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© Reuters. Arrival of the stock of electric vehicles: getting closer to income
Some interesting companies went public in 2021 as part of a PSPC business combination. In addition, there has been no shortage of publicly traded companies in the electric vehicle industry.
Arrival (ARVL) appears to be an attractive company in the electric utility vehicle industry. After trading at $ 22.8 in March 2021, ARVL stock is on a downtrend. The stock reached $ 10.40 last month and is currently trading at $ 13.03. (See ARVL stock charts on TipRanks)
Considering the addressable market and its commercial developments, the ARVL share seems positioned for a further rise. I am bullish on the title as the growth in the commercial electric vehicle market gains momentum.
In summary, Arrival has a diverse vehicle portfolio with an electric bus, electric van and large electric van in the works. According to the company’s own estimates, the total addressable market for vans is $ 280 billion. In addition, electric buses have a potential market of $ 154 billion.
Clearly, there is a great opportunity and Arrival seems well positioned to take advantage of it.
Strong growth in the order pipeline
It should be noted that Arrival expects production of electric buses to begin in the fourth quarter of 2021. Its electric van and large electric van are expected to launch in the third quarter of 2022. Therefore, there is still time before ‘Arrival does generate significant income.
However, the company’s order intake has been strong. This is a first indication of the market potential. At the time of the SPAC business combination, Arrival reported orders worth $ 1.2 billion of United parcels Service (NYSE :). The order is for 10,000 vans with the option for 10,000 more.
Arrival last month released second quarter 2021 results. The company’s non-binding orders and letter of intent reached 59,000 vehicles.
In another important development, Arrival and Uber Technologies (NYSE 🙂 have collaborated on an electric car for the VTC industry. The first arrival car is expected to go into production in the third quarter of 2023. The company is also in talks with other rideshare companies. This will open up another big market for the arrival.
The micro-factory approach
In terms of manufacturing, Tesla (NASDAQ 🙂 takes a Gigafactory approach. Arrival enters the industry with a potentially revolutionary Microfactory approach.
As the name suggests, the idea is to have smaller manufacturing units with a low capital requirement. Arrival estimates the cost of setting up a micro-factory to be $ 44 million. Currently, the company has a cash reserve of over $ 450 million. This can be used to set up ten micro factories.
The main advantage is that Arrival can easily create a global presence through this approach. In addition, thanks to automation, the company’s micro-factory has a low break-even point and a lower number of employees per vehicle manufactured.
The approach can also be used for tailor-made solutions for large orders. Arrival is already setting up micro factories in the US and UK. Based on the order book, these factors can be implemented within six months at several locations.
The Taking of Wall Street
According to the TipRanks analyst rating consensus, ARVL stock is considered a moderate buy, with one buy attributed in the past three months.
The average ARVL price target is $ 20.00 per share, implying a potential upside of 53.49% from current levels.
Another interesting fact about Arrival is the company’s focus on innovation. The company has a team of over 500 software engineers and a strong intellectual property portfolio. In the last quarter, the company also partnered with Ambarella (NASDAQ 🙂 to provide advanced driver assistance systems.
Overall, Arrival has yet to generate revenue. However, the company has built up a strong order book that provides visibility into growth once the micro factories start production.
It should also be noted that United Parcel Services, Uber and Leaseplan are large entities with a global presence. Based on the initial delivery of vans, orders could be significantly increased.
These factors make the ARVL share attractive after a significant correction.
Disclosure: At the time of publication, Faisal Humayun does not have a position in any of the titles mentioned in this article.
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