With its whisper-quiet driving experience, environmentally friendly profile, and inherently superior reliability due to fewer moving parts, it’s no wonder why modern drivers have elected electric vehicles over their combustion-powered counterparts. But no matter how hard I try, I don’t have the same understanding for Electrameccanica Vehicles (NASDAQ:SOLO). SOLO stock is an example of the EV market jumping the shark.
Now, don’t misread the last statement. I’m not suggesting that I’ve lost my passion for EVs. Quite the opposite, I believe this market has the potential to eventually overturn the fossil fuel paradigm. About the only advantages of driving a gasoline-powered car these days is the mechanical experience that some automotive enthusiasts enjoy. As well, there is the convenience factor.
But as charging stations become more prevalent, the concept of range anxiety will increasingly become a thing of the past. In addition, exciting developments in EV battery technology will improve range to the point where they will compete with the most endowed combustion vehicles.
Because rising technology makes innovations more accessible to a wider audience, I fundamentally see little need for Electrameccanica’s three-wheeled flagship car, Solo. For now, there may be a very limited case for SOLO stock. As a purpose-driven commuter car, Electrameccanica theoretically helps worker bees save money on their trips to the office.
I know what you’re thinking. Sadly, SOLO stock is one of the biggest victims of bad timing. With the novel coronavirus still disrupting American society, that commute may not materialize until next year. Until then, everybody is saving money the old-fashioned way: by sitting at home.
Here’s the kicker. Even after we return to normal, Electrameccanica would still be a poor bet.
SOLO Stock Has a Math Problem
As DigitalTrends.com pointed out, three-wheeled cars have been a tough sell in America. Mainly, they’re not real cars but are often glorified motorcycles. Unless you’re filling a niche enthusiast market, three-wheeled cars for the masses have never gone well.
That’s strike number one for SOLO stock. Another glaring flaw for the Electrameccanica Solo is that it’s incredibly slow. According to the company’s website, the Solo drives to 60 miles per hour from a standstill in a pedestrian 10 seconds. When you’re trying to commute in the modern urban jungle, that slow of an acceleration will be a liability.
According to a Bloomberg report, contemporary cars are faster and more fuel efficient. Comparing cars from 2017 to those back in 1976, the “median time it took for a vehicle to go from 0 to 60 miles per hour was halved, from almost 14 seconds to seven.” And that’s due to the horsepower bump up, from an average of 145 to 283.
Yet today, drivers enjoy great gas mileage. Basically, they’re having their cake and eating it too. In this context, the Solo, and therefore SOLO stock, don’t make much sense.
But the biggest flaw for Electrameccanica is that its commuter car has a severe math problem. Priced at $18,500, you’re not getting great value for the money. Yes, popular EVs cost twice as much as the Solo. But for forking twice as much money, you get to carry five times as many people (including yourself).
Not only that, look at storage capacity. According to Electrameccanica’s specifications, the Solo can only carry five cubic feet of cargo. That’s really sad when you consider that many sports cars will have twice that capacity.
Electrameccanica May Fail in Its Stated Purpose
To put the above into further context, a Lamborghini Aventador SVJ Roadster has slightly more cargo capacity than a Solo. When an exotic car offers more utility than a commuter vehicle, you have problems.
And that really is emblematic of the various issues facing SOLO stock. The underlying company purports to address a function that most of us perform, commuting to work. However, even in this primary goal, the Solo falls short.
For example, by making this vehicle into a caricature of a true EV, it has limited range of only 100 miles. That could be a huge problem post-pandemic, where many people have decided to live further away from crowded metropolitan areas. While range anxiety is becoming less of a problem for real EVs, it could be a growing problem for SOLO stock.
With bearish outside fundamentals along with a confusing message, Electrameccanica is only an EV play on paper. In reality, the company is much like its flagship product – unnecessary and soon-to-become irrelevant.
On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in the article.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.