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FUV: Leveraging Transitions in Mobility

06/14/2018
By M. Marin

NASDAQ:FUV

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Oregon-based Arcimoto (NASDAQ:FUV) is positioning itself to benefit from transitions in mobility as governments mandate lower car emissions, consumers are increase adopting green automotive solutions and technology companies enter the automotive space. The company is developing an efficient, economical electric vehicle (EV), the FUV. The company raised roughly $18.1 million in a September 2017 Regulation A offering, enabling it to accelerate its manufacturing plans. With a conservative financial approach to developing and launching the FUV, management expects that it will achieve scale production at a fraction of the cost that traditional auto manufacturers incur. The company recently announced that it has commenced production of 15 beta vehicles for fleet and rental operations.

The Arcimoto FUV is designed to address two major problems that limit the commercial appeal of most alternative vehicles: cost and range. The FUV’s base model price is $11,900 and its range per charge is ample for local driving. Management believes the FUV might be a good second or replacement car. There are roughly 14 million cars in use that are at least 25 years old, up from about 8 million in 2002, according to IHS.

Initial Launch: States Closest to Headquarters

EV traction varies by state, with penetration generally highest in states that offer economic incentives. For example, the Clean Vehicle Rebate Project in California has encouraged EV sales, according to IHS Automotive. Arcimoto intends to deliver the first production FUVs to customers in the three west coast states of Washington, Oregon and California highlighted in the figure below. These states are closest to Arcimoto’s Oregon headquarters. Moreover, they are also leading adopters for efficient transportation solutions, according to the company, with Oregon and California currently leading in EV adoption. An October 2012 Pike Research study indicates that PEV penetration is likely to be highest in New York City, Los Angeles, San Francisco, Seattle, and Portland. With the exception of New York City, these cities are within Arcimoto’s initial target market. Targeting these three west coast states initially will also enable Arcimoto to maximize its distribution efficiency and lower costs of early product service.



View Arcimoto Planned Initial Geographic Launch

Rentail Model

Arcimoto also expects to launch a rentail model that would enable customers in certain markets to rent the FUV on a daily basis from the in-market experience centers. This model is expected to be cash flow positive for Arcimoto and management anticipates forging partnerships with other companies to facilitate rentails. For example, the company has formed a partnership with HULA Holdings to introduce the EV Oasis charging, education, and rental center and anticipates additional in-market experience centers over time.

The company expects to expand its rental concept with various partners and franchisees on a revenue-share basis. The company believes this channel could prove to be an attractive source of cash flow that could also help drive sales.
 
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