Investors who are not too risk-averse and looking to bet on electric trucks should buy a small amount of Ayro (NASDAQ:AYRO) stock.
That’s because the electric-truck maker has found a niche in which it can be successful, and it has already recruited a great partner. And importantly, at this point, the market capitalization of AYRO stock is still quite reasonable.
A Viable Niche for Ayro Stock
As I’ve noted in previous columns, battery-electric trucks have severe limitations. In addition to the range limitations which all EVs have at this point, battery-electric trucks require a tremendous amount of electricity to function. For example, in a March 2 column, I noted that “according to one estimate, charging the battery {of} one of Tesla’s (NASDAQ:TSLA) Semi SUVs ‘would consume as much energy per year as 2,500 EU households.’
Further, because “16,000 pounds of batteries” are needed for an electric-battery truck to travel 250 miles,” the loads that such vehicles can carry are quite limited. I noted that, because of these limitations, “truck maker Peterbilt thinks that ‘refuse, regional, and urban pickup and delivery’ are the best ways in which battery-powered trucks can be used.”
Therefore, Ayro’s electric trucks — which the company is marketing to ” university and corporate campuses, for commercial and urban delivery” — are likely very well-suited for that niche. After all, trucks that deliver items on a university or company campus don’t generally have to go very far or carry heavy loads.
As a result, Ayro’s EVs should please the customers that buy it for those purposes, which are generally in-line with Peterbilt’s vision for electric trucks. And according to Truckinginfo, “Battery-powered trucks…benefit greatly from high transient, stop-and-go operation with more opportunities for regenerative braking.” Delivery trucks certainly have to brake a great deal.
Further, as I’ve pointed out previously, many companies are eager to show that they are doing their part to help the environment and combat global warming. I believe that, given the leftward political bias of most universities, they will certainly be in the same boat.
Ayro’s Partnership Validates Its Trucks
On July 9, Ayro announced in a press release that it had entered into “a collaborative engineering partnership with Gallery Carts. Together, the companies developed a “configurable mobile hospitality vehicle for ‘on-the-go’ venues across the United States,” Ayro noted. The vehicle “permits food, beverage and merchandising operators to bring goods directly to consumers.”
In other words, the companies are jointly created a food truck. Ayro’s press release also indicated that Gallery has previously been selling “low-speed” EVs made by Ayro.
Gallery is definitely not a lightweight company or a small-time player. Ayro pointed out that Gallery has made carts and kiosks for four decades and “has a diverse clientele throughout mobile food, beverage and merchandise distribution markets.”
Indeed, Gallery appears to have many high-profile, lucrative contracts, including deals to provide food carts for the Daytona International Speedway and Houston’s NRG Stadium. Indicating that Gallery’s customers also include airports, resorts, and “government and corporate campuses,” Ayro noted that many of these customers are looking to “reduce their carbon footprint.”
The fact that a major player like Gallery chose to partner with Ayro, suggests that the latter company makes high-quality electric trucks. And, given Gallery’s existing relationships with many enterprises that are in Ayro’s target market, Gallery is well-positioned to sell a large number of Ayro’s electric trucks.
The Bottom Line on AYRO Stock
The company has identified a good niche for electric trucks, and it should benefit from the desire of many colleges and companies to reduce their carbon footprints. Moreover, Ayro’s partnership with Gallery validates its technology and gives it a strong foothold in its target market.
Finally, AYRO stock is trading at a reasonable market cap of about $100 million, making it a worthwhile bet for those looking for an EV company in which to invest.
As of this writing, the author did not own any of the aforementioned stocks.