GreenPower: Worth The Risk In Wake Of Recent Approvals

Dallas Salazar profile picture
Dallas Salazar
5.23K Followers

Summary

  • It’s more good news for GreenPower Motor Co.
  • This morning as the tech-first transportation-startup has secured even further adoption for its new, white-labeled EV350 buses.
  • GreenPower has updated investors that it has been granted the all-important California Air Resources Board approval for its 40 foot EV350 all-electric heavy duty bus.
  • Additionally, parallel to its CARB approval GreenPower’s EV350 was also granted Environmental Protection Agency approval as a heavy-duty electric vehicle.

It's more good news for GreenPower Motor Co. (GPVRF) this morning as the tech-first transportation-startup has secured even further adoption for its new EV350 buses. GreenPower has updated investors that it has been granted the all-important California Air Resources Board (CARB) approval for its 40 foot EV350 all-electric heavy duty bus. Apparently, according to the GreenPower press release, the startup is also filing for CARB approval on several other products within its portfolio.

If GreenPower can secure CARB approval for other products within its line - even if these aren't its "marquee" products - that should do well for implied valuation. I say "implied" in that GreenPower currently trades with little liquidity and prices extremely inefficiently on the over the counter market (not unusual for microcaps). Potential investors should be aware of this before considering a GreenPower position.

Still, CARB approval is the first step down a road than can do well to improve early and sustained adoption, overall marketplace traction, and significantly alter the economics of the products (the buses) for buyers (more on this soon). Again, all of these are good things for a tech company masquerading as a motor co. They're also good things for investors in that I don't see the GreenPower story ending with it as a stand-alone company. I've held out for a long time that I think GreenPower is merged into a much larger, technology-lagging, traditional motor company. I'll reserve further comment on that until GreenPower has matured a bit.

Additionally, parallel to its CARB approval GreenPower's EV350 was also granted Environmental Protection Agency (EPA) approval as a heavy-duty electric vehicle. Why does this matter? Well with the combined EPA and CARB designations GreenPower has been granted by CARB "Hybrid" and "Zero-Emission Truck & Bus" voucher incentive program allowance status. This is absolutely huge.

Now GreenPower's 40 foot EV350 is eligible to receive vouchers for rebates upon purchase for up to $95,000. As alluded to above, this significantly alters the economics of purchasing an EV350 for the buying market. GreenPower Chairman Fraser Atkinson noted this in commenting, "rebates can be combined with other incentives in the State of California making a compelling case for the purchase of our EV350 by lowering the upfront costs and accelerating the payback period. Customers purchasing our EV350 will further benefit from significant fuel savings and reduced maintenance costs compared to a traditional diesel bus".

The value-prop behind the EVE350 becomes noticeably more definitive with the rebate program participation. I have to believe this is going to be good for, again, adoption, traction, and GreenPower valuation. Remember, GreenPower only needs to sell a few buses per year to reach cash-flow breakeven - its model is incredibly capital light. Between the announcement of rebate program participation and the recently updated "ADOMANI LOI" announcement I'm extremely confident that GreenPower is at least cash flow breakeven over the next four reported quarters. I just don't see a way, without significant delays or unseen disaster, that GreenPower isn't. All signs and all previous execution are pointing to this milestone being realized.

I reiterate that GreenPower is currently illiquid - so much so that it should be thought of as a private company that's offering ownership via a public board - but GreenPower might be worth taking a speculative risk on. The company continues to execute and continues to move forward on its growth strategy roadmap. I think it's only a matter of time before the market or a potential suitor takes notice.

Good luck everybody.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

This article was written by

Dallas Salazar profile picture
5.23K Followers
Dallas Salazar is the CEO an Austin-based consulting firm that specializes in private company lifecycle management, up to and including taking companies public, and in helping consult publicly traded companies. Mr. Salazar is also a venture investor in a portfolio of energy and commodity startups, including startups extracting oil, natural gas, helium, and carbon dioxide, as well as engaged in the business of large scale carbon sequestration. Mr. Salazar has recently had large exits in Comstock Resources, Eclipse Resources, Torchlight Energy, as well as numerous privately held natural resource and commodity extraction ventures.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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