The Vancouver-based electric vehicle company went public in September, and says it has over 20,000 orders for its cars, representing C$400 million in anticipated sales.
The deal with Zongshen calls for the production of 5,000 SOLOs in 2018; 20,000 in 2019; and 50,000 in 2020, with new deliveries scheduled for the fourth quarter of 2018. The suggested retail price for the three-wheeled SOLOs is C$19,888, but they qualify for provincial rebates of up to C$11,000.
“We are thrilled that Zongshen has joined us in leading the clean energy charge and partnered with us in the production of our innovative, new SOLO,” said Jerry Kroll, CEO of Electra Meccanica. “We have thousands of orders on the books and we now have the manufacturing capacity to begin filling these orders for our customers.”
Electra Meccanica also offers an electric sports car called Tofino for C$50,000. About 50 new electric car models are anticipated to hit the global market between 2017 and 2022, with offerings from Daimler (OTCMKTS:DDAIY), Volkswagen (ETR:VOW3) and General Motors (NYSE:GM), to name a few.
The SOLOs are powered by a 16.1-kWh lithium-ion battery. A slew of companies, including Tesla (NASDAQ:TSLA), LG Chem (KRX:051910), Panasonic (TSE:6752) and Samsung, are building gigafactories capable of pumping out lithium-ion batteries for electric cars. By 2020, Tesla’s gigafactory in Nevada is expected to produce enough lithium-ion batteries to power 500,000 vehicles per year.
Frost & Sullivan notes that the global market for these batteries doubled to $22.5 billion in 2016 from $11.7 billion in 2012. According to the firm, the automobile sector’s share of the lithium-ion battery market grew to 25 percent in 2016 from 14 percent in 2012 — that represents a CAGR of 37 percent.
China is currently the world leader in the electric car space. It produced and sold more than 28 million cars last year, according to the International Organization of Motor Vehicle Manufacturers, and has set goals for electric and plug-in hybrid cars to make up at least a fifth of its auto sales by 2025.
Prices for lithium are expected to surge as these vehicles become more common in China and other parts of the world. Benchmark Mineral Intelligence predicts that lithium carbonate prices will average $13,000 a ton over the 2017-to-2020 period from around $9,000 in 2015 to 2016. Lithium hydroxide is expected to average $18,000 a ton between 2017 and 2020 against $14,000 from 2015 to 2016.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.