GPV Analyst Note from Industrial AllianceGreenPower Motor Company Inc. (TSX:GPV.V, Not Rated, Last:$0.64) – GPV announced yesterday morning 9 LOI’s received by ADOMANI (Private, GPV’s California-based All-Electric School Bus Sales Rep), from 9 different School Districts in the State of California, and pertains to a total of 25 all-electric GPV school buses. This factory rep arrangement with ADOMANI was announced last year (Oct ‘15), and an initial 22 bus LOI between GPV and ADOMANI (for Q3/’16 delivery) was mentioned however there were no specifics re. end buyer(s). ADOMANI is clearly doing their work, as yesterday’s announcement provides clarity re. specific customers, and is the 1st big milestone in ADOMANI’s plan to put 150 GPV school buses on the road by end of ’17, with [substantially] higher medium-long term objectives as they ramp-up sales. Here’s a quick take on electric school bus potential: In USA >37k school buses are replaced each year; and California alone has a total of ~34k school buses, of which ~8,400 are deemed non-compliant and have to be upgraded by the end of ’17 (electric retro-fit), or replaced (new all-electric), in order to qualify under new emissions standards. It's worth noting that there is significant government funding (to the tune of US$400M), coming down specifically for school buses, and ADOMANI is right in the middle of it. School buses in California alone can be a company maker for GPV, however this is just one piece of the puzzle. For a quick-take on what’s happening in ‘Transit’, we’ll outline some Key/Near-Term Catalysts:
1) Canada --- In BC, we believe the Greater Victoria Harbour Authority is about to take delivery of North America’s first ever all-electric double decker bus, a GPV model EVC550; expect some healthy media coverage, and transit circles to take notice. We see GPV as having an edge in the double decker market, so more DD sales and new DD customers are likely to surface in the coming months/quarters.
2) USA --- Grant funding announcements expected any time from the California Air Resource Board (CARB), which is currently evaluating 38 zero-emission bus and truck pilot commercial project proposals. In one of those projects (Porterville Transit, California), GPV is named as the technology partner, and will supply an initial 10 transit buses & construct a production facility for early ’17 commissioning, that will employ 100's in the community; beyond Porterville it is possible that grant recipients could choose GPV although we currently have no visibility.
3) International Factory Rep --- We would not be surprised if GPV aligns with an Internationl/Global Bus Sales entity(ies) to accelerate the sales and marketing process outside CAD/USA (note just a week ago, GPV announced the new CAD Factory Rep, 'City View Bus Sales & Service'), so they're being very proactive in order to leverage experts in various marketplaces.
4) Other Government Initiatives/Funding --- Difficult to research with so many facets, but clearly the trend is to support clean transportation initiatives, clean propulsion advancement, battery innovation, etc… all positive drivers for GPV.
5) Sales --- the ultimate driver of this stock is end-user sales to large transportation entities. We expect to see periodic updates re. progress in Canada (namely BC, perhaps Quebec), in USA (California and Washington State are leading the charge), and outside CAD/USA, GPV having recently announced right-side-steering wheel capability means we could see ‘Global’ sales at any time. We’re watching closely as entry into a new market outside North America where adoption of all electric buses is much further along, could be yet another substantial opportunity to accelerate the commercialization of GPV’s bus family.
Bottom line on GPV: This stock is up from 25c just a month ago, with several news releases regarding developments in Canada, USA, and potential progress in other International markets, all incrementally positive. Clean tech transportation in general is ‘probably not a bad place to be’, and with this momentum it appears GPV is earning its way onto people's radar. Stock is tightly held, with strong insider ownership and catalysts on the horizon that suggest this small cap pure play on all electric transit & school buses is one to own. The stock will need a breather somewhere in this run, but with a long term view this looks like an excellent opportunity.