The Tesla of buses, GPV is now taking to market an all-electric long range heavy duty bus to transportation entities across the USA, going head-to-head with only a few competitors, namely BYD Electronic Co Ltd (HKG:0285), New Flyer Industries Inc (TSX:NFI.T), and Proterra (Private). Admittedly, we’re very early days but given market potential and the quality of GPV’s product, this looks like a very interesting opportunity. 

Company description

  • GreenPower Motor Company Inc. (GPV) is a ‘clean sheet’ designer and manufacturer of a new all-electric long-range transit bus for the North American market
  • The bus (EV350 – see Figure 1 below) is OEM supplied (i.e. it uses commercially available off-the-shelf components for all major systems; brakes, axle, dashboard, transmission, etc.), for ease of manufacturing, parts/equipment warranties and continuity with current transit commission spare parts inventories
  • Currently the base assembly is completed in China with final assembly in Chino, California. However, management expects to establish a US production facility in the coming quarters that will enable the EV350 to qualify for US Federal and State transportation grant funding
  • Importantly, all EV350 units carry a US-based Vehicle Identification Number (VIN), whether base assembly occurs in China, or the US

Investment highlights

  • Large target market – there are ~67,700 transit buses in the USA and ~15,500 in Canada; the North American heavy duty bus industry typically replaces ~7,500 units/year, valued at an estimated US$3bln to $3.75bln per year
  • Emission regulations are driving demand/acceptance – the USA has mandated (Executive Order 13514) that public fleet gas consumption must decline by 2% per year for a total cumulative reduction of 30% by 2020. Regulations and social pressure are driving demand and acceptance for ‘clean solutions’
  • EV350 is an all new, clean sheet design with several advantages over its competitors including: built using global OEM parts leading to cost effective spare parts inventory management; purpose built chassis that improves ride quality and has a lower centre of gravity than other electric competitors; US-built VIN in order to address potential political issues and quality concerns and a 100% US-built manufacturing program expected to launch in 2015; and significant range of over 300km (185 miles) on a single charge for the 2015 model
  • Attractive payback vs. diesel – the EV350 is estimated to save ~$50k/vehicle per year in fuel costs compared to an equivalent sized diesel bus, which translates into an upfront capex payback period of 5-6 years. A bus lifecycle is typically 10-12 years
  • Pricing is in-line with compatibles, at an average list price of US$860k, the EV350 is in-line with the electric bus industry at $887k and very close to its nearest long range competitor, the BYD K9 (US$864k)
  • Best range in class – the single charge range for the EV350 is over 300km (185 miles) vs. BYD K9 (>250km). Proterra has recently introduced a new long range model (~290km), however it is not expected to be commercially available for 12-18 months
  • Charging flexibility – the EV350 requires a static, home base stand that costs US$50k, similar to the BYD K9. Other major competitors (i.e. Proterra and New Flyer) require in-transit changing stations that cost US$200k to US$250k and severely limit route flexibility

Overall it appears GPV has a stand-out product. The company began marketing the new EV350 this year with a target to sell ~10 buses before YE (break-even at 3-4 buses sold).

Over the coming quarters the company will potentially make significant progress as it relates to developing the sales pipeline, and ultimately crystallizing purchase orders.

Figure 1: Profile of EV350

GPV EV350 bus profile shot

Source: Company Reports

Figure 2: GPV/EV350 Comps

GPV comp adv from corp pres

Source: Company Reports

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