This May Be The Best Way To Play The $700 Billion EV Boom

FN Media Group Presents Oilprice.com Market Commentary

LONDON, July 28, 2023 /PRNewswire/ — Electric vehicle sales are set for a 35% year-on-year increase in 2023, with national policies and incentives providing further impetus for producers and consumers. So far, overall, this has been rewarding for investors. Companies mentioned in this release include: Tesla Inc. (NASDAQ: TSLA), Honda Motor Co., Ltd. (NYSE: HMC), Toyota Motor Corporation (NYSE: TM), Li Auto Inc. (NASDAQ: LI), Lucid Group Inc. (NASDAQ: LCID).

While the top 14 EV stocks had a market capitalization representing only 13% of that of the Top 10 vehicle manufacturers as of the end of 2019, they still managed to outperform them. That trend continued through last year, both with EV and battery stocks.

Electric car sales exceeded 10 million units in 2022, with their market share steadily climbing, from less than 5% of new cars sold in 2020 to 14% in 2022. In the first quarter of this year, we already saw a 25% jump in sales, year-on-year. But this space has become extremely crowded, resulting in a price war that is making investors uneasy.

It’s time to find a new niche in the EV segment where first-movers have a very clear advantage: electric boating, where innovators hope to take the EV revolution off-road. The waterways are going electric, too.

That’s why the next big thing in racing is all-electric, with NFL superstar Tom Brady joining the UIM E1 World Championship with ownership of an electric boat racing team. The inaugural season of the EV boating world championship is set to launch in early 2024.

The electric boat playing field is far less chaotic and crowded, and the first-mover advantage goes to Vision Marine Technologies (VMAR^[1]), which offers a proprietary PowerTrain outboard motor that is being used in the launch of the fastest electric speedboat in its class on the market.

The newly unveiled H2e Bowrider^[2] speed boat took the Paris Boat Show by storm in December, and made its official debut in February in Miami, with deliveries expected to start this summer. 

The boat, developed in partnership with Four Winns, is special because it showcases VMAR’s E- Motion 180 HP electric outboard motor. That motor, with proprietary PowerTrain technology, makes the H2e Bowrider the first all-electric series production bowrider on the market.

The Sound of Silence Opportunity

The global electric boat market was valued at $5 billion in 2021, and is projected to reach $16.6 billion by 2031^[3], growing at a CAGR of 12.9% from 2022 to 2031. 

Narrowing that down by type, the 40-foot electric boat market alone is worth $1.9 billion as of 2023, and is set to hit $4.93 billion by 2030 for a growth rate of 14.6% during that time period.

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 represents a $2-billion opportunity for investors over the next five years. And while climate change is a key element propping up the electric boating industry, it’s not the only ‘attraction’:

• Electric boats are quiet. They completely change the boating esthetic by removing the sound of the loud outdoor motor, which overwhelms all other sound at sea.
• They’re safe, too. There’s no risk of gasoline leaks or carbon monoxide poisoning common with internal combustion engines.
• The consensus seems to be that electric boat motors, by design, are more robust than their loud and dirty predecessors, and they also require a lot less frequent maintenance than a gasoline engine. They’re cheaper to operate over the long-run: No oil changes, no filters or tune-ups, and while combustion engines require maintenance every 100 hours, electric motors (on average) can go up to 3,000 hours without.

The World’s Most Powerful Electric PowerTrain

Vision Marine’s E-Motion is the first fully electric, production-ready, high-performance 180 HP outboard motor on the market. The 180E Electric 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 powerbank.

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 cost perspective, it out-competes everyone else, which should help it to capture new market share.

Vision Marine’s (VMAR^[4]), E-Motion motor isn’t confined to speedboats, either; they’re turning pontoon boats into faster, better and cleaner versions of themselves.

VMAR is in the process of 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 will set off in Virginia on a 1,050-nautical-mile journey to Miami, Florida, to showcase the capabilities of sustainable electric power.

Last September^[5], right out of the gate, VMAR received and 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 delivery target to dealers set to begin in 2024.

VMAR’s proprietary electric motor and powertrain system turns any boat into an electric boat, which makes its strategy to sell motors (not boats) to OEMs an incredibly savvy one in a market flooded with EV makers who are spending more money than they might ever make.

A Second, Disruptive Revenue Chain

VMAR also plans to plug in the boat rental market. The global boat rental market (across all boat types) was valued at $18.2 billion^[6] 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, again, VMAR has first-mover advantage. VMAR’s flagship Newport business managed to serve 300,000 clients in the first three years, annualizing $4 million in revenues with a 35% profit margin. 

By the end of 2024, Vision Marine (VMAR^[7]), expects to be free-cash-flow positive, and by 2025, it expects to have two profitable and growing divisions, after which the scaling is expected to gain further momentum. 

Traditional Carmakers Are Work Keeping An Eye On

Tesla Inc. (TSLA) is undoubtedly the leader in the electric vehicle industry, known for its innovative and high-performance vehicles. With a vision to ‘accelerate the world’s transition to sustainable energy,’^[8] Tesla has revolutionized the auto industry, proving that electric vehicles can be both desirable and profitable. From its high-performance Model S to the more affordable Model 3, Tesla has a range of vehicles that cater to different segments of the market.

One of Tesla’s core strengths lies in its vertical integration, controlling everything from vehicle design and manufacturing to its proprietary Supercharger network. This enables Tesla to continually innovate and rapidly deploy new features. For instance, Tesla’s over-the-air software updates regularly provide owners with new functionalities and performance enhancements, something few other automakers can offer.

Honda Motor Co., Ltd. (HMC), one of the world’s largest automakers, has been ramping up its efforts in the electric vehicle market. The company has set an ambitious goal to make 100% of its auto sales in major markets electric by 2040, indicating a strong commitment to transitioning from traditional internal combustion engines.

Honda’s electric vehicle strategy^[9] includes not only battery electric vehicles (BEVs) but also fuel cell electric vehicles (FCEVs) like the Honda Clarity Fuel Cell. This diversified approach to electrification could help Honda cater to various market needs and regulatory environments. The company is also collaborating with General Motors on EVs, intending to leverage economies of scale and shared expertise.

Toyota Motor Corporation (TM) is the world’s largest automaker, renowned for its manufacturing efficiency and reliability. Toyota has been a pioneer in hybrid technology with its iconic Prius model and continues to invest heavily in various forms of electrified vehicles^[10], including hybrids, plug-in hybrids, battery electric vehicles (BEVs), and fuel cell electric vehicles (FCEVs).

One area where Toyota is unique is its continued focus on hydrogen fuel cell technology. While most of the auto industry is focusing on battery electric vehicles, Toyota is one of the few automakers pushing fuel cell technology, with vehicles like the Toyota Mirai. The company believes hydrogen fuel cells can complement batteries, particularly for long-haul and commercial vehicles.

Li Auto Inc. (LI) is a Chinese electric vehicle manufacturer that specializes in plug-in hybrid electric vehicles (PHEVs), which they refer to as Extended-Range Electric Vehicles (EREVs). This is a unique approach in the current EV market, where most companies focus on pure battery electric vehicles (BEVs)^[11]. Their vehicles, such as the Li ONE, can run on electricity for daily commuting and switch to gasoline for longer trips, providing flexibility for the users.

Li Auto’s EREV strategy could be particularly appealing in regions where EV charging infrastructure is not fully developed, as it alleviates range anxiety while still offering most of the benefits of electric driving. The company’s focus on SUVs, a popular segment in China and globally, could also be a growth driver.

Lucid Group Inc. (LCID) now known as Lucid Group after its merger with Churchill Capital Corp IV, is an American electric vehicle manufacturer that focuses on luxury vehicles. Their first model, the Lucid Air, has been praised for its technological advancements, luxurious features, and impressive range, offering over 500 miles on a single charge^[12].

Lucid’s strategy of targeting the luxury segment sets it apart from other electric vehicle startups. By focusing on high-end, high-margin vehicles, Lucid is looking to establish a strong brand and solid financial footing before potentially moving into more affordable segments. Lucid is also working on energy storage solutions, similar to Tesla’s energy business, which could provide additional revenue streams.

By. Josh Owens

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References

1. ^{^} VMAR (finance.yahoo.com)
2. ^{^} H2e Bowrider (www.fourwinns.com)
3. ^{^} $16.6 billion by 2031 (www.alliedmarketresearch.com)
4. ^{^} VMAR (finance.yahoo.com)
5. ^{^} Last September (investors.visionmarinetechnologies.com)
6. ^{^} $18.2 billion (www.alliedmarketresearch.com)
7. ^{^} VMAR (finance.yahoo.com)
8. ^{^} ‘accelerate the world’s transition to sustainable energy,’ (www.tesla.com)
9. ^{^} electric vehicle strategy (automobiles.honda.com)
10. ^{^} electrified vehicles (www.toyota.com)
11. ^{^} pure battery electric vehicles (BEVs) (ir.lixiang.com)
12. ^{^} 500 miles on a single charge (www.lucidmotors.com)
13. ^{^} http://Oilprice.com/terms-and-conditions (oilprice.com)
14. ^{^} http://Oilprice.com/terms-and-conditions (oilprice.com)
15. ^{^} [email protected] (www.prnewswire.co.uk)