Tesla Of The Sea? How EV Tech Is Revolutionizing Boating
The electric vehicle boom isn’t just about passenger cars and trucks, it’s also about the millions of speedboats and other recreational boats whose pollution has, at times, caused more damage than the Exxon Valdez oil spill.
And it’s all about the battery, just as it has been with the EV market, and Vision Marine Technologies Inc (NASDAQ:VMAR) is a company investors should keep an eye on as their proprietary technology looks to turn the boating market upside down.
It has successfully developed the world’s most powerful marine electric motor, with proprietary technology. And in my opinion is poised to send waves through the industry.
This is the year the $12-billion boat battery market joins the green revolution.
This is the year the transition to electric begins in earnest.
And the first mover advantage is going to Vision Marine, which unveiled its E-Motion 180 HP electric outboard motor, with its proprietary PowerTrain technology, at the Paris Boat Show in December. And has since launched the new H2 Bowrider in partnership with Four Winns.
Powered by Vision Marine’s E-Motion, the H2 Bowrider is the first all-electric series production bowrider on the market.
The H2e’s top speed is 35 knots (40mph), and while its official debut was in February, deliveries are set to start this summer.
The E-Motion is the first fully electric, production-ready, high performance 180 HP, which makes it the key market disruptor.
With its one-of-a-kind tech advantage, which includes the batteries, the engine and the software, Vision Marine’s E-Motion is now the only turn-key solution for boat manufacturers in its class.
That’s a strong first-mover position to be in at the critical junction of a high-dollar energy transition.
On Trend in the Trillion-Dollar Energy Transition Climate
Vision Marine isn’t just on trend, it’s helping to set the trend.
It was already out of the gates before anyone else even heard the whistle.
Its proprietary tech aims to transform the boating industry.
In 2022, global investment in the low-carbon energy transition hit a record $1.1 trillion, buoyed by an energy crisis and government policy action around the world.
In fact, as noted by BloombergNEF: “In another first, investment in low-carbon technologies appears to have reached parity with capital deployed in support of fossil fuel supply.”
While renewable energy was the largest sector in investment terms, topping a record $495 billion in 2022, electrified transport was a close second, with $466 billion spent, up an astounding 54% year-on-year.
This is exactly what Vision Marine (NASDAQ:VMAR) is looking to capitalize on with the launch of its game-changing marine-grade battery and boat engines.
Vision Marine’s business plan is to market its E-Motion Powertrain to Original Equipment Manufacturers (OEMs) rather than the public, and they have already received dozens of advance orders.
And investors are poised to see the company collect its first revenues from the PowerTrain battery technology this year.
But there is a second level in this revenue chain, as well: The $5-billion+ boat rental market.
Vision Marine’s flagship Newport electric boat rental setup has launched with 35 boats and over 300,000 clients in the first three years, annualizing $4 million in revenues with a 35% profit margin. That’s just the beginning.
There are 8,000 marinas in the world, and 10,000 waterfront resorts and marinas, and Vision Marine is eyeing this huge playfield for rapid expansion of its electric rental segment–at a time when going electric has become a must for the environment.
This year, they’ll be rolling out two more fully-owned electric boat rental locations and launching their franchise model.
By 2024, it’s full speed ahead with scaling. By the end of 2024, Vision Marine expects to be cash-flow positive, and by 2025, it expects to have two profitable and growing divisions, after which the scaling will pick up the pace even faster.
And there are some legendary names behind it lending confidence to its targeted goals, not to mention a string of design, engineering and manufacturing partnerships that bode well for production and marketing.
The Next Challenge for Speedboats
Vision Marine’s E-Motion fully charges overnight with no additional infrastructure, has the highest horsepower in its class on the market, offers the first-ever custom design marine battery packs, and it all comes in at a lower cost than any competitors:
E-Motion combines an advanced battery pack, inverter, and high-efficiency motor with proprietary union assembly between the transmission and the electric motor design and extensive control software. E-Motion technology used in this powertrain system is designed to improve the efficiency of the outboard powertrain and, as a result, increase both range and performance.
Legend and First-Mover Advantage
Designed by boating legend Ian Bruce, the father of the Laser, the world’s most popular sailing boat, Vision’s first motorboat Bruce 22e set a record for the electric boat competition in the famed Lake of the Ozarks Shootout races in August last year after hitting a speed of 49 mph.
CEO Mongeon took Vision Marine (NASDAQ:VMAR) from a private company to a NASDAQ listing, successfully raising capital to develop the company’s proprietary technology and commercialize it, earning VMAR the moniker “Tesla of the Sea”.
Together, Vision Marine’s team has positioned the company to have a clear first-mover advantage, with the most powerful electric solution on the market.
The company boasts zero debt, a highly profitable and growing rental division, first Powertrain revenue this year and expects cash-flow positive standing in 2024.
There is comfort in both first-movers and legends from an investors’ standpoint. And Vision Marine is confident enough to have declared after winning the Ozarks Shootout electric-powered boat race and breaking a new record that it would race anyone, anywhere, to prove its propulsion tech is the most powerful in its class in the world.
Here are a number of other companies investors should be looking at as the green technology boom continues:
Tesla (NASDAQ:TSLA): After a difficult 2022, things are looking up for Tesla. The Model Y emerged as the best-selling vehicle worldwide in the first quarter of 2023 and the company’s stock price has begun to rebound. Tesla's CEO, Elon Musk, recently hinted at exciting developments on the horizon for the company. While he did not unveil specific new products during the annual shareholder meeting, Musk confirmed that two exciting projects are in the pipeline, generating anticipation among investors and enthusiasts alike. Musk also made an unexpected announcement regarding Tesla's advertising strategy recently, expressing openness to exploring paid advertising, a departure from his previous stance against advertising.
As Tesla gears up for the highly anticipated Cybertruck delivery event later this year, and with the promise of new products on the horizon, the company remains at the forefront of the electric vehicle revolution. With its visionary leadership, groundbreaking technology, and unwavering commitment to excellence, Tesla continues to shape the future of transportation and solidify its position as a global leader in the automotive industry.
Ford (NYSE:F): Despite facing challenges in recent years, Ford is now making significant strides in the electric vehicle market. The company's electric vehicle unit reported losses in 2022 and projected potential losses in 2023. However, Ford remains optimistic about the future, aiming to turn its EV business into a profitable venture by the end of 2026. The company plans to increase EV production capacity to 2 million units per year by 2026, leading to improved profitability. Ford also expects to benefit from selling software and services to EV owners, cost improvements in raw materials, and other incremental gains.
With a strong commitment to building an industry-leading portfolio of highly differentiated EVs, Ford aims to capitalize on its strengths in pickup trucks, vans, and SUVs. By embracing innovation, scaling production, and optimizing efficiency, Ford is positioning itself as a significant player in the electric vehicle revolution, poised to shape the future of transportation and solidify its position as a key player in the automotive industry.
Rivian Automotive (NASDAQ:RIVN): In a competitive market, Rivian is demonstrating resilience and solid demand for its vehicles, even in the face of increasing vehicle pricing. While competitors have been lowering prices to stimulate demand, Rivian stands out with an average selling price (ASP) increase in the first quarter of 2023 compared to the previous year. With an ASP exceeding $83,000 per vehicle, Rivian's pricing power indicates strong demand, further reinforced by the company's growing backlog of reservations, which reached 114,000 in late 2022.
Rivian's ability to maintain an increasing ASP is crucial as it continues to innovate and develop new technologies for its upcoming R2 models. The R2 platform, set to launch in 2024 as Rivian's first high-volume, mass-market vehicle, will come at a lower price point, making it even more appealing to a broader customer base. The company's solid liquidity position, highlighted by recent capital raises and credit facility expansions, sets it apart from many of its competitors, allowing Rivian to make substantial investments, including a new manufacturing plant in Georgia. While Rivian's stock has experienced volatility and a 25% drop this year, the company's enviable balance sheet, strong product adoption, and focus on improving efficiency could provide a compelling case for investors with an appetite for risk.
General Motors (NYSE:GM): General Motors has emerged as a formidable competitor in the electric vehicle (EV) market, surpassing Ford in the first quarter of 2023. With a focus on scaling production and boosting its EV lineup, GM aims to solidify its position as a key player in the race to catch up with Tesla. In the first quarter, GM's EV sales soared to 20,670 units in the U.S., surpassing Ford's sales by nearly two to one. GM is scaling the production of its Ultium Platform and expects margin gains as a result.
GM's strong performance in the first quarter can be attributed to record sales of the Chevy Bolt EV and EUV, along with upcoming launches of highly anticipated models like the Chevrolet Silverado EV, Cadillac LYRIQ, Chevrolet Blazer EV, and Equinox EV. The company plans to produce 50,000 EVs in the second quarter and double that production rate in the second half of the year, signaling its commitment to meeting growing demand. GM's impressive cash flow and earnings, along with the potential for increased dividend payouts, make it an interesting choice for investors seeking exposure to the EV market.
Albemarle Corporation (NYSE: ALB): Few companies have benefited from the electrification of transport as much as Albemarle, the world’s largest lithium producer, has. Despite facing headwinds from elevated raw material costs and demand weakness in specialties, Albemarle is strategically positioned to capitalize on the long-term growth of the battery-grade lithium market.
In the first quarter of 2023, Albemarle saw higher volumes, supported by the La Negra III/IV expansion in Chile and an increase in tolling volumes. Additionally, the company's cost-saving and productivity initiatives are expected to support its margins throughout 2023. To meet the increasing demand for electric vehicles and lithium-ion batteries, Albemarle recently announced the site for its lithium mega-flex facility in South Carolina. With an initial investment of $1.3 billion or more, the facility aims to produce approximately 50,000 metric tons of battery-grade lithium hydroxide annually, which can be increased to 100,000 metric tons. This capacity can support the production of about 2.4 million electric vehicles per year. The facility aligns with the Inflation Reduction Act and contributes to the localization of crucial minerals in North America. The company is also actively investing in projects in Western Australia and China to enhance its global lithium conversion capacity.
Fisker (NYSE: FSR): After a long decline, Fisker’s stock price recently jumped as the company launched a financing website for its customers following the successful delivery of its first Fisker Ocean EV SUV. The fiskerfinance.com platform aims to provide a convenient and streamlined financing process for customers, covering all aspects from car loan applications to payment tracking. By facilitating the buying process, Fisker hopes to benefit from increased customer accessibility and convenience.
With Fisker's vehicles hitting the roads, the introduction of the financing website is a logical step to support customers in purchasing their EVs. In a competitive market in which Tesla is currently cutting prices aggressively, Fisker’s ability to facilitate the purchase of its Fisker Ocean SUV, which has a commendable range of up to 440 miles on a full charge, could be a game-changer for the company.
ChargePoint (NYSE: CHPT): A prominent player in the EV charging industry, ChargePoint operates across multiple countries and enjoys a strong position in the U.S. market. As the adoption of EVs continues to grow, ChargePoint is well-positioned to benefit from this trend. While ChargePoint has experienced declining profits, it has consistently demonstrated strong revenue growth, ranging between 90% and 100% over the past five quarters. Analysts predict that the company will begin to reduce its losses by next year, presenting potential growth opportunities for investors.
ChargePoint currently serves 80% of Fortune 50 companies, and as these businesses incorporate more EVs into their fleets, ChargePoint's revenue and profits are expected to increase and the company hopes to break into profitability within the next three years. The company’s Q1 financial results are set to be announced on June 1, 2023.
Blink Charging (NASDAQ: BLNK): Another EV charging giant, Blink Charging has experienced a significant decline in share price, down approximately 70% from its previous highs, despite its unchanged long-term prospects. However, the company has secured new contracts for EV charging station deployments and is addressing overspending and executive compensation issues. Notably, Blink Charging has won a contract with the federal government through the GSA to provide EV charging stations, which could potentially result in an annual revenue boost of $20 million. Additionally, the company has obtained an IDIQ contract from the United States Postal Service to sell up to 14,500 charging stations, potentially generating around $20 million annually.
Blink Charging has been focusing on improving its margins and reducing expenses. The company has been successful in raising prices while lowering the cost of generating revenues. Over the past four years, Blink Charging has been able to increase its gross margins, reaching approximately 33% in the most recent quarters. With a combination of price increases and cost reductions, the company aims to achieve a 35% gross margin in the long run, leading to a smoother path to profitability.
Nvidia (NASDAQ:NVDA): While most companies in the EV space are suffering from intense competition, Nvidia is taking advantage of it. The U.S. chip giant has become a key player in China's electric vehicle (EV) market as several Chinese automakers choose its technology to power their semi-autonomous driving systems. Start-ups Xpeng and Nio, as well as Baidu's auto unit Jidu and Geely's Polestar brand, have adopted Nvidia's Drive Orin chip for their latest vehicles. Nvidia's chipset and software platform offer the capabilities for fully autonomous driving, making it a highly attractive choice for Chinese EV companies.
In China's fiercely competitive EV market, Nvidia is benefiting from the intensifying competition among automakers. Despite Tesla's strong brand presence and record sales in China, the American electric vehicle manufacturer designs its own semiconductors for its ADAS, called the Full Self-Driving (FSD) chip. This has opened up an opportunity for Nvidia, as Chinese EV players seek to close the perceived technology gap with Tesla by partnering with the chip giant. Nvidia's strong presence in the Chinese market and its strategic focus on expanding its auto chip business around FSD position it well to meet the demands of Chinese EV makers and capitalize on the growing market.
QuantumScape (NYSE:QS): Focused on developing solid-state lithium-metal batteries for electric vehicles (EVs), QuantumScape presents an intriguing opportunity, albeit one with significant risk. The company's innovative battery technology has the potential to revolutionize the EV industry by enabling lighter, safer, and faster-charging batteries with longer life cycles. QuantumScape has made notable progress, with promising testing results for its 24-layer cell prototype, demonstrating high-level fast charging and minimal capacity loss. The company has received investments from major players like Volkswagen and has garnered interest from other auto companies. If QuantumScape successfully brings its products to market, it could witness explosive sales and earnings growth, leading to substantial returns for investors.
The company is still in the pre-revenue stage, relying on prototype technologies, and faces challenges in terms of reliability and commercialization. Its substantial operating expenses and the need for significant capital expenditures highlight the financial uncertainties it faces. Additionally, QuantumScape is not the only player in the potentially revolutionary battery technologies space, as competitors like CATL, Toyota, Samsung, and others pose potential challenges. Scaling up manufacturing could prove costly and encounter unforeseen obstacles. Undoubtedly an exciting company in the space, but with plenty of risk associated.
By. James Stafford
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