RE:RE:2023 - not too pretty horizon for manyEV Stock Prices are a reflection of the general "risk off" market that we find ourselves in for the following reasons:
- Borrowing costs are up, Margin calls are up
- Input cost increases (particularly battery related) have exceeded rates of inflation by a wide margin due to other geopolitical issues including China's management of the Pandemic and the trade war between the West and China
- None of these companies (including Tesla) command pricing power, so further margin erosion is inevitable.
Pre commercialization companies, with strong balance sheets (lots of cash) are best positioned to weather this storm.
Many early stage EV companies with significant capex and limited cash on their balance sheets will fall by the wayside as their cost and pricing models no longer work and they cannot afford to change them.
- All of these companies (as well as others) will need solutions that reduce cost.
EXRO has the luxury of being able to participate in multiple market segments and deliver cost savings in all of them.
With SOP not commencing until Q3 2023, EXRO should have limited exposure to Credit concerns in the near term.
It is also worth noting that Sue has been speaking to Tier 1 partnerships. Companies in this strata are generally creditworthy.
Best of Luck