of 80mph with full charging in three hours on a level 2 charger.

The publicly-traded carmaker (ticker SOLO on the Nasdaq) announced in a government filing that total vehicle pre-orders as of October 22, 2018 exceeded 64,000 units. That represents around $1Bn in potential sales at the expected vehicle MSRPs of approximately $16,000. That price tag makes it one of the least expensive EVs on the market, which company officials say will be a strong selling point.

Electra Meccanica has been involved in other EV ventures in the past and say the diminutive design, which has been tried unsuccessfully before by previous carmakers notably the UK’s Sinclair C5 and likely to include offerings from domestic electronics brand Dyson, is ripe for the current times. It contends the low price point combined with an expanding network of charging stations in California in particular will make the Solo a hit with commuters.

A bullish note from Diamond Equity Research predicts the carmaker will have a cushy 25% gross margin and predicts 75,000 Solos will be sold in the next three years. The analysis sees Electra Meccanica’s ability to tap into the enterprise market as one way to attain that sales figure. It has already announced a collaboration with 7-Eleven, the world’s largest convenience retailer, in which the Solo may play a central role in a fleet for local delivery initially in some Canadian locations. A company spokesman told TU-Automotive it is also targeting hotels including the Vancouver Doubletree, corporate and university fleets, as well as delivery companies as potential business clients.

The carmaker is also producing another electric car, a two-seater called the Tofino. It recalls a classic Italian roadster sports car, harkening to the automaker’s heritage – the company’s Intermeccanica subsidiary has been building high-end specialty cars for nearly six decades.

To be sure there are skeptics of the lightweight, commuter EVs as a winning proposition. In fact, some industry insiders don’t see think even a low price point and a growing network of charge points will boost the Solo’s prospects. “At least in US terms, the vehicle has very poor prospects for a variety of old reasons: narrow width, limited seating, little cargo capacity, three-wheels. Basically, it’s sales-proof,” Eric Noble with The Car Lab, which does design work for a number of other automakers, told TU-Automotive in an interview. Noble added: “I think much of the reason is that, as a three wheeler, it supposedly doesn’t have to meet passenger car safety standards; which, of course, didn’t help Aptera or the dozens of others that walked over this cliff before.”

Still, the Solo has turned heads and enjoyed plenty of attention by media and a verdict on its viability will be known soon enough as sales results begin rolling in and as the company looks to expand into more markets. As for the Tofino roadster, the company advertises a retail price of $50,000 and claims the vehicle sports a 250-mile range with a top speed of 125mph but the company estimates delivery will not be until 2020.

Looking further down the road, the Diamond Equity Research analysis found Electra Meccanica’s stock to be “undervalued with significant upside if the company executes on the top line growth management anticipates”.

The volatile market on Wall Street heading into the new year, including for shares of rival EV makers Tesla and NIO, produced some major turbulence for these growth stocks as they tend to be even more vulnerable to whipsaw trading. That means investors will probably be less patient and looking for positive sales results sooner rather than later given the turbulent trading climate.

Whether that affects any long-term design decisions by the carmaker or consumer confidence in buying a car from a nascent EV brand remains to be seen. However, it may mean the bumpy ride for investors will continue, at least in the near term.