News of a pending merger is sending ElectraMeccanica Vehicles (NASDAQ:SOLO) stock up this morning. The electric vehicle (EV) producer has struggled recently, but it may be nearing a turning point.
Today it announced plans to merge with Tevva, a company in the EV battery and hydrogen truck technology space. Its new partner is based in the United Kingdom, and for that reason, the newly formed company will target European markets before the United States. But SOLO stock has been rising all morning on the news, indicating that U.S. markets are happy with the news. If successfully executed, this merger has the potential to create a powerful company that could secure a piece of the growing electric truck market.
What else do investors need to know about this pending deal? Let’s take a closer look at both companies and what their combination could look like.
What’s Happening With SOLO Stock
Despite some slight volatility as markets opened this morning, SOLO stock appears to have stabilized and is enjoying some excellent momentum today. As of this writing, it is up more than 15% for the day, and its current trajectory suggests that it has even further to go. The company still hasn’t made up the ground it lost after its late July surge, but if this growth continues, it could easily get there. According to MarketWatch, the deal is expected to close during the fourth quarter of the year, giving the stock room to run until it does.
It might seem just a bit ironic that a company whose trading symbol spells “solo” is merging with another player in the space. But it certainly makes sense that these two companies would decide to join forces. ElectraMeccanica designs and produces EVs, and Tevva is helping electrify the field of medium- and heavy-duty commercial vehicles. Tevva features a 110,000-square-foot factory in the U.K. town of Tilbury, and ElectraMeccanica operates a 235,000-square-foot manufacturing facility in Mesa, Arizona. While neither is well known in the other’s country, both can benefit from exposure to the international market that their new partner can provide. This is likely the reason that SOLO stock is surging today as momentum for the merger builds.
In a joint statement released by both companies, ElectraMeccanica CEO Susan Docherty spoke to this. In her words:
“We believe this is the right time and Tevva is the right partner with which to pivot from consumer vehicles to commercial vehicles and respond to commercial fleet customer demand for superior, reliable and cost-efficient trucks. The complementary operations of the two companies and our similar values and mission give me complete confidence we can jointly create significant shareholder value. Tevva is extremely well positioned in the U.K. and European market and our world-class manufacturing facilities, combined experienced senior executive team and balance sheet will help take our combined company to the next level.”
As the statement also notes, the two EV producers seek to create a “market leader in zero-emission commercial vehicles” by joining forces. This merger will likely enable them to do exactly that.
SOLO Stock: The Road Ahead
For months on end, ElectraMeccanica has struggled against a difficult market tide, and experts have urged investors to ditch SOLO stock.
InvestorPlace contributor Alex Sirois argues that it has routinely failed to demonstrate an ability to produce quality vehicles. While that might be true, this new merger might be exactly what helps the company buck this image and start turning out quality products. Combining with a European leader will give it the kind of unique edge that only comes from a strong presence in multiple markets. It may seem premature to say this, but merging with Tevva could ultimately be what pulls SOLO out of penny stock territory.
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On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
