![]() Looking at the risks for the bull case, there are several major ones. In my view, Vicinity's shares should get back to $5.00 per share if the company manages to reach sales of $112 million and EBITDA of $8 million in 2022. The share price decline has been so severe that Vicinity is now trading at almost 30% below the $4.26 per share issue price for its October 2021 public offering. Overall, I view 2021 as a transitional year for Vicinity and I'm surprised that the market valuation of the company has dropped so much in recent months. ![]() Looking at 2022, deliveries of clean diesel and compressed natural gas buses are expected to come down to around 95 units from around 130 units this year as some clients will switch to the Vicinity Lightning. In my view, the financial performance for the first nine months of the year was encouraging as Vicinity boosted deliveries from 49 to 119 buses and revenues grew by 145%. Hopefully, EV sales will smoothen out sales during periods of lower transit bus deliveries in the future. Only six buses were delivered during the quarter, compared to 20 a year earlier. The most recent example is Q3 2021 when bus sales declined by over 70% to just C$2.1 million ($1.7 million). One of the key issues for Vicinity is that revenues from its clean diesel and compressed natural gas have been irregular and there have been periods of low deliveries, which significantly affects its financial results. The size of these orders should be a relief to investors as the share price has tumbled 68% since the listing on NASDAQ in July 2021. In just the first three weeks of January, Vicinity announced new orders worth $33 million. Vicinity revealed at its Q3 2021 earnings call that its backlog stood at close to C$90 million ($72.1 million) and looking at the recent orders, I think the company could surpass its 2022 goals. The company expects to deliver over 75 Vicinity Lightning EV buses and chassis, 2 EV trucks, and 300 Vicinity Optimal EVs in 2022 and thus boost its revenues by over 300% to C$140 million ($112.1 million). Setting foot in the USA is crucial as the FTA provides up to 80% funding to public transit authorities for bus purchases and almost every state has a transit agency that owns or is planning to add new electric buses. Vicinity estimates that the addressable market for this bus alone is over 4,000 units. The new flagship product of the company will be the Lightning electric bus, which uses BMW ( OTCPK:BMWYY) batteries and components. You see, Vicinity has a product portfolio that includes electric buses, shuttles, trucks, and chassis that are expected to make up around 70% of its revenues this year. It's scheduled to open in the first half of 2022 and is key to Vicinity's EV plans. Vicinity can deliver around 2,000 units per year through its contract manufacturing partners and the new facility will be able to produce up to 1,000 units per year. Vicinity's headquarters are located in Aldergrove and the company is building a Buy America-compliant vehicle assembly facility in the US city of Ferndale, which is located around 30 minutes by road. The addressable market is around 1,500 units and over 600 of the company's buses, which carry an average sales price of $400,000, are in operation today. Its flagship product is a clean diesel and compressed natural gas bus which holds a market share of around 90% in Canada's mid-sized heavy segment. Vicinity was founded in 2012 and was known as Grande West Transportation Group until March 2021. Order volumes this month have been encouraging and I think the company could beat its financial forecasts if the rest of the year goes this well. Vicinity is well funded following a $17 million public offering in November and has a market valuation of $108.2 million as of the time of writing. The latter is a relatively small bus maker that is going electric in 2022, with revenues and EBITDA expected to grow to more than C$140 million ($112.1 million) and over C$10 million ($8 million), respectively. There is and its name is Vicinity Motor Corp (NASDAQ: NASDAQ: VEV ). I've written several bearish articles on electric vehicle (EV) manufacturers on SA and some subscribers are probably wondering if there is even one company in this space that I consider to be cheap and promising. Scharfsinn86/iStock via Getty Images Investment thesis
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