Is Arcimoto Stock A Buy?

Arcimoto Inc (NASDAQ:FUV) is a Eugene, Oregon-based electric vehicle company that invented the Fun Utility Vehicle (FUV). These two-seat, three-wheeled electric vehicles are built in the company’s Arcimoto Manufacturing Plants (AMPs).

And thanks to rising EV interest, the company rose to become a billion-dollar company in 2021. Everyone’s looking for the next Tesla Inc (NASDAQ:TSLA), so is Arcimoto stock a Buy?

The EV investment mania is a trend that isn’t stopping anytime soon, and it would be easy to believe that caused the company’s market valuation to skyrocket. After all, Arcimoto’s annual sales are barely in the triple digits after ten years in business.

Ross Gerber, a money manager at Gerber Kawasaki, seems to have spotlighted the company and may have hand in its surge after calling the company a “Tesla lite” to his 116,800 Twitter followers.

While it may seem like a stretch, the company does have more tangible results so far than other EV darlings, like Nikola and Lucid Motors.

We take Arcimoto for a drive to see if it can power huge returns to investors.

The Wild Reason Why Elon Won’t Support Arcimoto 

Arcimoto is an American EV manufacturer. While Tesla aims to replace conventional vehicles and Lucid aims at luxury vehicles, Arcimoto’s first vehicle is all about fun. Think of all-terrain vehicles, go karts, or a mix of golf cart and three-wheel motorcycle.

The company even makes a van variant built for security professionals and emergency services, called the Rapid Responder. And it expanded to a last-mile delivery vehicle called the Deliverator.

By 2021, Arcimoto bought Tilting Motor Works for around $10 million. This company focuses on a three-wheel conversion kit for touring motorcycles and will help bridge the gap between traditional and electric vehicles.

Elon Musk was among the first people to ride in an Arcimoto FUV. The outspoken Tesla founder crashed it into a brick wall and refuses to support the company or three-wheeled EVs since.

Like Tesla, the company is building out its manufacturing capabilities to prepare for scale. Unlike Tesla, the company isn’t selling EV credits to major manufacturers to supplement its revenue. Instead, it’s focusing on the specialty vehicle markets.

The company hopes its flat-bed version will be useful for Hollywood productions or even inside the warehouses and factories of Amazon (AMZN) and Tesla. Of course, ramping up production won’t matter much if the company doesn’t have growing sales to match.

Is Arcimoto Stock A Buy?

Arcimoto Inc started 2021 with a market capitalization around $500 million, and it quickly doubled to become a $1 billion company by Q1.

It started production of its first vehicle in 2019 and aims to produce 50,000 vehicles per year by the end of 2022. It aims to drive its production costs down to $10,000 per vehicle as it delivered nearly triple the volume in Q3 as it did in Q2.

 

The company expects its Q4 sales will be more than both of those quarters combined, and analysts estimate that it shouldn’t have any issue realizing that goal. Currently, it has the capacity to make three vehicles per day.

This severely limits the manufacturing and delivery capabilities, and that highlights the inherent risks of investing in this tiny EV maker.

Arcimoto Is Still A Tiny EV Manufacturer

It can’t be overstated how few vehicles Arcimoto sells – we’re talking dozens every year. The company continues making new models, but it hasn’t proven any sales or customer demand over the past two years, despite being open for business.

While investors are piling into a longshot EV play, it appears to be based more on buzz than any deep research. Many analysts are lining up to remind everyone that this company isn’t worth $1 billion.  

Not only does it need to expand its production capabilities, but it needs to find a customer base. It appears forgotten by most, as Google’s smart search results highlight the question “is Arcimoto still in business?”

The company has 20k Facebook followers and 9k on YouTube. There’s a good chance reading this article is one of the first times you have heard of it, and that’s a big problem. Lack of market acceptance makes it hard for this scrappy small company to find buyers.

It’s attempting to find demand in a new category, as it’s neither a motorcycle nor car. Various states are handling it differently, with some requiring a motorcycle license to operate it. All this uncertainty makes for a tough sale for both consumers and investors.

Arcimoto Product Market Fit Remains In Question

Even in a world of infinite possibilities, it’s hard imagining one where Arcimoto mimics Tesla’s success. Newcomers like Nikola, Nio, and Lucid Motors are all jockeying for position with legacy automakers like General Motors and Honda.

Each of these companies has some form of EV that fits into traditional consumer automobiles. Each is working to electrify large industrial vehicles, like big rig semitrucks. While these companies chase proven profitable industries, Arcimoto almost comes off as the Doofus Rick of the bunch.

Bikers can opt for a Harley Davidson LiveWire. Regular drivers can buy a Tesla. Arcimoto is scrambling to find anyone else. In short, product market fit remains an unanswered question.

Is Arcimoto Stock A Buy? The Bottom Line

Arcimoto is an electric vehicle maker from Eugene, Oregon hoping to change the way we think about transportation. It created a three-wheeled vehicle that’s halfway between a motorcycle and car. Tesla founder Elon Musk test drove one, crashed it, and offered sage advice about the vehicle’s safety.

It raced to a billion-dollar valuation in 2021, and that has some analysts worried. The company has manufacturing output of three vehicles per day, and it’s not selling enough to max that out. Substantially all of its assets fit into a new lane for three-wheeled vehicles that aren’t fully covered by current laws.

This leads to a long and bumpy road for investors that may find their money parked in the wrong place. Drive carefully, as it’s hard to see the road ahead for this one.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.