Category Archives: globalization

China Low Speed Electric Vehicle Market Booming According To Report

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A Chinese low-speed vehicle.

A Chinese low-speed vehicle.

A research report recently published by ResearchInChina estimates that 302,000 low speed electric vehicles were produced in China last year, an increase of 46.6% from the year before. The market has grown rapidly since 2009 and is marked by manufacturers and intense competition. From the report:

At present, domestic LSEV producers concentrate their production bases mainly in Shandong Province, whose LSEV output rose from 16,300 in 2009 to 175,000 in 2013 at a CAGR of 81.0%. Key players there are Shifeng Group, Shandong Baoya New Energy Vehicle Co. Ltd., Shandong Tangjun Ouling Automobile Manufacture Co., Ltd., and so on. At the same time, spurred by the robust downstream demand for LSEV, Chery and BYD have also ventured into this field.

Learn more:  Reportstack.com

Comment:  As we have noted previously, the LSVs in China and LSV compliant vehicles in the US are two different animals. Relatively speaking, the Chinese LSV market is largely unregulated so the quality and safety features of the LSVs are not the same. On the other hand a dynamic LSV market has arisen with a host of manufacturers and component suppliers. China is a very large market so even a niche market like LSVs can result in sizable market demand. The relatively inexpensive LSV option is appealing to those consumers who have some money but can’t afford a highway speed vehicle or don’t need that level of features and functionality. The Chinese government is also encouraging the adoption of alternative fuel vehicles.

ePower Trucks Sells First Ligier Flex L3 Low Speed Electric Truck In UK

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Flex L3 All Electric Truck

Flex L3 All Electric Truck

Earlier this year ePower Trucks became distributor for French manufactured Ligier Flex L3 all electric trucks and they have now announced that Newcastle University’s EAT@NEWCASTLE catering service has purchased the first such vehicle. The Flex L3 is a street legal low speed electric vehicle with a top speed of 25 mph, range of 35 miles and payload capacity of 400 kg. The truck costs approximately 22,500 USD.

The catering service will use the vehicle to deliver hot and cold food and beverages to various venues on campus. For their purposes the Flex L3 has a box body but the vehicle can also be configured with a flat bed, cage or tipper. The electric drive train is powered by a lead-acid gel battery pack which can be recharged in 8 to 10 hours. Learn more:  EVworld.com

LSVs Popular In China

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A Chinese low-speed vehicle.

A Chinese low-speed vehicle.

A recent article discusses the surprising large size of the low-speed electric vehicle market in China. With over 200,000 LSVs produced there in 2013, it dwarfs the nearly 15,000 sold in the US. Some interesting characteristics of the market include, according to the article, a complete lack of regulation. Not surprisingly, hand in hand with this is a lack of safety features on the vehicles. On a more positive note, a host of component manufacturers and innovative low cost manufacturing processes have also cropped up to support this market and enabled many manufacturers to enter the fray.

A common design for a Chinese LSV is four doors with one seat in the front and two side-by-side in the back. The seating room would be considered small by Western standards. Chinese LSVs typically use lead-acid batteries and are powered by 1.5-kW to 4-kW DC motors with a top speed of around 38 miles per hour and costs range from $2,000 to $12,000. They are particularly popular in rural areas. Learn more:  Green.autoblog.com

Comment:  As the article points out, the small size of the US LSV market makes it a less appealing export market to Chinese manufacturers with so much opportunity at their doorstep. A friend of mine tried for several years to import a quality LSV from China that met the US safety standards and consumer requirements. He had a difficult time finding any company willing to spend the money to do the testing and meet the standards for a relatively small market opportunity. At the time, the quality of many of the vehicles he looked at was also not going to meet the needs of the US market.

Another difference in the markets is that the US market has become more of a commercial/institutional market. In the US, many of the consumer markets where LSVs would be useful are already served by golf cars and from what I’ve seen the trend among municipalities has been to allow golf cars on public streets rather than restrict them. This negates to a large degree the necessity of having purposely built LSV compliant vehicles. The commercial/institutional buyers however are looking for vehicles with those added safety features and official designation as an LSV.

In general, international markets offer greater potential for small electric vehicles than the US. From other developing countries in Asia to urban environments in Europe, from both a regulatory and market demand perspective, these markets are more conducive to creating a substantial market for these vehicles.

Polaris Reports Record Quarterly Results – Gains Market Share

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Beauty shot of the new Sportsman ACE from Polaris.

The Sportsman ACE, one of the many different vehicles that helped drive record quarterly performance for Polaris.

Polaris Industries reported record second quarter results with sales of $1.014 billion and net income of $96.9 million. Sales increased 20% from Q2 2013 and net income 21%. Key drivers were an increase of 15% in North American retail sales with strength in ORV and motorcycle products. Management also raised their full year guidance to a 16-18% increase revenue. Here are some highlights from the earnings call with a focus on small, task-oriented vehicles:

  • ORV sales increased 13% for the quarter to $701.5 million
  • Guidance for full year:  up 11%-13%
  • Side-by-side sales up low teens % and outpaced the market
  • Polaris gained market share in side-by-sides and ATVS
  • Sportsman ACE is selling well and customer data to date indicates that it is reaching a new market segment
  • New ORV models will be announced shortly
  • Promotion environment for side-by-sides remains aggressive
  • Small Vehicle sales increased 29% to 43.5 million
  • Aixam Mega sales up over 40% in Q2
  • GEM and Goupil sales combined increased 6%
  • New products will be announced in the second half of the year
  • Small Vehicle sales guidance for the year:  up 25%-30%
  • In the commercial segment Brutus sales are below expectations as the company tackles the B2B sales process but Bobcat and National Account sales did well.
  • International sales increased 29% in Q2 to $170.5 million driven, in part, by side-by-side sales in many regions

Learn more:  Seekingalpha.com (Earnings call transcript)

Comment:  Polaris continues to operate on nearly all cylinders and will be shortly rolling out new products. Their only weakness appears to be in the commercial segment. It is telling that Bobcat and national accounts did well in the quarter but the Brutus  retail sales, while improving, remained below expectations. This points to the continuing mismatch between the majority of Polaris’s distribution network and the commercial customer the Brutus is targeting. Most of their current dealers are accustomed to a different consumer-oriented sales process. Management is likely to pursue additional marketing partnerships in this segment to bolster commercial sales while trying to assist, train and bring more of their traditional dealers up to speed in this segment. But this is nitpicking, the company continues to roll in competitive markets and is even exceedng high expectations.

Flex L3 Electric Utility Truck Available In UK

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The Flex L3 electric truck produced by Ligier is now available in the UK.

The Flex L3 electric truck produced by Ligier is now available in the UK.

ePower Trucks will be the UK distributor for Ligier’s Flex L3 electric utility truck. Ligier is a French manufacturer. Powered by lead gel batteries, the street legal Flex L3 has a top speed of 25 mph and a range of 35 mph. The target applications for the vehicle, which can come in a flat bed, cage, box body or tipper configuration, are urban delivery and estate management. The payload capacity is up to 400 kg. The Flex L3 is priced at 13,500 pounds and is available in white, red or gray. Learn more:   Transportengineer.org

Comment:  The urban delivery market application is a good niche market for electric vehicles especially for the delivery of goods that are neither too large or heavy. This type of application requires slower speeds and less range so more expensive lithium-based battery packs and more powerful electric powertrains are not necessary. This type of application is more prevalent in Europe and Asia. For similar reasons, light-duty maintenance applications on college or corporate campuses or city parks are also a good fit for this type of vehicle.

Cenntro Motor To Produce Electric Utility Vehicles At Nevada Facility

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Cenntro Motors Kombi EV electric utility vehicles to be produced in Nevada.

Cenntro Motors Kombi EV electric utility vehicles to be produced in Nevada.

Cenntro Motor plans to begin production of 1,650 electric vehicles at a Sparks, NV facility by August or September of this year. The $20.1 million, 150,000 square foot facility will also serve as the company’s headquarters. The facility will employ approximately 100 people and training grants along with tax deferrals were part of a $1.2 million incentive package to attract the company.

Cenntro Motors designs and builds lightweight electric commercial and passenger vehicles and their first vehicle is the Kombi EV designed for maintenance, delivery and light cargo transport. The vehicle currently comes in two configurations, the Green Space Version with a cargo bed and the City Version with a van box. Both vehicles are 2WD and use a 10 Stator KLD DC motor with max power of 12.5 kW. The vehicle’s KLD Energy Technologies oneDRIVE™ propulsion system uses a 48V system with a 6.8kW KLD Li-ion battery pack. Other key features include 800 payload capacity, 4-wheel hydraulic disk brakes, a range of 50 miles and top speeds of 31 mph for the Green Space and 25 mph for the City.

Cenntro Motors also recently acquired SITL-Brandt Motors located in Lyon, France, which will be the headquarters for their European operations. The acquisition was valued at $50 million and management plans to invest an additional $20 million. With the acquisition Cenntro’s lineup in Europe will include an all-electric CITELEC commercial truck, a two-person quadracycle and electric scooters. Learn more:  Reviewjournal.com and Cenntromotors.com

Comment:  The commercial/government market for small electric vehicles is attracting more attention as many companies believe this is where the growth is. From colleges and universities to municipalities and commercial entities organizations are finding these vehicles to be green, safe and cost-effective for applications that do not require traditional passenger vehicles or pick-up trucks. It continues to represent a growth segment for the STOV industry. It is also an international market with arguably better opportunities in European and Asian markets where smaller vehicles are more accepted, prevalent and have been used effectively for many years.

 

Eicher-Volvo Joint Venture May Enter Mini-Truck Market

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eicher-volvo-joint-venture-ve-commercial-vehicle-studying-plans-to-enter-mini-trucks-segment

Eicher is considering a mini-truck offering to enter the small commercial vehicle market through their joint venture with Volvo.

A joint venture between Eicher Motors Ltd. of India and Volvo, VE Commercial Vehicle, may enter the growing small commercial vehicle market in India. The small commercial vehicle market consists of the vehicles of 5 tonnes or less. The joint venture is considering a mini-truck offering in the 1-3 tonne range. This segment already features vehicles like the Ashok Leyland Dost, Tata Ace and Mahindra’s Maxximo Plus. The decision to enter the market will be made within the next six months with a potential product launch in 2016-17.

The small commercial vehicle market represents over 50% of the commercial vehicle market with an estimated 359,000 vehicles sold every year and growth to over 500,000 expected by 2019. The market is driven by the hub and spoke distribution system in India where large trucks transfer goods to or between hubs and smaller vehicles deliver the goods the last few miles. Learn more:  Economictimes.com

Comment:  For regulatory reasons, mini-trucks have not been a major market in the US although farmers often purchase used mini-trucks coming out of Japan and use them as of-road work vehicles. In some areas they are being allowed more access to public roads, but this is often in the context of agricultural use rather than the general public. Eicher, which also makes motorcycles, has a joint venture with Polaris that started in 2012. This joint venture is focused more on a range of personal vehicles with reports of a four-wheeled vehicle to be launched in 2015. At the same time, there could be opportunities for the companies to work together in the small commercial vehicle space given Polaris’s acquisitions in the past few years of GEM, Aixam and Groupil.

Tata Motors To Launch New Mini-Truck

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The Tata Ace mini-truck

The current Tata Ace mini-truck

Tata Motors announced plans to launch a new mini-truck for the Small Commercial Vehicle  (SCV) segment within the next month. The new vehicle will be targeting the segment between Tata’s Ace mini-truck and their Super Ace pickup truck. The SCV segment, which comprises sub-1 tonne payload mini trucks and above 1-tonne payload pick- ups is below the 3.5 tonne (gross vehicle weight) Light Commercial Vehicle segment. The segment has become a competitive segment as more companies have launched vehicles for the market. Tata holds an estimated 48% share of the market.

In India and other countries in the region SCVs are used for the delivery of goods in the last mile of the distribution network. This service need often offers an opportunity for entrepreneurs to start their own business as a local shipper. They typically will get financing to purchase a vehicle. Despite a sluggish economy of late the, market segment is expected to grow as penetration in rural areas is low and when compared to other developing countries, India’s use of SCVs is low as well. Learn more:  Thehindu.com

Comment:  The SCV market in India is dominated by Tata and other local or regional manufacturers. It should be noted though that Polaris has started to enter other vehicle segments in India. In the future there could be potential for their GEM line or some of their vehicles from European acquisitions for use in this market. For electric vehicles, the ability of the local electrical grid to provide reliable charging opportunities, could be a significant hurdle though.

Polaris Reports Another Quarter of Strong Results

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The new RZR XP 1000 is the fastest-selling side-by-side in Polaris history.

The new RZR XP 1000 is the fastest-selling side-by-side in Polaris history.

Polaris reported another strong quarter of results for the Q4 2013 driven by off-road vehicles, motorcycles, PG&A and international sales. Overall, sales for the quarter were $1.08 billion, up 20% from the prior year period. Net income for the fourth quarter was up 23% to $108.7 million, yielding record earnings per share of $1.56, up 26%. Full year 2013 sales increased 18% to just under $3.8 billion. International and adjacent market businesses each grew 29% and 79%, respectively. Full year net income from continuing operations was $381 million. Some of the highlights of earnings report and conference call with a focus on small, task-oriented vehicles include:

  • Off-Road Vehicles division which includes UTVs and ATVs increased in revenue in Q4 16% driven by strength in side-by-sides, particularly RZRs, Defense and Commercial.
  • For calendar year 2013, ORV completed another strong year with revenue up 13%.
  • Polaris gained market share again in the fourth quarter and for the full year 2013
  • Polaris is #1 in the North American ATV industry, with 2013 retail sales up mid-single digits in an industry that was essentially flat.
  • All Model Year ’14 new product introductions are selling extremely well and seasonality is now approaching.
  • The new RZR XP 1000 is the fastest-selling side-by-side in company history and the XP 4 is built on that RZR XP sales momentum.
  • Polaris ORV commercial revenues increased by over 120% in 2013.
  • Both Bobcat and Brutus retail improved notably in the fourth quarter but management still sees significant missed opportunities in Polaris in dealer execution and customer development opportunities. To drive improvement in 2014, they added a dedicated infield commercial sales force to assist dealers in landing local B2B and B2G business and also initiated a partnership with Ariens.
  • The Defense division, which sells mostly off-road ATVs and UTVs has momentum with a strong 4th quarter and an ongoing winning streak for recent contracts.
  • Small vehicles, were up 25% to 30%, which includes a full year of Aixam acquisition.
  • PG&A sales also rose 33%. Growth came from every category, with Accessories up 30%, Parts up 24% and apparel up over 150%, led by an outstanding first year from KLIM.
  • 2013 industry conditions remained tepid with ORV industry down upper single digits.
  • Polaris side-by-side retail sales growth moderated just a bit in the fourth quarter, but increased low double digits for 2013, outpacing the side-by-side industry which grew an estimated 10% for the year.
  • ORV is expected to grow in the high single-digits percentage range in 2014.
  • Management anticipates aggressive competition in the side-by-side market, with increased promotions possibly being more of a challenged than new products.
  • The new Sportsman ACE is expected to add incremental revenues with a small amount of cannibalization of existing ORV sales.
  • Management is very happy with how the numerous product introductions have been received in the market.

Learn more: Seekingalpha.com (earnings call transcript)

Comment:  Polaris continues to churn out new models and in general execute very well. It will be interesting to see how well the Sportsman ACE will sell, to whom and whether or not it will create a new category of vehicles. Management’s comments indicate that the side-by-side market may be slowing a little in the coming year. This could create a more competitive environment in the market as the pie will be growing at a slower pace than in the past few years and manufacturers recently added new offerings to go after key segments.

Mini-truck Sales Slow In India

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According to a recent report mini-truck sales have slowed in India in 2013. This segment includes vehicles with a payload of under one ton like the Tata Ace. Combined with pick-ups that fall under a gross vehicle weight of 3.5 tons, they make up what is referred to as the Small Commercial Vehicle market. This market had been growing quite well in recent years as a hub and spoke model of distribution has been widely implemented. The vehicles in this segment are often used in the last mile of this distribution scheme. However, analysts believe this market has become saturated in the larger metropolitan areas. Mini-truck sales have dipped below pick-up sales which also slowed toward the end of the year.  Learn more:  TheHindu.com

Comment:  Polaris is making an effort to grow sales in the Indian market through a strategic partnership. While their focus appears to be more on the off-road vehicles and snowmobiles, they also starting to sell the GEM which in some configurations would be appropriate for this application.