At first glance, the small electric concept vehicle made by Electrameccanica Vehicles (NASDAQ:SOLO) reminds me of the three-wheeled motorcycles driven by bikers who can’t or don’t want to ply the streets on two wheels. There’s a reason for this connection and it will play a role in the ultimate success of SOLO stock.
Beyond having an unusual name, this is fledging concept company is riding the wave – or bubble – pushing electric-vehicle stocks.
And its three-wheeled vehicle, the Solo, is actually a battery-powered motorcycle with a cab.
Will the little Solo concept catch on? Is Solo stock a good investment? Time will tell, but for now, retail investors should be as cautious as a motorcyclist in traffic.
A Look at SOLO Stock
Electrameccanica Vehicles, founded in 2015, is a subsidiary of Intermeccanica International, which makes sports cars in Vancouver.
Electrameccanica went public three years later, gaining a spot on the Nasdaq under the ticker SOLO, a nifty continuation with the company’s vehicle.
Over the last year, the price of SOLO stock ranged from a dismal 89 cents per share to a high of $13.60. April 2020 was a rock-bottom month for the stock.
Shares surged briefly prior to Thanksgiving. This likely was due to an upbeat earnings report and upward pressure on most electric-vehicle stocks.
However, shares declined since the November spike and SOLO stock is currently trading around $7.
The company is comparatively small, like its vehicle, with a market cap of about $544 million.
As I said, the Solo is essentially a three-wheeler motorcycle with a cab. It looks like a small modern car from the front. The cab, which holds one occupant, tapers in the back around the single rear wheel.
The company says the cab has amenities such as air conditioning, a back-up camera and technology to support hands-free communication. The company’s target group is urban commuters.
Price is $18,500.
The vehicle is being made with Zongshen Industrial Group, which manufactures about 3 million motorcycles a year in Chongqing, China. Electrameccanica says it has the capacity to make 20,000 vehicles a year.
In October, the company said the initial shipment of Solo vehicles was imported to the United States and they will be used for marketing and sales purposes. The company also said it planned to open six “new retail locations” in California and Arizona.
The vehicle has a range of 100 miles, the company said, and can reach 80 miles an hour.
“This three-wheeled vehicle will revolutionize the urban driving experience, including commuting, delivery and shared mobility,” the company says confidently.
A two-seater vehicle is on the drawing board.
Is There a Market for the Solo?
Electrameccanica presents a dilemma for investors. While electric-vehicle makers are not exactly traditional (think Elon), this company is far out even for EV companies.
It seems to be seeking a motorcycle-car experience without the protections that auto buyers nowadays take for granted.
And although a look at commuter traffic finds most drivers alone in their cars, I suspect very few of them use that car just to back and forth to work.
Electrameccanica also appears to believe businesses will buy their vehicles to make urban deliveries, but I don’t expect the Solo can replace the nimble motorcycle when it comes to weaving through rush-hour traffic jams.
The Bottom Line
My InvestorPlace colleague Matt McCall sums up the Solo as a three-wheel vehicle looking for a place in a four-wheel world. And he has a solid point.
Remember the Smart car? This two-seater had the backing of a major automaker and was pitched as a convenient alternative for city drivers. It also had four wheels. Despite the sense the cars made, they were not embraced by enough consumers and they disappeared from the market.
Meanwhile, cars and trucks in the United States seem to just get larger.
I think the odds are against the Solo becoming widely used in the U.S. – even in urban settings. Electrameccanica may find a niche for its vehicles and survive. But the outlook for SOLO stock as a long-term investment is quite uncertain.
Swing traders looking for a cheap stock to play might be interested to buy and sell when the next spike occurs. Otherwise, investors interested in the electric-vehicle market should consider other companies.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.