Blue Bird (BLBD), Proterra (ACTC) and Lion Electric (NGA), EV bus makers are entering a bullish decade

EV bus makers stock chart
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit

On Tuesday evening the Board of Education in Maryland’s Montgomery Country in an anonymous vote approved a 16-year contract value of $169 million to lease 326 buses. According to Bloomberg, this contract can mean the start of a changing era that can replace its entire 1,422 bus fleet over the next two decades.

Advanced Energy Economy’s spokeswoman, Monique Hanis, said that this deal represents the largest municipal government order in the history of buses. Since the Biden administration has pledged to support the adoption of electric vehicles, more automakers have intentions to convert their fleets, however, this transition will take years to accomplish.

Thomas Built Buses Inc, a division of Daimler AG (OTCPK:DDAIF), will manufacture the vehicles and Proterra Inc is the one that will provide the electric battery technology. The deal is coordinated by Highland Electric Transportation Inc that will also provide buses, charging stations, train drivers and maintenance.

Summary

  • The Board of Education in Maryland’s Montgomery Country in an anonymous vote, approved a 16-year contract value of $169 million to lease 326 buses. Moreover, the electrification of school buses is part of Biden’s Clean Energy agenda by 2030. This gives rise to stocks such as Blue Bird (NASDAQ: BLBD), Proterra Inc (NYSE: ACTC), Lion Electric (NYSE: NGA).
  • Blue Bird was up 22% yesterday and NGA Is up 14% in the pre-market hours today and ArcLight was up 8% yesterday.
  • A “huge cost differential” between existing diesel buses and electric models was cited by the school district that sits right outside of D.C. In the article you will how the maintenance and energy costs can be reduced by 60% and 80% respectively.

About Proterra Inc

ArcLight Clean Transition Corp. (NASDAQ: ACTC), a SPAC has announced a merger with electric bus automaker Proterra Inc. The company is an established EV maker of batteries and storage systems that have specialized in powering bus fleets and other public transit vehicles with its EV technology in the last decade. Moreover, Proterra has installed more than 54 megawatts of charging systems and has more than 300 megawatt-hours of battery systems.

In the first half of 2021, the merger will be completed and ACTC will be renamed with Proterra’s ticker symbol “PTRA”. The pro forma shows a market capitalization of $5.988 billion as represented in the slide presentation.

Proterra Inc comparison to other EV bus companies

Source: Proterra Inc Presentation.

According to the Investor place article, the stock is undervalued at least a third of what it should be worth with a higher target price of $38.16. The stock is traded today at $22.94 which gives an average of $30.55, 33% higher than the current price.

In the school bus market, there is Blue Bird (NASDAQ: BLBD) and Lion Electric (NYSE:NGA) except for Thomas Built Buses Inc, a division of Daimler AG (OTCPK:DDAIF) and Proterra Inc.

About Lion Electric

Canadian-based school bus and urban box truck manufacturer Lion Electric exists since 2008 and will be merging with Northern Genesis Acquisition Corp. (NYSE: NGA), a blank check company this quarter. After the completion of the merger, the ticker symbol will change from NGA to “LEV”. The pro forma valuation shows a $1.9 billion market capitalization where proceeds will be used to expand Lion’s growth manufacturing capacity and the planned construction of a highly automated battery system assembly factory.

Management believes that its current annual capacity to produce 2,500 trucks and buses will grow while demand keeps increasing. Forecasts from its presentation show a capacity to build 1,800 trucks and 675 buses in 2022 with the potential to drive revenues to the $760 million range next year.

The LionC bus can fit up to 72 students and is the only zero-emission school bus. It has an electric motor delivering up to 250 kW and has as much or more power than diesel engines in the school transportation industry. The bus has an integrated touch screen that allows the driver to get real-time information updates on the battery status and a complete diagnosis an all LionC components. The school bus can reduce energy costs by 80% compared to a diesel bus and 60% of maintenance costs.

Proterra Inc bus

Source: https://thelionelectric.com/en

In addition to school buses, Lion Electric produces medium box and urban trucks such as garbage haulers. This type of truck involves lower mileage per day and overnight storage while allows excellent opportunities for electrification. As reported on Benzinga.com, Amazon (NASDAQ:AMZN) has shown an interest in Lion’s medium and urban box trucks. On January 4, the company has filed to the SEC that Amazon has agreed to purchase 2,500 Lion Model 6 and 8 until 2025. An option to purchase upwards of 20% in shares and warrants of Lion is also in the SEC filing.

About Blue Bird (NASDAQ: BLBD)

Bear in mind that all these stocks could now be undervalued due to the closure of schools and are expected to go higher once schools reopen. The stock price was up 22% after the Montgomery County public school district in Maryland decided to switch its bus fleet over to electric models at no additional cost.

Blue Bird is a leading designer and manufacturer of school buses with more than 550,000 buses sold since its creation in 1927. In November the company won an award of $100 million from the Bezos Earth Fund to the World Resources Institute (WRI). This granted it the opportunity to advance the adoption of zero-emission school buses in the U.S.

On February 16, Livonia public schools added 22 Blue Bird buses propane Autogas-fueled buses to its fleet with funding from the Michigan Department of Environment, Great Lakes, and Energy (EGLE) to purchase clean, cost-effective propane school buses. The new buses do not require additional maintenance and they are 75% cleaner than federal emissions standards, emitting fewer total hydrocarbons and virtually eliminating particulate matter. Propane school buses also reduce harmful nitrogen oxides by 96%, according to a 2019 study by West Virginia University. Exposure to nitrogen oxide exhaust can have negative health effects on children and is a leading cause of asthma, according to the EPA.

blue bird EV bus

Source: https://www.blue-bird.com/buses/vision/vision-propane-bus

Blue Bird’s 5th Generation Vision Propane bus is engineered to deliver fuel and maintenance cost-saving results and has sold over 18,000 vehicles. Safety is built-in, the one-piece roof bow system in all buses to ensure safe student transportation.

Bottom Line

Electrification of school buses is a part the Biden’s Clean Energy agenda. The goal of the proposal is the electrification of all school buses in America by 2030. The inclusion of EV school buses in the Clean Energy agenda will continue to generate interest from both school districts and investors for the next several years and is a major tailwind for Lion Electric shares, Blue Bird and Proterra.

Disclaimer – I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.

Natalia C. - Junior Analyst at FDGT Academy

Natalia C. - Junior Analyst at FDGT Academy

I am a stock analyst/investor with prior experience and knowledge to BSc Accounting and Finance. After completing my degree and exposure to the accounting firms I decided that the direction I should choose is towards the Investment world. I completed my masters in Investment Management where it gave me solid fundamentals to build my career on. I have examined a lot of different aspects of investment, from REITS, derivatives, currencies, bonds, equity and hedge funds. I never stopped learning about the market which is why I can analyze and write articles for FDGT community always personally opinionated. My passion are green energy and electric vehicles stocks as a whole. I also had my share of analyzing the work form home stocks that are coming to take over in the upcoming years.