A $15 Billion Electric Vehicle Niche Is Flying Under Wall Street’s Radar

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The EV industry is simultaneously a wildly rewarding and wildly risky ride for investors. EV manufacturers are now struggling to stay profitable unless they are Tesla or China’s biggest players.

In 2022, we saw overall car sales plummet by 8%, but at the same time, EV sales soared by 65%, according to Kelley Blue Book. Still, despite the fact that electric vehicles are now the clear future, growing pains, cash burn and a brutal price war have rendered this a snake pit for investors.

While EV sales are set for a 35% year-on-year increase in 2023, bolstered by national policies and incentives providing further impetus for producers and consumers, some companies are dealing with missed deadlines, lagging production and serious fiscal problems, including bankruptcy.

While some of the biggest failures went through SPAC deals (special purpose acquisition company mergers) in 2020 and 2021, those deals are fading away now after failures to deliver and amid SEC investigations. At their hyped-up height, they were all listed as future “Tesla killers”.

Lordstown Motors Corp (OTCMKTS: RIDEQ) filed for bankruptcy in June due to lack of cash to finance development. Year-to-date, it’s lost ~83% of its share price. It’s not alone.

Nikola Corp (NASDAQ:NKLA) stock is down over 77% since it launched, and Fisker Inc (NYSE:FSR) is down 38%. Rivian Automotive (NASDAQ:RIVN) has lost $103 off its share price since its stunning IPO. Lucid Group (NASDAQ:LCID) is surviving, but only because the Saudi sovereign wealth fund keeps pumping money into it no matter what. It’s a legacy play that does not reflect the current reality on the ground.

The over-crowded, brutally competitive EV car space is now undergoing a price war that many won’t survive. But this isn’t the only EV segment investors should be looking at. There is another $15-billion opportunity in this space, and it means going off-road.

Prime Time for Electrifying the Waterways

Now, the EV revolution is unfolding on the waterways, but the lessons of the crowded roadways have been learned. This time, it’s not about cash burn. It’s smarter, if you know where to look.

The recreational boat market is worth nearly $19 billion today, and it’s projected to reach nearly $26 billion by 2028—in just four-and-a-half years. That’s an astounding growth rate, and it’s all because of a push to go electric, including the adoption of emissions-free transportation and government policies that are hyper-advantageous to this segment.

The smart and first-mover advantage goes to Vision Marine Technologies (NASDAQ:VMAR), with its proprietary E-Motion powertrain outboard motor that can turn any speedboat into the fastest electric version in its class on the market.

The cash-burn is not there because VMAR is selling directly to OEMs (original equipment manufacturers). It’s not trying to build boats. It’s making smart partnerships with battery makers and engineers and tapping into a boat-building market that has to do only one thing to make this viral: Fit an award-winning electric motor on the back, instead of a noisy, polluting and expensively maintained gasoline-powered outboard.

Nor is it just about speedboats, either. VMAR’s E-Motion fully electric outboard engine technology can be used on pontoons—a recreational trend worldwide.

VMAR is also gearing up to flip the massive boat rental market into an electric bonanza.

It’s time to find a new niche in the EV segment, and these innovators and first-movers have a very clear advantage.

The Electric Boat Motor That Changes Everything

In partnership with VMAR, veteran boat maker Four Winns unveiled the new H2e Bowrider speed boat at the Paris Boat Show in December, and then made its official debut in February in Miami, with deliveries to start this summer.

The speedboat showcases VMAR’s E-Motion 180 HP electric outboard motor with proprietary powertrain technology. That motor makes the H2e Bowrider the first all-electric series production bowrider on the market.

And VMAR’s E-Motion is the first fully electric, production-ready, high-performance 180 HP outboard motor on the market, as well.

The powertrain can provide a consistent 180 HP of pure electric power, with cutting-edge high voltage power when you need it most, and a completely scalable power bank.

The proprietary technology is end-to-end: It includes the batteries, the engine, and the software, making it the only turn-key solution for boat manufacturers in its class.

The E-Motion outboard motor can fully charge overnight with no additional infrastructure and boasts the highest horsepower engine in its class. And from a price perspective, it out-competes everyone else, which should help it to capture new market share.

The bigger picture here is that VMAR’s technology system can turn any boat instantly into an electric boat.

This month, Vision Marine (NASDAQ:VMAR) is busy equipping a pontoon with electric propulsion and solar panels for the longest known electric boat run in America (and possibly in the world). VMAR’s Zenith pontoon with set off in Virginia on a 1,050-nautical-mile journey to Miami, Florida, to showcase the capabilities of sustainable electric power.

VMAR has also secured a manufacture & supply agreement with McLaren Engineering, a wholly owned subsidiary of Linamar Corp. That means reliable production, at scale.

McLaren’s role in this means protection against supply chain bottlenecks, with more than 90% of components sourced in North America and a production capacity of up to 18,000 E-Motion outboard motors annually.

Last September, right out of the gate, VMAR received an initial purchase order from the North America’s Limestone Boat Company for $2 million worth (25 units) of E-Motion 180E outboard motors and powertrain systems. Limestone is now moving into scheduled production, with a delivery target to dealers set to begin in 2024.

Vision Marine is expecting its first revenues from powertrain this year.

While it’s been all about build-out and launch over the past couple of years, VMAR is positioned to be free-cash-flow positive next year–a rarity in an EV segment where car manufacturers have largely run out of money to keep manufacturing and where profitability remains highly elusive.

The $18B Global Boat Rental Market, Ripe for Electrification

The global boat rental market (across all boat types) was valued at $18.2 billion in 2021, and is projected to reach $31.2 billion by 2031, growing at a CAGR of 5.7% from 2022 to 2031. It’s a huge market that is about to go electric.

And it’s not just about the environment … Electric boats are considered a better experience all around, from the noise-less enjoyment to the ease of maintenance and lower operating costs in the longer-term.

And, again, VMAR has a first-mover advantage.

VMAR’s flagship Newport Beach business managed to serve 300,000 clients in the first three years, annualizing $4 million in revenues with a 35% profit margin.  In March, the company opened its second electric boat rental operation in Portside Ventura Harbor, California. Later this year, VMAR will roll out a third fully owned electric boat rental location and launch their franchise model. Next year is also out scaling up with speed.

A Brilliant Outlook for Marine Batteries

EV battery maker stocks are soaring, unlike their chaotic car manufacturing counterparts. Just this week, Chinese battery maker CATL reported earnings showing a 63% spike in profits and excellent guidance.

The same positive fate looks set for the marine battery market, where Vision Marine (NASDAQ:VMAR)  boasts proprietary technology that it has quietly been developing for a decade, with certified battery cells and custom designed marine-grade battery packs. It also has a partnership deal with Octillion, which has a production capacity of up to 5,000 batteries per day.

As we speak, the multi-billion-dollar boat battery market is undergoing its biggest transition since the invention of the boat motor itself. Not only is the marine battery market forecast to grow by 18.6% to 2030, but it may represent a $2-billion opportunity for investors over the next five years.

Breaking Records All Over the Place

VMAR is out to make history, and it’s already broken a number of records, making it one of the most exciting smaller EV plays on the NASDAQ at a time when investors are growing increasingly frustrated on the roadways.

It’s a first-of-its-kind proprietary outboard motor and powertrain, powering the first all-electric series production bowrider on the market.

Late last year, the company broke the world electric boat speed record at 109 MPH in a 100% electric boat in the Lake of the Ozarks Shootout, the largest boating even of the year in North America. Now, it’s about to do it again, on a journey intended to “challenge the limits of what was thought possible” in the longest electric boat ride ever from Norfolk to Miami.

From there on, VMAR expects the wind to fill the sails with positive cash-flow by the end of next year and profitable and growing divisions by 2025.

Other Companies To Watch:

Stellantis N.V. (NYSE:STLA) is an automotive conglomerate that was formed in 2021 by the merger of Fiat Chrysler Automobiles and PSA Group. This multinational corporation, which operates 14 different brands, including Jeep, Peugeot, and Maserati, is committed to the development of electric vehicles and has announced that it aims to invest over €30 billion through 2025 in electrification and software development. The company has set ambitious goals, planning to achieve sales of low-emission vehicles of 70% in Europe and 40% in the US by 2030.

Stellantis’s strategy revolves around four electric vehicle platforms designed to cover all market segments, from small city cars to performance vehicles. By leveraging the strengths of its diverse brand portfolio and targeting investment in EV technology, Stellantis aims to capture a significant share of the expanding EV market. As an investor, it’s worth watching Stellantis’ progress in EV adoption and its broader push towards electrification.

The company’s performance on the stock market reflects investor confidence in its direction, and recent financial results have shown resilience in the face of industry-wide supply chain challenges.

XPeng Inc. (NYSE:XPEV) is a leading Chinese electric vehicle manufacturer. The company has distinguished itself with its focus on technology and innovation, including developing advanced driver-assist systems. XPeng’s vehicles, including the P7 sedan and G3 SUV, are aimed squarely at the technology-savvy middle-class consumer and compete directly with other Chinese EV startups like Li Auto and Nio.

XPeng has shown robust sales growth, underpinned by the strong demand for EVs in China. The company is also expanding its sales network and investing in its self-developed full-stack autonomous driving technology, XPilot, which enhances its competitive positioning in the industry.

As an investor, it’s worth noting XPeng’s commitment to in-house software development and autonomous driving technology. These innovations could provide the company with a long-term competitive advantage in the rapidly evolving EV market.

Li Auto Inc. (NASDAQ:LI) is a pioneer in the Chinese electric vehicle market. The company’s Li ONE SUV, a plug-in hybrid that can run on electricity and gasoline, has resonated with consumers who have concerns about range anxiety. The vehicle’s success has allowed Li Auto to compete with other Chinese EV startups, including Nio and XPeng.

The company’s focus on Extended-Range Electric Vehicles (EREVs) differentiates it from competitors who are focused on pure electric models. This allows it to cater to a unique customer segment in the Chinese auto market. Li Auto’s sales growth has been impressive and shows that its hybrid approach to EVs is gaining traction.

From an investment standpoint, the company’s distinct product offering and strong sales growth make it a compelling proposition. The company’s ability to navigate the competitive EV landscape and cater to the unique needs of Chinese consumers may provide strong growth opportunities in the future.

Nio Inc (NYSE:NIO) has emerged as a prominent player in the EV sector. The Chinese-based automaker has carved a niche for itself in the premium electric vehicle market, with a strong lineup of SUVs and the ET7 luxury sedan. The company’s innovative “Battery as a Service” model and battery swap technology have helped to distinguish Nio from its competitors.

Nio’s business model is about more than just selling cars. It’s focused on providing a lifestyle brand to its users, including Nio Houses that serve as showrooms, lounges, and gathering places for Nio users. The company’s focus on user experience and community sets it apart in a crowded EV market and provides a unique value proposition for customers.

From an investment standpoint, Nio is an interesting play in the world’s largest auto market. With strong government support for EVs in China and a growing middle class, Nio is well-positioned to capitalize on the growth in the EV market. The company’s distinct approach to customer service and innovation in battery technology could provide a solid foundation for future growth.

BlueBird (NYSE:BLBD) is a leading designer and manufacturer of school buses. The company’s portfolio includes both conventional combustion engine buses and a growing lineup of electric models. The company has a substantial share of the North American school bus market and is making significant strides in the adoption of electric buses.

BlueBird’s emphasis on producing zero-emission vehicles is a significant part of its growth strategy. The company’s electric buses, with their lower total cost of ownership, are appealing to school districts looking to cut operational costs and reduce their environmental impact.

Investors should consider the company’s leadership in the school bus market and its commitment to electric buses. As more school districts across the U.S. move towards electrification, BlueBird is well-positioned to benefit from this trend. The company’s ongoing commitment to innovation and its well-established brand provide a strong base for potential future growth.

General Motors Company (NYSE:GM) is a staple in the American automotive industry. They’ve made significant commitments towards an all-electric future, announcing a $27 billion investment plan in electric and autonomous vehicles through 2025, aiming to launch 30 electric models globally. GM’s Ultium battery technology is central to these ambitions, promising high energy capacity and versatile applications across different vehicle designs.

GM’s commitment to electric and autonomous vehicles signals a significant shift for the traditional automaker, laying the groundwork for a sustainable future in the automotive industry. The company’s plans don’t just involve passenger vehicles but extend to commercial vehicles and even electric air taxis, demonstrating an encompassing strategy in electric mobility.

Investors should monitor GM’s ambitious strategies to transform its portfolio and seize a significant portion of the booming EV market. GM’s past performance and experience in the industry provide a strong base for this transition, making it a notable contender in the EV race.

Toyota Motor Corporation (NYSE:TM) is the world’s largest automaker in terms of production volume. While Toyota was an early adopter of hybrid technology with the Prius, it has been slower than some competitors to fully embrace electric vehicles. However, the company has announced plans to invest $13.5 billion into battery technology by 2030 and aims for 40% of its global sales to come from electric vehicles by 2025.

Toyota’s strategy includes a diverse range of electrified vehicles, including hybrids, plug-in hybrids, battery electric vehicles, and hydrogen fuel cell vehicles. This broad approach enables the company to serve a variety of consumer needs and preferences in different markets around the world.

From an investment perspective, Toyota’s established global presence, manufacturing expertise, and reputation for reliability provide a solid foundation for its push into the electric vehicle market. Investors should watch how the company navigates this transition and manages the different facets of its electrification strategy.

Volkswagen AG (OTC:VWAGY) is one of the largest auto manufacturers in the world, based in Germany. The company owns a plethora of brands, including Volkswagen, Audi, Porsche, and Lamborghini. Volkswagen has embarked on a major push into electric vehicles as part of its “Transform 2025+” strategy, aiming to be the global leader in electric mobility by 2025.

Volkswagen’s EV strategy revolves around its modular electric drive matrix (MEB) that serves as the technological foundation for a large number of the Group’s electric cars. The company plans to launch dozens of electric models in the next few years, with the goal of selling approximately 26 million fully-electric cars by 2029.

As an investment, Volkswagen presents a compelling case as a traditional automaker transitioning to an electric future. The company’s substantial resources, broad brand portfolio, and aggressive electric vehicle goals suggest it could become a dominant player in the global EV market.

Originally known for pioneering the smartphone market, BlackBerry Limited (NYSE:BB) has since shifted its focus and has been carving a niche for itself in the automotive sector. Although not a direct electric vehicle manufacturer, BlackBerry’s QNX software has become a critical component in the rapidly evolving automotive industry, securing a significant place within the Electric Vehicle (EV) and Autonomous Vehicle (AV) spaces.

BlackBerry’s QNX is a leading independent software platform used for in-car systems, from infotainment to advanced driver-assistance systems (ADAS). It’s known for its security, reliability, and scalability, making it a top choice for automobile manufacturers worldwide. As vehicles become more connected and autonomous, the role of software like QNX becomes increasingly critical.

Additionally, BlackBerry has been investing heavily in cybersecurity, a growing concern for connected and autonomous vehicles. Their technologies provide much-needed security solutions to protect against cyber threats, ensuring the safe operation of these advanced vehicles. Furthermore, BlackBerry’s partnerships with leading auto industry players such as Baidu, NVIDIA, and Qualcomm demonstrate its impact on the sector.

Blink Charging Co. (NASDAQ:BLNK) is a leading provider of EV charging equipment and networked EV charging services. With its extensive range of products, including home, commercial, and public chargers, Blink is driving the expansion of necessary charging infrastructure to accommodate the growth of the EV market.

A significant aspect of Blink’s operations is its cloud-based Blink Network, which connects all its charging stations and provides EV drivers with vital information like charger location, availability, and charging fees. Blink’s role in expanding and managing this charging infrastructure will be essential as the adoption of electric vehicles increases. Investors may consider Blink due to its key role in facilitating the shift towards electric mobility and the expected growth of the EV charging infrastructure market.

By. Josh Owens

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