News Release
Middle East’s $9 Billion EV Opportunity Reaffirms Potential In These Stocks
VVPR, VFS, NWTN, LCID
The Middle East, a region long known for its oil and gas riches, is transitioning to a new, more sustainable future, potentially dominated by electric vehicles. The UAE, for instance, has launched several initiatives over the past years to encourage the adoption of EVs among its residents. Strategies like the Dubai Green Mobility Strategy 2030 aim to have around 42,000 electric cars on Dubai’s streets by the end of this decade. Currently, the UAE is ranked 7th globally and is the top country in the MENA region on the Global Electric Mobility Readiness Index (Gemrix), demonstrating the nation’s dedication to sustainable transportation and its goal of achieving carbon neutrality by 2050. Like the UAE, the Saudi government has also taken significant steps to drive EV adoption, including funding infrastructure. Since 2021, the Saudi Electric Vehicle Charging Infrastructure Development Initiative (SEVCIDI) has been working towards a goal of installing 50,000 domestic charging stations by 2025. According to analysts, EV adoption will gain major momentum in the Middle East thanks to growing tech-savvy urban hubs in Saudi Arabia and the UAE, in addition to a significant drop in the cost of EVs over the past years. With EV sales looking set to continue ramping up, here are four stocks that seem well positioned to capitalize on the region’s growth. VivoPower International PLC (NASDAQ:VVPR), a sustainable energy solutions (SES) company, is on a mission to make the cost of owning an EV much more affordable without compromising on any of the features. The company’s flagship subsidiary, Tembo e-LV, supplies conversion kits containing all the parts needed to convert a vehicle from an internal combustion engine to electric. These parts include the batteries, an e-motor, a reduction box, a charger, software, and many other components that make the converted vehicle work safely and seamlessly. In essence, the Tembo electric utility vehicle (EUV) conversion kits will transform new and second-hand diesel-powered 4x4 LandCruiser and Hilux vehicles into ruggedized EUVs that can operate in the harshest of terrains, like in mining and other industrial applications. Tembo’s conversion kits have seen significant interest from not only the Middle East but also the African market, as illustrated by its recent securing of a commitment of 5000+ kits and an order pipeline of 10,000+ kits. Those included an MOU in Jordan for 1,000 kits, opening a path to the Middle East, which is the largest Landcruiser market, and a definitive agreement in Kenya for 4,000 kits, providing entry into second-hand vehicle segments, which expands the company’s addressable market. To put the opportunity in context, the Middle East and Africa EV markets were worth about $3.33 billion in 2024 and are expected to reach $9.42 billion by 2029, representing a CAGR of 23.20%, according to research from Mordor Intelligence. VVPR is well positioned to capitalize on this growth and has what could possibly be one of the best backers to help advance in the region. That is because earlier this month, Vivo received a direct investment of $10 million into Tembo at a pre-money valuation of $120 million, from a private investment office of a member of the ruling Al Maktoum family of Dubai. At the moment, VVPR has a market cap of about $12.5 million, which implies that its valuation has significant upside potential even without taking into account its other subsidiaries, which it is divesting from. Just this week, VivoPower International PLC (NASDAQ:VVPR) announced that it entered into a definitive asset sale agreement for the sale of one of its non-core business units, Kenshaw Electrical, to ARA Group Limited, a leading diversified industrial services group based in Australia, for a total of A$5 million. This follows another announcement that it would spin off the majority of its Caret business unit’s portfolio, representing up to ten solar projects totaling 586 MW-DC at varying stages of development. This is in line with VivoPower’s previously announced strategy to focus on reinvesting in its strong growth businesses, including Tembo. It is also important to note that Tembo will be going public via a merger with Nasdaq-listed SPAC Cactus Acquisition Corp. (CCTS). CCTS will issue 83.8 million shares in exchange for Tembo shares at $10 per CCTS share, which corresponds to a pre-money indicative equity valuation of Tembo of $838 million. VivoPower shareholders will get 5 Tembo shares worth $10 each for every share held, in addition to a special dividend at $1 per share, translating to another $5 per VivoPower share held. This deal has the potential to unlock significant shareholder value since even if the Tembo share price upon IPO is only $1, this implies a per share valuation for VVPR of $28, including the value of dividend shares. VinFast Auto Ltd. (NASDAQ:VFS) marked a significant milestone in its global expansion strategy by entering into a dealer sales agreement with Bahwan Automobiles Trading LLC (BAT) for the distribution of electric vehicles (EVs) in Oman. This collaboration not only introduces VinFast's presence in the Middle East but also underscores the company's commitment to promoting green mobility solutions worldwide. The deal follows an Initial Memorandum of Understanding for Cooperation signed at the COP 28 conference in the United Arab Emirates (UAE) in 2023. It makes BAT the official dealer of VinFast in Oman. Under the agreement, BAT is to establish 13 VinFast stores and service locations over the next three years. The first store is expected to launch in mid-2024, with vehicle sales commencing shortly after. VinFast will also collaborate with BAT to introduce four e-SUV models in the Omani market: VF 6, VF 7, VF 8, and VF 9. Mr. Ta Xuan Hien, CEO of VinFast Middle East, said: "Oman presents a promising market for electric vehicles, as consumers in the nation demonstrate a growing interest in sustainable and environmentally friendly transportation solutions. We are confident that this dealer sales agreement with BAT, a leading and highly reputable dealer in Oman, will empower VinFast to swiftly establish a presence in the market and provide customers in the country with the most diverse and high-quality selection of electric vehicles available." NWTN (NASDAQ:NWTN) is a Dubai-based pioneering green energy company dedicated to providing passenger-focused, premium electric vehicle products and green energy solutions to customers worldwide. The company has a full vehicle assembly facility in Abu Dhabi. In January this year, NWTN’s strategic partner, W Motors, a leading manufacturer of high-performance luxury cars in the Middle East, signed a partnership agreement with Manaseer Group. Through this agreement, Manaseer Group will be the exclusive distributor for W Motors and NWTN vehicles in Jordan and the Middle East and Africa region. It will use its facilities as a factory for assembly and thereafter manufacturing operations for these new car brands, which is made possible by Manaseer’s strong presence and expertise of the Jordan market, and its commitment to providing environment-friendly solutions that combine innovation and luxury. The agreement was reached following Manaseer Group's recent participation in the Higher and Executive Committees for Integrated Industrial Partnership meeting that took place in Bahrain. Manaseer Group’s Vice Chairman Eng Abdel Rhman Obaid said: "We are proud to have represented Jordan in the Higher and Executive Committees for Integrated Industrial Partnership meeting and to contribute to the industry's development in Jordan and the region, as we believe in our role in the industrial sector empowerment.” Lucid Group, Inc. (NASDAQ:LCID) officially opened the first-ever car manufacturing facility in Saudi Arabia last year, making it its second Advanced Manufacturing Plant (AMP-2) and first international plant. The facility will produce Lucid's groundbreaking electric vehicles for Saudi Arabia and export them to other markets. The AMP-2 facility received significant support from the Ministry of Investment of Saudi Arabia (MISA), the Saudi Industrial Development Fund (SIDF), and the Economic City at King Abdullah Economic City (KAEC) and is expected to play a pivotal role in accelerating Saudi Arabia's strategic goal to diversify its economy. The AMP-2 facility has begun semi knocked-down (SKD) assembly and is expected to have an annual capacity of 5,000 cars. The initial operation re-assembles Lucid Air vehicle 'kits' that are pre-manufactured at the company's U.S. AMP-1 Manufacturing Facility in Casa Grande, Arizona. Lucid aims to transition AMP-2 to complete build unit (CBU) production after the middle of the decade, with an additional annual capacity of 150,000 cars. Disclaimers: The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. 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May 01, 2024 08:00 AM Eastern Daylight Time
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