How ElectraMeccanica Makes Money

ElectraMeccanica (SOLO) is a designer and manufacturer of smaller and simpler electric vehicles. The company's flagship product was a three-wheeled electric car until this car had to be recalled in early 2023. In Dec. 2022, ElectraMeccanica also started assembling the electric vehicles of other companies in order to further leverage its state-of-the-art manufacturing facility in Mesa, Arizona.

The company was incorporated in 2015 and three years later, ElectraMeccanica filed for an initial public offering and began trading on the Nasdaq in 2018. In 2020, the company started production and delivery of its first EV, the three-wheeled SOLO.

After founder Jerry Kroll, top shareholders include State Street, Citadel Advisors, Mitsubishi Asset Management, Millennium, Deutsche Bank, and Morgan Stanley.

ElectraMeccanica's Financials

In May 2023, the company released its first quarter report for fiscal year (FY) 2023 for the period ending March 31, 2023. For Q1 2023, the company brought in revenues of $504,427. This is a year-over-year (YOY) decrease of 51.4%. The company had a net loss of $12.3 million. This is an improvement over the $18 million net loss from the same period the previous year.

ElectraMeccanica used to have two reporting segments: Electric Vehicles and Custom Built Vehicles. But as of 2023, the company only has one reporting segment: Electric Vehicles, which is responsible for all revenues. The company does break down revenues in this segment by U.S. sales and Canada sales; however, for Q1 2023, all sales were made in the U.S.

ElectraMeccanica's Recent Developments

In Feb. 2023, the company announced a voluntary recall of its SOLO vehicle due to a technical issue that would prevent propulsion in some cars at certain times. In April 2023, the company decided to repurchase all the vehicles it sold due to safety concerns of this technical issue.

This issue exists in the SOLO models G2 and G3 that were released between 2019 and 2023. The issue has not been found in the G1 system, which used a different design system and parts.

The company's financial performance will be severely impacted by the repurchase of all these vehicles. It will be further negatively affected because it has not yet determined the cause of the issue, which will prevent ElectraMeccanica from selling its vehicles.

In its Q1 2023 report, ElectraMeccanica stated it will finance operations over the next 12 months with cash on hand and it may seek additional funding through private placements and/or public offerings of equity capital or debt.

The company does have a strong balance sheet, with total assets of $162 million and total liabilities of $46.3 million. It also has a large amount of cash ($111 million) with no debt on the balance sheet.