We’ve had some time to digest the big pivot from Naked Brands to Cenntro Electric Group Ltd (NASDAQ:CENN) stock. Going from a struggling intimate apparel retailer and wannabe e-commerce platform to an electric vehicle (EV) company is big leap.
You can read more about the background of what happened, including how NAKD stock became CENN stock in my post-ticker change analysis. At that time, I noted that Cenntro now offers a cheap option for those looking to add an EV stock to their portfolio.
How big an opportunity is this, though? With the way many EV stocks have blown up over the past few years, there’s always a risk that someone will hear the “EV” label and immediately assume there’s money to be made.
However, that’s far from a universal truth. Many of the EV companies landing big investments are essentially startups. They’re plugging (no pun intended) prototypes, not production vehicles. Anything can happen between now and when they are actually able to sell an EV versus taking a $100 deposit. With that in mind, let’s take a deeper dive on Cenntro.
Cenntro Sells Commercial EVs, Not Cars
The first distinction to make is that Cenntro is in the commercial EV market, not the electric car market. Think vans and other last-mile delivery vehicles, along with off-road utility vehicles aimed at farming and other applications.
That may be a good thing for CENN stock, with the consumer EV market approaching a boiling point and traditional automakers beginning to jump into the fray at an unprecedented rate.
Cenntro Has Vehicles in Production, and On the Road
The second big point to make about Cenntro is that this is no startup, Yes, it is only now being publicly traded after the deal with Naked Brands, but Cenntro was already a growing company.
It currently offers five different EV models:
- The Metro light duty commercial vehicle for intracity deliveries, in trial production since 2017
- Logistar 400, Class 4 urban delivery van
- Logistar 200, light duty commercial van
- Neibor 200 electric micro truck
- ORV off-road utility task vehicle
To date, Cenntro has over 3,300 EVs produced and delivered to customers in 26 countries. Those EVs have logged more than 20 million miles. The company has issued guidance that it is on track to deliver a minimum of 20,000 vehicles in 2022.
CENN stock is currently worth $2 per share for a company that generated $5.5 million in revenue in 2020, and has sold 3,300 EVs since 2017. What direction do you think CENN is going to go if the company meets its guidance and sells 20,000+ EVs this year?
Addressable Market for Last-Mile Commercial EVs
Cenntro’s primary target is last-mile delivery. We’re not talking about the big rigs that transport goods across country. These are the smaller trucks and vans that bustle through city streets, dropping off packages. The classic example is the U.S. Postal Service, which set off a frantic bidding war that lasted several years as the government agency set out to replace its fleet of nearly 200,000 delivery vans.
A report by Transparency Market Research notes that companies are planning to spend big on this market. Why? There are several reasons. Even after the pandemic’s initial surge, e-commerce continues to grow in popularity. More e-commerce means more deliveries. In addition, urbanization continues to grow, with more people across the globe moving to cities. Again, this means more last-mile deliveries. What’s particularly important to Cenntro is the push to electrify this last-mile fleet.
According to Transparency Reasearch data, last-mile delivery accounts for over 50% of the total transportation cost of an item. That puts immense pressure on delivery companies to cut costs, and electrifying does so through reducing “fuel” and maintenance costs.
In addition, there are increasingly stringent regulations around emissions, making traditional gas and diesel-powered delivery vehicles more expensive to operate. Adding to the EV appeal, many governments are now offering incentives to companies if they electrify their delivery fleets.
Transparency Market Research pegs the value of the global last mile delivery market at $477.27 billion by 2021. Given its value of $150.39 billion in 2020, that represents a compound annual growth rate (CAGR) of 10.31% between 2021 and 2031. While EVs have been a small chunk of that expenditure in the past, the factors above mean that is going to change. The report authors spike out the opportunity this offers:
“use of electric vehicles and autonomous vehicles for transportation of goods in last mile delivery is gaining popularity, which makes them a highly lucrative investment for the near future.”
That rapidly growing last-mile commercial EV market — which ultimately could be worth over $400 billion a year as fossil fuels fall out of favor — is Cenntro’s addressable market.
I would say that offers considerable opportunity for long-term CENN stock growth.
Bottom Line
CENN stock is a bonafide opportunity to invest in an EV stock at a low entry price. Cenntro remains tainted by the whole Naked Brands chapter, but that will eventually be forgotten. For now, you have an EV stock with a “B” rating in Portfolio Grader that is ramping up production and determined to be a big player in the lucrative global commercial EV market.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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