In an increasingly competitive space, Cowen Equity Research has initiated coverage of Electric Last Mile Systems (ELMS) with an outperform rating, setting a per-share price target of $14.

ELMS (NASDAQ: ELMS) closed Thursday at $9.15, down 6% from the open.

The research firm said it was “impressed by the company’s experienced management team and capital-light go-to-market business model that focuses on keeping its approach to manufacturing simple” and a low capital expenditure need to bring Class 1 and Class 3 electric delivery vans to market.

ELMS, which went public on June 28 in a reverse merger with Forum Merger III Corp., was co-founded by former General Motors (NYSE: GM) executive Jim Taylor and Jason Luo, former CEO of Ford China.

Among the reasons Cowen cited for its outperform rating was the early head start ELMS has in the race to electrify commercial delivery vehicles and the company’s plans to retrofit a Sokon platform for its Class 1 Urban Delivery van, which is expected to be available in Q4, Taylor previously told Modern Shipper.


Read: Funding in hand, ELMS readies for electric vehicle launch later this year

Read: Cowen: Arrival’s unique approach sets up opportunity in EV space

The vehicle will be produced at the former Hummer plant in Mishawaka, Indiana. The Urban Delivery van will have a range of about 250 miles. The batteries and power system will come from China but the skateboard chassis will be sourced in the U.S. This approach helps ELMS avoid costs to retrofit the chassis for electric motors. Unlike competitive vehicles, ELMS’ products are purpose-built for commercial use, Taylor noted. Its Urban Delivery van features a 42-kilowatt battery and between 170 and 180 cubic feet of cargo capacity.

“This approach simplifies manufacturing but comes with many challenges around passing stringent U.S. safety requirements, however we believe the management team’s deep experience will enable ELMS to successfully achieve necessary certification,” Cowen wrote in its report.

Taylor told Modern Shipper the company was working through that certification process now and was on track to meet its delivery target. He also said ELMS’ budget called for $160 million in expenses to produce the vehicles – a funding level the company reached through the stock deal.

Cowen also noted lower cost of ownership as a factor as compared to competitors. Taylor said that, with incentives, the Urban Delivery van would cost roughly $25,000. Its current list price is $32,500.

A Class 3 vehicle – the Urban Utility – is being planned for 2022. Both vehicles will be shown at the upcoming Route Consultant Contractor Expo, a FedEx (NYSE: FDX) contractor event.

“The ability to leverage an already proven and developed platform is core to the company’s simplified manufacturing process, as 80% of the engineering will be complete by the time it hits the production line,” Cowen wrote.

The research firm also cited ELMS first-on-the-road status as a key to the company’s success and a reason for the stock rating.

ELMS currently has 45,000 preorders for the Class 1 van, Taylor said.

Arrival also liked by Cowen

ELMS is not the first commercial electric vehicle maker that Cowen has put out positive vibes on. In April, the firm initiated coverage of Arrival (NASDAQ: ARVL), another electric vehicle maker also gaining support from a major parcel company. While ELMS seems to have drawn interest from FedEx, Arrival has received orders for 10,000 vehicles from UPS (NYSE: UPS).

Like ELMS, Arrival is approaching manufacturing with a unique spin.

“We are constructive on Arrival’s unique approach to electric vehicle production leveraging microfactories and vertical integration. The company’s technology and strong value proposition for short-haul commercial operators warrants a premium to other less vertically integrated competitors,” the Cowen report said.

Arrival is planning four vehicle platforms, starting with a bus platform this year followed by small and large vans in 2022 and a smaller vehicle platform in 2023. It will make the vehicles at up to 33 microfactories globally, including a facility in Charlotte, North Carolina, that will produce the UPS-ordered vehicles.

“Arrival’s cost advantages stem from a series of differentiated design choices, which are all underpinned by the company’s microfactory manufacturing approach,” Cowen wrote in April. “Traditional automotive manufacturing is linear, with output bottlenecked by the slowest process in the manufacturing line. The company’s process uses a ‘technology cell’ approach by leveraging robotics, which allows stations to be used multiple times on the same vehicle.”

Click for more Modern Shipper articles by Brian Straight.

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