This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Electric Last Mile, an electric vehicle (EV) company focused on creating efficient and reliable last-mile solutions, has become the latest private company to go public in a sphere that is growing increasingly crowded.
As per the press statement released just moments ago, Electric Last Mile has inked a merger agreement with the SPAC, Forum Merger III Corporation (NASDAQ:FIII), in a deal that would value the combined company at $1.4 billion. The following slide, sourced from the company’s investor presentation deck, summarizes the salient points of the merger agreement:
Electric Last Mile aims to capture the last-mile e-commerce delivery segment in the U.S. by deploying its Class 1 urban electric delivery vans that already enjoy strong demand in China, with pre-orders exceeding 30,000 units (for Sokon vehicles). The company’s production plant in Indiana is already retrofitted for EV production, with the commercial launch of the Class 1 delivery vans expected in Q3 2021, thereby allowing the company to gain a first-mover advantage in the United States. Crucially, Electric Last Mile expects to spend only $160 million in order to establish operations:
As far as its clients are concerned, Electric Last Mile aims to deliver cost savings in two ways. First, its delivery vans will cost the same as the conventional Internal Combustion Engine (ICE) ones, but with 30 percent more cargo space. Second, the vans would incur around 50 percent reduction in maintenance expenses compared to similar ICE offerings. Cumulatively, Electric Last Mile anticipates $36,000 in lifetime cost savings to consumers:
As far as its finances are concerned, Electric Last Mile expects to deliver 4,100 vehicles in 2021, 19,100 units in 2022, 35,000 units in 2023, 55,000 vehicles in 2024, and 83,000 units in 2025. Moreover, the company expects to become cash-flow positive in 2023. On an EBITDA basis, the company would become positive in 2022.
Given the momentous nature of today’s development, it is hardly surprising that shares of Forum Merger are surging in the pre-market trading session:
Electric Last Mile and Forum Merger expect to close this deal in the first quarter of 2021. Of course, should the company deliver on its promises, it would certainly pose a difficult challenge to its competitors, such as Workhorse (NASDAQ:WKHS) and Ford (NYSE:F), both of which are trying to capture the delivery segment in the United States. For consumers, however, the proliferation of competition is beneficial, as it will help in lowering the costs of the product while also improving the after-sales service.
