SOLO Looks Like a Good Way to Profit From the EV Surge

Electramechannica Vehicles (NASDAQ:SOLO) has many positive characteristics that could make the company hugely successful, Consequently, I think that longer-term, risk-tolerant investors should devote a small portion of their portfolios to SOLO stock.

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Electramechannica’s flagship car is an electric vehicle called the Solo, which sells for only $18,500. Not surprisingly, only one person can ride in the Solo at a time.

The main attractions of the Solo, of course, are the fact that it’s an electric vehicle, yet it doesn’t cost a lot of money. Tesla’s (NASDAQ:TSLA) cheapest vehicle is the Model 3, which sells for nearly $36,000 after California’s state tax credit. (Electramechannica is initially focusing its U.S. efforts in the Los Angeles area.) The other well-known EVs, such as General Motors’ (NYSE:GM) Bolt and Nissan’s (OTC:NSANY) Leaf, cost at least $30,000 after the credit.

The Solo’s price makes it affordable for millenials and members of Generation Z who can’t afford to pay $30,000 but want an EV to lower their carbon footprints.

Trends Can Benefit SOLO Stock

Although I think the work-from-home trend will greatly recede after a vaccine for the novel coronavirus is introduced, many more millions of Americans will work from home than before the pandemic.

I think that Electramechannica’s Solo is a very good vehicle for families that include one or more people working from home. Such families can have two vehicles. One would be a larger one that can be used for trips together and driving on highways. The other could be the Solo for local trips taken by one family member during the work day, after work or weekends.

Given the lack of a daily commute, buying a cheap, small car that’s more suited to local driving than highway driving makes a lot of sense.

Two other trends that can boost demand for the Solo are the recession and the movement from cities to suburbs. The recession is likely to lower incomes, greatly increasing the total addressable market for the Solo. And as many Americans flee cities to the suburbs, they will have access to the garage-based chargers that make owning electric vehicles much easier.

Electramechannica’s Other Strengths

Electramechannica has a long history of building cars, dating back to 1969 in Italy. The company, for most of its existence, specialized in building replicas of Porsche cars. Its experience leaves it well-positioned to design attractive vehicles that function at a high level.

Similarly, the company’s CEO, Paul Rivera, has worked in the auto sector for 20-plus years and was an engineering and electric system executive at Ricardo. Ricardo has been in existence for over 100 years and reportedly has over 2,800 employees. Rivera’s background should enable him to make good decisions for Electramechannica and owners of SOLO stock.

Finally, Electramechannica’s idea of initially focusing on the Los Angeles market sounds like a good strategy. the area should be very receptive to the Solo. The approach will lower the company’s early marketing costs. Further, California’s has ample financial incentives for EVs and a high number of low-income, environmentally-conscious people.

The Bottom Line on SOLO Stock

Electramechannica’s stock has been weak recently as euphoria over electric-car stocks has ebbed.  Still, in light of the tremendous growth potential of electric cars, that bullishness should return sooner rather than later.

Meanwhile, the Solo and Electramechannica are very well-positioned to succeed over the longer term. The shares are worth buying for risk-tolerant investors with a significant time horizon.

Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer. As of this writing, Larry Ramer owned shares of Electramechannica.  

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