COVID-19: A Tailwind for e-scooter Manufacturer Vmoto

Summary

• Vmoto Limited has reported record global unit sales year to date to May 2020 on the back of increased demand for electric vehicles.
• Vmoto has several discussions in the pipeline with international distributors as well as customers and has inked several exclusive distribution agreements with the same.
• Globally introduced legislation regarding the adoption of EVs and emerging trends unfolded by COVID-19 are likely to boost the demand for EVs in the longer term.

In recent years, electric vehicle (EV) has witnessed rapid evolution with ongoing developments in the automotive sector across the globe. Favourable changes in the government policies along with financial as well as non-financial assistance under various schemes and programs have greased the wheels for the transformation in the EV market.

Automotive manufacturers are preparing themselves to bring forward every line of product to the consumers ranging from electric cars to electric scooter and bikes.

International scooter/motorcycle manufacturing and distribution company, Vmoto Limited (ASX:VMT) reported record international unit sales year to date (YTD) to May 2020. VMT delivered robust operational as well as commercial growth while continued progress of its strategy to sell high value electric two-wheel vehicle products into global markets.

From 1 January to 31 May FY2020, VMT delivered total unit sales of 8,453, of which 7,770 units were sold into international markets, indicating a growth of 42% on the pcp in 2019 and a surge of 107% on pcp in 2018.

Since beginning of the pandemic period to date, the Company operations have remained immune to the impact of COVID-19 and continued. Moreover, VMT has received commitments from international distributors for FY20 business planning and deposits for sales orders.

International Sales Units (Source: Company's Report)

As restrictions across economies are easing, VMT’s key international markets, logistics and delivery of products to distributors as well as customers have returned to normal levels. On the back of regular trading conditions, VMT is gaining momentum in the execution of its strategies.

While specialising in high quality electric-powered two-wheel vehicles, the Company engages in manufacturing and distributing a range of electric scooters/motorcycles from its wholly-owned state of the art manufacturing facility in Nanjing, China.

Recent International Distribution Agreements

VMT has something more than just COVID favouring it. The Company has inked several exclusive distribution agreements with international distributors across Japan, Costa Rica, Panama, and Thailand. These agreements mark the expansion of Company into new markets as they are signed for the warehousing, distribution, and marketing of its B2C range of electric two-wheel vehicle product.

VMT has also supplied samples to numerous potential B2C and B2B distributors and customers in Brazil, Mexico, Spain, Turkey, and fifteen more countries. More significantly, the Company is also in discussions with prospective distributors and customers across these countries.

Vmoto and Ducati

Another gold feather in the cap of VMT is its exclusive licensing agreement signed with Ducati Motor Holding S.p.A. in FY19. The agreement was signed for manufacturing and distributing a Special Edition Ducati branded electric two-wheel vehicles, which are distributed through existing networks of international distributors of Vmoto.

Ducati is a globally recognised vehicle manufacturer, and VMT’s agreement with Ducati offers strong validation of Vmoto’s electric vehicle offering from one of the globally leading luxury motorcycle manufacturers.

Initiatives Favouring EVs In Europe

VMT is hopeful that the initiatives implemented by several European governments are likely to impact the demand for EVs in the region positively. These initiatives include subsidies to consumers who are buying two-wheel electric vehicles for personal transportation to boost green mobility in post-lockdown phase.

Notably, the post-lockdown phase is a crucial time for the Company, as people have gradually started to return to work but have only limited access to public transport.

More importantly, VMT believes that the impact of COVID on personal and public transportation and government initiatives shall be favourable to Vmoto. The Company anticipates gaining a longer-term positive impact on its business as VMT’s B2C and ride-sharing products enable consumers to travel with flexibility while adhering to social-distancing measures.

Another trend put forward by COVID-19 is the global consumer shift towards online shopping for food as well as other products and services. Taking advantage of this trend; VMT expects a lift in demand for its food and parcel delivery electric scooter products as people embrace food and parcel home delivery services.

Trend Setters for EVs

VMT has the first-mover advantage in a growing global market with strong tailwinds. Several factors contributing to the favourable environment for VMT’s business include:

• The increasing popularity of delivery services and ride-sharing due to advances in app technology and mobile network.
• Legislative changes in Europe around Co₂ emissions targets plus government subsidies driving EV sales and increased investment in charging infrastructure.
• Maturing technology around electric vehicles, including electric driving system and battery technology.
• The increasing number of city inhabitants and population density driving demand for two-wheeled vehicles.

It looks like COVID-19 has created a push for electric vehicle manufacturers across the globe supporting VMT by the strong operational as well as commercial growth of its products along with new distribution agreements.

Amid COVID-19 restrictions, reduced pollution levels have been reported worldwide due to the shutdown across the globe. Visible improvements in the environment are believed to form the basis for a social framework that can boost the shift towards electric mobility.

In the least expectations, this scenario is likely to make people much positively predisposed towards the need for adopting electric vehicles and a greener environment. The declined pollution levels are likely to deliver support for electric mobility and the EV boom.

On 03 July 2020, VMT stock settled at $0.355, gaining 4.412% intraday, slightly shying away from the 52-weeks high price of $0.360. VMT has a market capitalisation of $83.23.

Bottomline

COVID-19 might have set a topsy-turvy fashion across the world. Yet, there are few segments which have not only benefitted immensely from the overall situation but also have been a trendsetter, for example, VMT projects, are the ongoing trends point toward a substantial market for EVs in coming times. There is undoubtedly a vast unexplored opportunity for EV manufacturers in the fresh as well as growing markets.