The S&P 500 rallied 4.4% as stocks finished higher for
the best weekly gain in the last six months. However, bond yields declined to
the lowest levels in nearly two years. Increased expectations of a Fed rate
cut, positive response to the U.S. and Mexico reaching a resolution to avoid
tariffs, and improved valuations, all helped stocks move higher.
In terms of economic data, signals were mixed with strength
from the services sector mostly offset by weakness in the manufacturing sector.
While job gains for the month of May came in below expectations, the
unemployment rate is still very healthy at a 50-year low. Analysts expect a
more balanced mix of positive and negative moves this season and feel confident
about rising corporate profits, strong economic growth, combined with low
interest rates creating a positive fundamental base that outweighs risks.
This also offers an opportunity to enhance diversification.
Reviewers call for appropriate global stock-market allocations, with
diversification across asset classes, including small- and mid-cap stocks, that
will likely benefit from increased trade fears or renewed economic signals.
U.S Economy
There remains continued evidence of a slowdown in the U.S.
economy, which in turn boosted hopes for a turn in Fed’s policy. Numbers from
ADP showed that private sector payrolls had grown by the smallest monthly
amount in over nine years for the month of May. Alongside that news, the Labor
Department reported overall, payrolls had expanded by only 75,000 in May. The
saving grace: May’s unemployment rate held steady at of 3.6%, its lowest in
five decades. Almost immediately after the figures were issued, futures markets
began pricing in over a 98% probability of a rate cut in 2019, which they say
has a 90% chance taking place by July (source: CME Group data).
Economist suggest that ultimately, the determination of
whether the economy continues to grow or falls into recession will be
determined by the labor market and household spending. By most estimates, these
are expected to remain healthy enough to support moderate GDP growth this year.
This is heavily weighted in favor of the still-healthy labor market that is
driving several key metrics.
Mexico On Hold
Expected tariffs planned to come into effect on June 10th
were averted in a last-minute deal reached between the U.S. and Mexico. In a
joint declaration released by the U.S. state department, the two countries said
Mexico would take “unprecedented steps” to curb irregular migration
and human trafficking.
The U.S. did not however, get one of its key demands that
would have required Mexico to take in asylum seekers heading for the U.S. and
process their claims on its own soil.
Mexico agreed to:
Deploy up to 6,000 additional troops along
Mexico’s southern border with Guatemala using its National Guard beginning
Monday
Take “decisive action” to tackle human
smuggling networks
The US agreed to:
Expand its program of sending asylum seekers
back to Mexico while they await reviews of their claims.
“work to accelerate” the adjudication
process
Both countries have offered pledges to “strengthen
bilateral co-operation” over border security, including what they have
called “coordinated actions” and information sharing.
These actions, while not inferring a long-term solution,
have arrested the immediate actions of the intended tariff going into place and
offered some signs of confidence that the two parties can work out terms that will
give the markets breathing room.
Metals and Mining
The precious metals markets were given a lift this week by
geopolitical issues that continue to plague investors who then seek out the
metals as safe havens. At the forefront was the gold market, which saw its best
weekly performance in more than a year. Some leading analysts have predicted
that the precious metal has enough momentum now to snap the critical long-term
resistance barrier in the near-term. Lower U.S. employment growth helped push
gold prices back to within close breaking distance of the all critical $1,350
level. During the week, August gold futures traded at $1,347.10 an ounce, up
2.7% compared to the previous Friday.
Gold faces some strong technical headwinds. Since hitting
its 2015 low, it has tested resistance at or near $1,350 a total of eight
times. Silver is taking some signals here, following gold’s lead on Friday. It
added gains on the back of ongoing geopolitical concerns too, trading just
under the US$15 per ounce level on track for its best week since late January.
The others in the precious group were also up: platinum was up close to 1
percent for the week and on track for its first weekly gain in the last seven
weeks. Palladium also climbed, edging up 1.05 percent for the week. As of 10:05
a.m. EDT Friday, palladium was trading at US$1,346 — a gain of close to US$20
from the previous week.
Energy and Oil
Once again, energy shares lagged, weighed down by continued
weakness in oil prices, and the typically defensive utilities and real estate
sectors also underperformed. Oil futures climbed for a second straight session
Friday, with U.S. prices erasing their loss for the week just two days after
dipping into a bear market. Natural gas spot prices fell at most locations this
week. Henry Hub spot prices fell from $2.63 per million British thermal units
(MMBtu) last Wednesday to $2.39/MMBtu. Temperatures were close to normal across
much of the Lower 48 states, with warmer-than-normal temperatures in the
Pacific Northwest and cooler-than-normal temperatures in the Southwest and
Northeast. At the Chicago Citygate, prices decreased 22¢ from a high of
$2.43/MMBtu last Wednesday to $2.21/MMBtu yesterday. Traders will be watching
updates on a production-cut agreement between the Organization of the Petroleum
Exporting Countries (OPEC) and other major oil producers ahead of the deal’s
expiration at the end of this month.
World Markets
European stocks rose as investors began pricing in
expectations for rate cuts as both the U.S. Federal Reserve and the European
Central Bank (ECB) indicated that they could possibly intervene if trade
tensions hit the global economy. The pan-European STOXX Europe 600 Index and
the UK’s FTSE 100 Index gained more than 2%. The exporter-heavy German DAX
Index and Italy’s FTSE MIB Index both gained almost 3%. Germany, which leads
European economies, reported that its Bundesbank data showed weak exports are
taking a toll on the German economy and cut its economic output forecast to
0.6%, down from 1.6% in December. The central bank also slightly lowered forecasts
for 2020 and 2021. Meanwhile, signs of China’s slowing economic growth
continued to accumulate. Clearly this is raising hopes for stimulus from
Beijing. The International Monetary Fund trimmed its 2019 growth forecast for
China to 6.2% from a prior 6.3% estimate and projected 6.0% growth next year.
The Week Ahead
This coming week is a relatively light week for reporting,
but some areas to focus on include inflation numbers to be released on
Wednesday, along with May retail sales and consumer sentiment reported this
coming Friday.
Stocks declined for the 4th straight week impacted by rising
trade tensions and continued geopolitical uncertainty. With the White House
announcing that the U.S. will impose tariffs on Mexico in order to quell
illegal entry, concerns increased on unresolved U.S.-China trade issues. These
have a serious impact on global growth. May showed the largest stock market pullback
this year, but in counterpoint, bonds rallied significantly. Overall, both the U.S. and global yields
showed declines; the 10-year Treasury ended at its lowest point in 21 months at
just 2.13%. German yields followed suit moving into negative territory.
U.S Economy
The leading US economic news surrounded the proposed tariffs
on all imports from Mexico in a bid to force Mexico to deal with its illegal
immigration problem. It’s hard to tell if higher tariffs on China and Mexico
are short-term tactics aiming to spur on specific actions, or they are more
long-term strategies that could stay in place after any goal is achieved. Both
of those things have occurred in past tariff bouts. Higher tariffs on U.S.
imports generally lead to higher prices in the U.S. and slower economic growth
for the countries involved. But the impacts are also typically small when
compared to the overall U.S. economy. Most analyst are still looking at
economic growth to continue at 2% to 2.5% in 2019. That’s thanks to strong job
numbers, slowly rising wages, low inflation, low interest rates and aggressive
fiscal policy.
Tariffs on Mexican Imports
The surprise tariff increase on Mexican imports is a 5%
tariff slated to begin June 10 and to increase monthly to cap at 25%. The plan
is to pressure Mexico over its inaction in dealing with stopping illegal
immigration flows to the U.S. Leading imports from Mexico include autos and
electronics, with the overall import figure at about $350 billion. Stocks in
the leading sectors declined in response. It’s hard to tell if these tariffs
will prompt a response from Mexico, but most analysts don’t expect tariffs to
rise to 25% on imports from Mexico. However, ongoing threats of higher tariffs
and trade disruptions are expected to add to stock market volatility.
Metals and Mining
The gold market is living up to its potential as a
safe-haven asset this week with prices pushing back above $1,300 an ounce. Gold
is seen as attractive because it is considered one of the cheapest safe-haven
assets out of all the financial markets. The U.S. dollar index has struggled to
hold gains above 98 points, but it continues to trade near a two-year high.
Meanwhile, the U.S. 10-year bond yields are trading at around 2.16%. The
inverse is true for gold, which is trading at a two-week high. The August gold
futures last traded at $1,309.20 an ounce. That is up over 1% from last week.
Geopolitical tensions always come to bear on the metals markets, and especially
gold. Some analysts think they have reached a tipping point with President
Donald Trump adding a 5% tariff on Mexico in his efforts to halt illegal
immigration into the U.S.
Energy and Oil
U.S. oil futures dropped by more than 5% on Friday to settle
at their lowest since February as another market saw affects of the Trump
administration’s plans for tariffs on Mexican goods. The concern is that the
tariffs may affect economic growth and therefore, energy demand. Overall,
energy shares performed worst for the second consecutive week as domestic oil
prices tumbled to their lowest level since February. The prices were dragged
lower by a smaller-than-expected decline in U.S. crude inventories. In a move
not widely reported, the Trump administration has decided to approve expanded
use of ethanol fuel. That is expected to help corn farmers hurt by the trade
conflict with China. According to data from PointLogic Energy, the average
total supply of natural gas rose by 1% compared with the previous week. Dry
natural gas production grew by 1% compared with the previous report. Average
net imports from Canada were down 2% from last week.
World Markets
This week, both the U.S.-China trade tensions and President
Trump’s new plan to impose tariffs on Mexico pushed equity markets in Europe
down as investors moved to lessen risk. The pan-European STOXX Europe 600 fell
about 2%, the UK’s FTSE 100 lost about 1.6%, and the export-heavy German DAX
index dropped 2.4%. Tensions are increasing in Italy between the euroskeptic
government and the European Union (EU). As a sign, the FTSE MIB Index lost
almost 3%. Investors sold Italian government debt likely due to growing fears
of a showdown between Rome and Brussels over Italy’s high debt levels. Over the
week, the benchmark Shanghai Composite Index added 1.6%, and the large-cap CSI
300 Index added just under 1%. The CSI 300 is notable as it tracks all bluechip
stocks listed on the Shanghai and Shenzhen exchanges.
The Week Ahead
There’s plenty of economic data to watch this week: the
Manufacturing Purchasing Managers’ Index comes out, along with auto sales and
construction spending from the month of May. A bigger factor will be May’s jobs
report, which will be released this week, with most market watchers and
economist expecting the unemployment rate to stay right in line with the
cyclical lows.
Key Topics to Watch
• Mexican Tariffs by the US • China Trade War with the US • ADP National Employment Report • U.S. International Trade in Goods & Services Report • ISM Manufacturing Report on Business • Revised Productivity & Costs
The fact that US stocks finished the week lower seems to
weigh on concerns that U.S. trade tensions with China are expected to be
prolonged. The broad sentiment across economic reports suggest that global
growth is showing signs of slowing. Lower oil prices pushed energy stocks down,
but utilities came back to lead advancing sectors. This is a “normal” seasonal
shift since it’s common for sector leadership to alternate from over time. For
investors, this reinforces why it’s important to ensuring your portfolio is
diversified across different sectors with variations in risk.
U.S Economy
The US economic figures are continuing strong; perhaps the
strongest we have seen to date. A snapshot of the key figures tells the story
pretty well. The US is about to tally the longest economic expansion yet. Based
on current figures, the streak of positive U.S. GDP growth will pass the 1990s
expansion to become the longest on record in June. As for unemployment, the
country is at a 50-year low. At 3.6%, the unemployment rate has fallen from 10%
a decade ago to its lowest level since the late 1960s. The US markets are on
their second-best all-time bull market. In the current run, the market has
gained more than 400% from its lows in 2009. The only previous bull market to
overtake this stretch was the 1987-2000 run that was both the longest and
strongest.
Actions by The Fed
The US Fed continues to help moderate the markets as it has
for nearly a decade. Despite tariff war worries, geopolitical issues and global
uncertainties, the Fed has stayed steady. What was a late-2018 sell-off then
became a strong 2019 rally thanks mostly to the Fed’s pivot to a more friendly position
on interest rates. The release of the Fed’s recent meeting minutes last week
proved that the U.S. central bank is holding off on additional rate hikes for the
immediate future. Since the economy is growing modestly with low inflation, the
Fed’s policy makes sense. But because the market that has gotten used to the
Fed’s defensive position, any policy shift viewed as a negative could be a
potential market risk. Investors then are eyeing allocation to some bonds as a good
defense.
Metals and Mining
It wasn’t a great week for gold bugs, as the gold market has
essentially given up all its earlier gains and is preparing to end the session
at a near a two-week low. The week started out positive week for gold as
investors moved into safe-haven assets likely due to the across-the-board 2%
drop in equities. But that was short lived with gold prices looking to end the
week down nearly 1% since last Friday. June gold futures last traded at 1275.90
an ounce. Certainly, some bears are pushing the renewed bearish sentiment for
the precious metal expecting that the momentum of strong equities could push
prices to a new low for the year in the near-term. Platinum made small gains on
Friday after reaching its lowest level since February 15 and palladium made the
most gains on Friday, ticking up over 1 percent and once again entering into
US$1,300 per ounce territory.
Energy and Oil
Natural gas has been inching higher as above normal
temperatures are coming into view. Ending the week, crude oil settled 11 cents
lower at $62.76 as OPEC considered easing production cuts amid escalating
Middle East tensions. Equity markets finished the session on a down note as
investors were reluctant to push stocks higher with uncertainty surrounding
trade negotiations. Analysts believe natural gas will likely remain locked in a
narrow trading pattern as strong production and mild temperatures chip away at
the global storage deficit.
World Markets
Trade worries are certainly front and center for global
markets. Negotiations have stalled and the threats of additional retaliatory
tariffs between the US and China are in play again. Last week’s U.S.
manufacturing and durable goods orders indicate that activity slowed recently.
This has again increased fears that trade turmoil is beginning to show up in
the entire economy. When U.S.-China trade tensions escalated in 2018, markets
absorbed sharp sell-offs and enjoyed serious rallies. The same has occurred as
of late, possibly linked to some positive signs on broader trade with the U.S.
dropping retaliatory tariffs with Canada and delaying auto tariffs with the EU.
Manufacturing and trade are important, but they are not the central driver of
U. GDP. That number is driven by consumer spending. As an important side note,
the British pound fell against the U.S. dollar but rebounded slightly after
embattled UK Prime Minister Theresa May announced that she would resign on June
7 given her inability to get her Brexit deal approved by the British
Parliament.
The Week Ahead
The coming week will be shortened by the Memorial Day
holiday in the US. Look for second-quarter gross domestic product (GDP) which
is slated for Thursday, and both consumer spending data and the University of
Michigan Consumer Sentiment Index will be released on Friday.
Walking into any concert venue, sports arena, or secure government building today, and the first thing you now must do is empty your pockets and walk through a metal detector. Thanks to a rise in mass shootings and terror alert levels, this clumsy and cumbersome process has slowly become the new normal for any entry into a busy place.
However, this era of slow security entry may finally be
coming to an end, as the future of security could soon merely involve a casual
stroll through a gate that safely and swiftly scans waves of people in real
time.
Meet HEXWAVETM from Liberty Defense Technologies – a brand new threat detection technology developed
at MIT that uses real-time Active 3D Image processing to detect metallic and
non-metallic threat objects and location, such as a gun, or guns, carried near
a school or place of worship prior to the criminal even entering the building. The
detection system, can now be as overt as a typical screening gateway, or covert
as installing devices into the walls or other hidden fixtures on the way into
the venue.
“What we’re targeting is the urban security market,” said
Bill Riker, CEO of Liberty Defense in an interview
with WIRED.
Developed to provide a key part of a layered threat
detection defense Liberty Defense is
looking beyond airports to other scenarios where people need to be scanned
quickly and unobtrusively—such as concerts, sporting events, and large outdoor
gatherings.
Upon detection, the system can tie into security
infrastructure to instantly begin setting off alarms, locking doors and putting
people inside on alert to enhance safety in a scenario where every second
counts.
“What we’re offering is an attack prevention system,” said Liberty
Defense COO and President of US Operations, Aman Bhardwaj, in
an interview with Forbes. “We’re preventing someone with a weapon from
entering.”
Speed + Stealth =
Safety
The Liberty Defense Technologies HEXWAVETM system
is the racing to become the security protection of the future—and it couldn’t
come soon enough.
Since 2015 there have been over 1,700 mass shootings in the
USA, with an average of over 350 shootings happening per year. In high-traffic
scenarios, dense gatherings of people are soft targets. Currently there are no
means to counter threats beyond entry point solutions, which have limitations
in terms of a combined criteria for accuracy, throughput and even location around
or within the perimeter of a facility.
Beyond just sporting events and concerts, places like
hotels, schools, and places of worship tend to have a lot of patrons always
entering and exiting.
A system such as HEXWAVETM might have prevented a
scenario such as the Las Vegas shooter successfully bringing a cache of weapons
up to his room, veiled under common luggage pieces. HEXWAVETM is
designed to discreetly spot metallic and non-metallic objects of interest, such
as guns or other weaponry.
Tourism
in Las Vegas took a noticeable hit in the aftermath of the shooting atrocity.
Hotels have been forced to look at new methods to protect their patrons, while
refraining from installing obtrusive gate of entry checkpoints that would
further add to the feeling of uneasiness left after the horrible event.
Where HEXWAVETM aims to help such venues, is to
utilize discreet hidden sensors amid entry points, that could perhaps be hidden
behind posters, in hotel furniture or in the light fixture—allowing people to
be scanned unaware. Through communication from the sensors to central controls,
a tripped alarm could alert police or local security officers, while giving its
clients instant notification in order to act accordingly, based on the
information provided by the scanners.
Advanced Privacy
Much of the resistance towards security systems, such as
those employed by the TSA in airports and terminals, is directed towards the
intrusiveness of their nature. Privacy
advocates and civil libertarians have raised concerns about some of the
more prominent systems in places such as Dulles International Airport, where
facial recognition scanners are in use.
“Right now, there is very little federal law that provides
any type of protections or limitations with respect to the use of biometrics in
general and the use of facial recognition in particular,” said Jeramie D.
Scott, national security counsel for the Electronic Privacy Information Center
in an
interview with the Washington Post. Scott’s organization has
filed Freedom of Information Act requests seeking details about the program.
Unlike visual recognition technology that is currently in
use at many venues, the HEXWAVETM offers a much less intrusive
solution.
This is achieved by several “game changing” advancements in
the technology, which were developed at MIT Lincoln Labs and are exclusive to
Liberty Defense Technologies.
Due to its unique antenna design and embedded computing
power, HEXWAVE’sTM creates 3D
images that are virtually analyzed in real time using an artificial
intelligence architecture.. The system’s advanced antenna design provides the
capability for the sensors to be distributed
in a way that is covert. Further, the
modular, self-contained design can be deployed across the entry paths of a
venue thus enabling it to be scalable to the needs of a responsive security
operation.
Personnel for Rollout
Beyond developing an effective technology, the challenge for
stakeholders such as Liberty Defense Technologies is to get their system into
as many venues as possible. Key to the company’s future successes are the
people behind the scenes.
Bill Riker was brought on as CEO in August 2018, after a
storied career with Smiths Detection, DRS Technologies, General Dynamics, and
the US Department of Defense. COO and President of US Operations, Aman Bhardwaj
compliments Riker’s security background, with a tech and manufacturing career
that includes over 20 years of experience working with leading global teams for
both major and startup companies, including Panasonic, Flextronics/Imerj, Educo
and Hisense.
Riker and Bhardwaj are joined by a highly-qualified
management team of leaders from the security industry, product development,
government technology and manufacturing sectors. Assisting the management team
is a highly experienced advisory board.
Notable among the advisory board is Francesco Aquilini,
owner of the Vancouver Canucks NHL hockey team, and the team’s home, Rogers
Arena which seats nearly 19,000 people. Aquilini also sits as the team’s main
representative on the NHL Board of Governors, among a group that has at least
13 arenas privately owned by members of the board.
Aquilini is not the lone sports presence on the advisory
board, as current President of Concacaf (the continental soccer governing body in
North and Central America) Victor Montagliani is also advising the company. As well, John May, former member of the Live
Nation Canada management team, helped grow that event promotion company through
to a successful joint venture with Maple Leaf Sports and Entertainment—owners
of all the major professional sports teams in Toronto (NBA, NHL, MLB, MLS,
CFL).
Meeting Demand
Liberty Defense has an exclusive license with MIT and a
Technology Transfer Agreement with MIT Lincoln Laboratory for active millimeter
imagining technology originally developed in the MIT Lincoln Laboratory for
weapon detection. They are continuing to
support the effort through a cooperative research and development agreement for
both the commercialization of the design and that includes other development to
continue progressing the technology.
This capability was developed. in
response to the growing threat from terrorism, especially after a wave of
subway and train attacks witnessed around the world in places like Madrid and
London. Prior to the HEXWAVETM innovation,
it was practically impossible to develop security systems with existing
technology for busy public spaces without grinding pedestrian traffic to a near
halt.
The demand is there: According to a Homeland Security
Research Corp. study, the global explosives and weapons systems market is
projected to be more than $8 billion by 2020 and more than $11 billion by 2025.
Liberty Defense Technologies is targeting the urban security
which generally consists of 4 vertical markets.
The market is segmented into four
verticals that include public venues, secured perimeters and buildings, land
transportation and a category called “other” that includes everything from
schools through places of worship, hospitality fclities and even
hospitals. Thesehave been projected to
reach $1.5-$2.0B in North America by 2020.
Projections for each component include: Public Venues
($283-$428M, CAGR to 8.8%); Secured Perimeters ($820M-$1.03B, CAGR to 4.7%);
Land Transportation ($174-$257M, CAGR to 8.2%); Other/Schools/Hotels
($201-$228M, CAGR to 2.7%).
In late 2018, Liberty Defense Technologies secured a C$7
million fundraising, in order to commercialize the HEXWAVETM system.
“The response from the investment community has been
overwhelmingly positive,” said Bill Riker, CEO of Liberty Defense. “There is
real commitment to solve the issues surrounding public safety that have
proliferated in recent years, and this detection system offers an innovative
approach for this challenge with the HEXWAVE product.”
Demand
for Electric Vehicles (EVs) is sharply on the rise, leading to initiates both
private and publicly-backed to incentivize an electric revolution on the roads,
including a $50 billion pledge from
Volkswagen to embark on an electric car ‘offensive’.[1]
In the United States, there are currently
approximately 840,000 EVs on the road, according to the Edison Electric
Institute’s report from June 2018. Between
Q1 of 2017 and Q1 of 2018, sales increased 32%.[2]
The proportionate number of EVs on the road is set to increase, with
electric options becoming more economic
to own and run—even compared to gasoline and diesel engines.[3]
That gap is about to widen more so, with the launch of the SOLO from
veteran Italian carmakers, Intermeccanica, which in 2017 was acquired by
Vancouver-based Electrameccanica
Vehicles Corp. (NASDAQ:SOLO).
Meet the Market’s Lowest Cost Electric Vehicle
Eye catching
with its unique three-wheeled,
single-seat design,[4]
the game-changing EV currently has another advantage that even the majors can’t
currently touch—its price.
Retailing at ~$15,500 USD, the SOLO is the least expensive EV on the market. Now with a manufacturing agreement with China’s largest motorcycle manufacturer in place, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) is set to further reduce its production risk, and capex, and increase it profit margins.
“Electrameccanica has a total of 64,154 vehicle pre-orders across all models, representing $2.4 billion in potential sales orders”
The company has two other EV’s in various stages of development, including the Tofino, an all-electric two-seat sports car, and the eRoadster, an electric evolution of Intermeccanica’s widely renowned classic vehicle design.
With the SOLO and Tofino, Electra
Meccanica brings a unique, winning EV formula for 2019.
Pre-Orders Galore: Billions in Potential Sales
in Play
As of December 20, 2018, Electrameccanica
Vehicles Corp. (NASDAQ:SOLO) had a total of 64,154 vehicle pre-orders
across all models, representing $2.4 billion in potential sales at the targeted
MSRP.
Pre-orders consist of 23,030
pre-orders for the SOLO single-passenger electric vehicle, which has a
$15,500 target MSRP, and 41,124
pre-orders for the Tofino two-seat roadster sports car, which has a $50,000
target MSRP.
Over a three-year period commencing Q1 2019, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) anticipates the
delivery of 75,000 SOLOs. Capitalizing on an established sales, distribution
and service model, the company will partner with existing dealership networks
to drive sales of the SOLO in non-core markets where the company doesn’t
maintain a dealership presence.
Electrameccanica Vehicles Corp. (NASDAQ:SOLO) will begin its deliveries through existing dealerships in Los Angeles, and Vancouver. So far there has been significant dealer interest worldwide—evidenced by dealer letters of intent for over 21,000 SOLOs.
Electrameccanica Offers First Look From Its China Facility
Learn about the China based Manufacturing facility
Adding Major Industry Experience to Its Board
Electrameccanica has begun adding strategic members to its board to strengthen its automotive industry experience. Most recently, the company appointed Peter Savagian as an Independent Director.
Mr. Savagian is a pioneer in automotive electrification, with a broad expertise in the technology, development, launch and production of electric vehicles. In 1990 he began work on the General Motors EV1, the first modern electric vehicle and was named Chief Engineer of Electric Propulsion Systems in 1998. Later, as General Director of Electrified Propulsion, he built and led multiple teams to innovate, engineer and execute the full range of electrified vehicle propulsion systems. His accomplishments at General Motors include 13 electrified autos brought to production. Notably, these include the first modern Electric Vehicle, the GM EV1, the first plug-in hybrid, the Chevy Volt, and the industry’s first long-range value EV, the Chevy Bolt.
Strong Macroeconomic Markers for the EV Market
As the world begins to make the steady shift into the EV market, some
jurisdictions are more eager than others.
There’s likely no market more eager to get rolling than the state of
California. As the nation’s largest EV market, the Golden State has recently
considered nearly doubling its subsidy for each pure electric vehicle sold in
the state—moving up to $4,500 from $2,500. This is on top of the federal
government’s currently offered $7,500 tax credit on each electric vehicle sold.[5]
Given this environment, Electrameccanica
Vehicles Corp. (NASDAQ:SOLO) has targeted California as the ideal Initial
Target Market.
California is a trend-setter market, with a predilection towards
adopting new technologies and adhering to increasingly progressive policies. With
its extremely high cost of commuting, California has a state-wide goal for EV
adoption, supported by subsidies and investment in charging infrastructure.
With its $15,500 USD price tag, a buyer in California could possibly
see up to $12,000 USD in tax incentives already taken care of for the SOLO—an
overall out-of-pocket discount of more than 77%.
Manufacturing a Chinese EV Advantage
In order to scale production to achieve a strong margin profile,
automakers seeking an advantage in the EV market are looking for a Chinese
manufacturing advantage. Even industry leader Tesla Motors is becoming forthright in its need for China, the
world’s largest auto market, in order to succeed.
Not only is Chinese customer demand and government support for EVs
skyrocketing, but the economic advantage of producing in the country is major.
Tesla CEO Elon Musk has expressed his concern that without
manufacturing in China, Tesla won’t be able to produce the company’s goal of
10,000 Model 3 electric sedans per week nor be able to offer the eagerly
awaited base model at a price of $35,000.[6]
“Bottom line is we need the Shanghai factory to achieve
that,” said Musk.
There’s been a lot of interest for EV makers surrounding China. Volkswagen’s and GM’s SAIC Motor, Warren Buffett-backed BYD, and the recently public NIO are a few among the companies that are already up and running in the country.
For Electrameccanica Vehicles
Corp. (NASDAQ:SOLO), a deal with shareholder and strategic partners,
Chongqing Zongshen Automobile Co., Ltd, has set the SOLO manufacturing line in
motion.
Zongshen is China’s largest manufacturer of motorcycles and motorcycle
engines. The company already produces over 2 million units annually, across 130
models of two-wheeled and three-wheeled motorcycles, including electric models.
Together, the Electra Meccanica
and Zongshen agreement should yield a level of scalability that would deliver a
massive manufacturing advantage for SOLO and the other models. Zongshen has
already constructed the SOLO manufacturing line, and has been contracted to
produce 75,000 vehicles over a three-year period, with initial deliveries
commencing in Q1 2019.
The economic advantage of this arrangement is quite clear, with scaled
gross margins expected in the ~25% range.
This industry-leading contract with a manufacturing partner reduces
production risk for Electrameccanica
Vehicles Corp. (NASDAQ:SOLO), while accelerating production, and notably
minimizes capital expenditures.
MAJOR EV-AUTOMAKER COMPARABLES
So far, the majors in the EV space are working diligently to secure
production for their upcoming lines of vehicles. Each has a unique struggle in
the lead-up to the eventual EV revolution, including getting costs down, making
profitable lines, and securing materials
With a simple line of two offerings, and more to come in the future, Electrameccanica Vehicles Corp.
(NASDAQ:SOLO) has already hit the ground running with the lowest cost EV on
the market.
Here are a few of the ongoing stories in the EV space happening right
now:
The Nevada-based Tesla Motors gigafactory
made headlines over the last few years, as the premiere EV brand name became an
American success story. However, the company has recently made clear its
intentions to enter the Chinese market, and attempt to compete with foreign and
Chinese automakers that are already manufacturing and selling EVs in the
country. CEO Elon Musk admits his company won’t be able to produce 10,000 Model
3 electric sedans per week, as originally aimed. Ahead of Musk’s company, Electra Meccanica has ramped up
production at a new Zongshen factory, for both its SOLO and Tofino models.
—
Kandi Technologies (NASDAQ:KNDI)
Market Cap: $276.77 Million
Kandi Technologies Group, Inc., through its subsidiaries, designs, develops, manufactures, and commercializes electric vehicle (EV) products and parts and off-road vehicles in the People’s Republic of China and internationally. It offers off-road vehicles, including go-karts, all-terrain vehicles, utility vehicles, and other vehicles for sale to distributors or consumers; and EV parts comprising battery packs, EV drive motors, EV controllers, air conditioners, and other electric products.
—
NIO Inc. (NYSE:NIO)
Market Cap: $1.461 billion
NIO Inc. designs, manufactures, and sells electric vehicles in the People’s Republic of China, Hong Kong, the United States, the United Kingdom, and Germany. The company offers five, six, and seven-seater electric SUVs. It is also involved in the provision of energy and service packages to its users; marketing, design, and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after sales management activities.
The largest US automaker, General Motors,is
committed to eventually make its entire vehicle lineup “all-electric,” but
doesn’t expect to make them profitably until “early next decade”. While pouring
money into EV technology, looking to capture a market that’s garnered much
excitement thanks to Tesla, General Motors has made it clear that
the company is committed to an all-electric future, with its luxury brand
Cadillac being the lead brand for its electrification efforts. While such
changes are cumbersome for massive automakers, groups like Electra Meccanica are able to capture the early market advantage
with pre-orders and an early run at scalability. As of October, 2018, Electra Meccanica has booked pre-orders
in excess of CAD $2.4 billion and is growing.
—
Strong Leadership Team At The Cutting Edge Of
The EV Space
“I am very pleased with our team’s progress to date. Having
driven the 2019 SOLO myself, I’m convinced we have a winning car on our hands.”
– Electra Meccanica Founder and President,
Henry Reisner
On the road to achieving its goals, Electrameccanica Vehicles Corp. (NASDAQ:SOLO) has been steered by
an experienced leadership team. In order to navigate the rollout of both the
SOLO and the Tofino to a customer base that’s hungry for a new experience
behind the wheel, the Electra Meccanica team
has been crucial to the brand’s successes.
CEO
Paul Rivera joined Electra Meccanica as Chief Executive Officer in August 2019. Before joining Electra Meccanica, Rivera most recently served as President of Ricardo, USA, a division of Ricardo, PLC (LON: RCDO), a 100-year-old global engineering, strategic, and environmental consultancy business with a value chain that includes the design, engineering, testing, and product launch, of vehicle systems, as well as the niche manufacture of high performance products. Previous to that, as Executive VP of Hybrid & Electric Systems at Ricardo, Rivera led the company’s evolution towards an efficient and sustainable low carbon future. Ricardo’s engineering and design solutions have had a significant impact on technical developments throughout the auto sector, providing innovative solutions across engines, drivelines and hybrid systems, as well as supporting the development of emerging technologies such as autonomous and connected vehicles.
Founder
Henry Reisner has served as the President of Intermeccanica since
2001. Intermeccanica is an Italian automobile manufacturer in operation for
over 60 years, which Electrameccanica acquired in 2017. Reisner’s background
includes extensive experience in the automotive industry with a background in
manufacturing. Having overseen early production of the SOLO, he’s expressed his
confidence in the company achieving its goals.
Chief Administrative Officer
With the international aspirations and multinational production and sales goals for the company, Rivera and Reisner are joined by Chief Administrative Officer Isaac Moss. With over 27 years of international business, multi-jurisdictional investment banking and corporate finance experience, Moss’ expertise has ranged across several industries, including specialty chemicals, tech and green energy.
The management team is rounded out by CFO Bal Bhullar, and General
Manager Ed Theobald. Bhullar is an accomplished financial executive with over
25 years of experience, that includes CFO experience at several public and
private companies. Theobald has over 40 years of experience across several
industries, including 19 years as General Manager at Envirotest Canada, a
subsidiary of ESP Global.
1.Lowest-Cost EV on the Market: In this
new era of electric vehicles, to hold the distinction of the lowest cost EV on
the market is a significant advantage for Electrameccanica
Vehicles Corp. (NASDAQ:SOLO). Where the next lowest cost EV at the moment
is the Smart Electric, which is nearly double the price at $28,750, the EMV
SOLO stands in an economic class of its own at an MSRP of $15,500 USD.
2. Over 64,000 Pre-Orders, Worth Billions in
Value: As of December 20, 2018, Electrameccanica
Vehicles Corp. (NASDAQ:SOLO) has accrued a total of 64,154 vehicle pre-orders across all models, representing $2.4 billion in potential sales at the
targeted MSRP. With delivery commencing in Q1 2019, the company will begin
with deliveries through existing dealerships in Los Angeles, and Vancouver—with
significant dealer interest worldwide, evidenced by dealer letters of intent for over 21,000 SOLOs.
3. Strong Macroeconomic Markers for EV Market:
The EV market is growing at a rapid pace, supported by government incentives,
and increased customer demand to move away from fossil fuels. Electrameccanica Vehicles Corp.
(NASDAQ:SOLO) has targeted California as the IDEAL Initial Target Market.
California is a trend-setter market, with a predilection towards adopting new
technologies and adhering to increasingly progressive policies. With its $15,500 USD price tag, a buyer in
California could possibly see up to $12,000 USD in tax incentives already
taken care of for the SOLO.
4. Industry-Leading Contract with Chinese
Manufacturing Partner: Ahead of major comparables, such as Tesla, Electrameccanica Vehicles Corp.
(NASDAQ:SOLO) has secured a major
manufacturing contract with leading Chinese motorcycle manufacturer,
Zongshen. As per the contract, Zongshen
will produce 75,000 vehicles over a three-year period, with initial
deliveries commencing in Q1 2019. The economic advantage of this arrangement is
expected to return gross margins of ~25%
at scale.
5. Strong Leadership Team At The Cutting Edge
Of The Lithium Technology Space: The Electrameccanica
Vehicles Corp. (NASDAQ:SOLO) team is built
to produce vehicles on an international scale. Led by founders CEO Jerry
Kroll, and President Henry Reisner, the Intermeccanica/Electrameccanica
team has the experience to compete in the automotive industry. With several
decades of experience that span multiple industries and countries, the
Electrameccanica team is set to rollout both the SOLO and the Tofino models and
to exploit deep connections within the
automobile industry built through over
60 years of automobile legacy through Intermeccanica.
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