Vision Marine (NASDAQ: VMAR): An Innovative, Revenue-Producing Company Riding the Electric Boating Growth Trend
The electrification and decarbonization trend is still in the early innings, but society has finally reached a point where seemingly a majority of people collectively agree that steps need to be taken to reduce the global carbon output to help slow the speed of climate change. Governments and corporations around the world are increasingly investing in renewable energy sources that can help expand clean energy access and reduce carbon dependence.
Electric vehicles (EVs) are a concept that has seen a tremendous surge in demand and interest from consumers in recent years. Driven by the success and cult-like following of Tesla (NASDAQ: TSLA) and its eccentric CEO Elon Musk, EVs are entering their “coming of age” stage as legacy automakers are finally understanding the market and investing millions of dollars to build out competitive alternatives to Tesla.
The United States government is also doing its part to help persuade consumers into considering EVs. The Inflation Reduction Act (IRA) was just recently signed into law by President Biden, which marks the most aggressive federal legislation towards climate change. The IRA provides a tax credit of up to $7,500 per light-duty EV through the end of 2032. For the first time, used EVs will also be eligible for a tax credit of up to $4,000 or 30% of the sales price, whichever is lower. Aside from consumer EVs, the IRA also provides tax incentives for EV charging infrastructure and for commercial & industrial entities to invest in electrifying their operations.
While the drive for EVs may be gaining the lion’s share of attention right now, the next market to likely benefit from the electrification and decarbonization movement is the boating industry. As of 2021, there were 11.96 million registered vessels in the United States alone. According to Statista, the greenhouse gas emissions produced by U.S. vessels was an astonishing 32.3 million metric tons of carbon dioxide equivalent (MtCO2e) in 2020, even amid the COVID lockdowns. This represents a massive opportunity to electrify the boating industry, which would also help reduce pollution in our waterways.
According to Future Market Insights research, during the projected period, the global electric boats market is expected to grow at a CAGR of 12.9%. The electric boats market value is projected to increase from US$ 5.65 Bn in 2022 to US$ 19 Bn by 2032.
One company that is standing at the forefront of the massive electric boating opportunity is Vision Marine Technologies (NASDAQ: VMAR).
Overview: Vision Marine
Vision Marine is a Canadian technology company that is focused on disrupting the traditional boating industry through its innovative electrification solutions. Backed by partnerships with major players in the boating and electrification industries, Vision Marine is building an innovative company that is producing results.
Unlike the massive number of EV startups that have hit the market in recent years, Vision Marine’s technology has already demonstrated success and the ability to disrupt the traditional boating industry. Furthermore, Vision Marine is a revenue-producing company, which makes it stand out even further in the electrification industry.
Breaking down Vision Marine, here are three key business components for the company:
- The E-Motion™ E180 fully electric outboard motor
- Electric boat rental service in Newport Beach, CA, and soon in Dania Beach, FL
- Design & development of innovative electric boat models
E-Motion™ E180 Fully Electric Outboard Motor:
Vision Marine is focused on more than just building electric boats. The company’s flagship product, the E-Motion™ 180E electric outboard motor, is the world’s most powerful electric outboard motor with 180 horsepower and a high-voltage, 70KWH lithium battery. In fact, the company’s Vision 32 boat with its E-Motion™ motor set a world record for the fastest electric boat in July 2022 with a top speed of 109 mph at the Lake of the Ozarks Shootout.
Aside from the world speed record, the E-Motion™ 180E motor represents a major opportunity for the company, as the flagship product can essentially turn any existing pontoons, catamarans, and center console powerboats into fully-electric vessels. The motor produces zero pollution, zero emissions, and a noiseless environment for our waterways. Another major benefit to the E-Motion™ outboard motor is its maintenance costs, which are far less than the traditional gas-powered boat.
Being a fully-sealed outboard motor with few moving parts, consumers no longer have to worry about checking oil, no spark plugs, and no expensive gasoline or diesel fuels. To top it off, the E-Motion™ motor does not require any special charging infrastructure, which can be charged using a standard 220v outlet. These outlets are largely available across marina locations in the United States.
For the legacy brands that control the traditional ICE outboard motor market, such as Suzuki, Honda Marine, Mercury, and Yamaha, the E-Motion™ 180E electric outboard motor is a major wake-up call. For VMAR shareholders, the outboard motor product gives Vision Marine a clear-cut advantage and a formidable alternative to the competition.
In September 2022, The Limestone Boat Company (TSXV: BOAT) placed an initial purchase order for 25 E-Motion™ 180E outboard motors and powertrain systems. The initial purchase order has a value of $2 million and further confirms the E-Motion™ product’s potential.
Award-Winning Electric Boat Rental Operation:
Outside of the E-Motion™ outboard motor, Vision Marine’s rental business is another key component of its current operations because it is a source of revenue for the company. In addition, the rental operations are high margin, scalable, and a repeatable business model. The company currently operates a rental electric boat operation in Newport Beach, California, which continues to see high demand from consumers. In fact, the operation was awarded a coveted 2022 TripAdvisor Travelers’ Choice Award.
The rental business provides a great opportunity for Vision Marine to showcase its electric boat models and its disruptive outboard powertrain technology to consumers. Whether you are an experienced boater or a beginner, electric boats provide a fun and safe opportunity to enjoy the waterways.
Newport Beach is just the beginning of Vision Marine’s rental business. In February 2022, the company announced it was working on an expansion development to bring its rental business to Dania Beach, Florida. With numerous seaside and lake vacation spots around the United States, the rental business has plenty of room to continue expanding in the United States.
Electric Boat Models:
Turning to fully-electric boats, Vision Marine is working on an initial four innovative models: Bruce 22, Volt 180, Fantail 217, and the Quietude 156. While it will take some time to fully scale and mass produce its electric boat models, it still presents a longer-term opportunity for the company. The Bruce 22 and Volt 180 models are geared more towards speed boat enthusiasts, as the models are estimated to have a maximum speed of 41 mph and 30 mph respectively. For boaters that prefer a more mellow and ambiance-focused experience, the Fantail 217 and Quietude 156 models are going to be better options.
Vision Marine: Key Partnerships
Vision Marine continues to reach impressive milestones with its innovative products. The operational success has largely been powered by Vision Marine’s ability to court world-class partnerships to build out its vision for the electric boating market. Below we break down some of its most impressive partnerships and how they impact Vision Marine’s operations:
In July 2022, Vision Marine formally entered into a partnership agreement with Groupe Beneteau. The partnership is focused on integrating VMAR’s E-Motion™ electric outboard motor onto several of Beneteau’s boat models. Initially, the Beneteau-Vision Marine offering will be launched under the Four Winns brand. The first deliveries are estimated to launch during Spring 2023.
Beneteau is a major partnership for Vision Marine because of its 130-year history in the recreational boating industry. The company maintains over 22 production sites with an employee headcount of over 7,500, as of the end of 2021. During the full-year 2021, Beneteau generated revenues of over 1.22 Billion Euros. Overall, Beneteau’s portfolio consists of eight key brands with 180 recreational models and a production rate of over 10,000 boats per year.
Groupe Beneteau: “Our vision is that 100% electric propulsion will usher in a new phase in boating and our mission will be to create the leadership in electric boating on inland waters. This new chapter is defined by a mindful approach to cruising.”
McLaren Engineering, a Subsidiary of Linamar Corporation (TSX: LNR):
In October 2021, Vision Marine entered into a manufacture and supply agreement with Linamar Corporation (TSX: LNR) and its subsidiary, McLaren Engineering. Under the terms of the agreement, Vision Marine will leverage McLaren’s cutting-edge technology and product development team to manufacture and assemble the E-Motion™ technology and outboard motor product. This includes testing, part sourcing, tooling, and designing objectives, which would be completed at Linamar’s facility in Canada.
The manufacturing and supply agreement with McLaren Engineering was a massive milestone for Vision Marine because it officially gave the company access to a world-class, full-service tier-1 supply partner. In other words, the McLaren partnership gave Vision Marine the ability to scale production for its incredible E-Motion™ E180 outboard motor.
“We are excited to develop precise manufacturing capability and protocols to scale mass production of Vision Marine’s groundbreaking E-Motion™ fully electric outboard. We consider Vision Marine to be a leader in electrifying global waterways and transitioning boating propulsion to a safe and clean EV industry,” said Linamar CEO Linda Hasenfratz.
Octillion Power Systems:
Vision Marine’s partnership with California-based Octillion Power Systems is another major milestone for the company. In January 2022, Vision Marine officially entered into its partnership with Octillion to develop and manufacture a customized high voltage and high-density 35 KW battery for use exclusively for recreational boating applications. Octillion’s advanced electric battery system is the lifeblood of the E-Motion™ outboard powertrain, which gives the product its robust power capabilities. Adding to the intrigue of the partnership, Vision Marine represents the first-ever marine-focused partnership for Octillion.
“Octillion is excited to support Vision Marine and its efforts to revolutionize the recreational boating industry,” said Paul Beach, President of Octillion. “The E-Motion™ platform offers an unparalleled boating experience when compared to traditional fuel-powered systems. These new platforms will encompass both state-of-the-art energy density-rich solutions as well as extremely high power options. By partnering with Vision Marine on this project, Octillion is excited to expand its energy storage brand into the marine industry.”
Big Transactions in the Electrification Market
Another way to validate Vision Marine’s business and vision is by looking at overall transactions within the electrification industry. In recent years, there have been several high-profile transactions from major corporations showcasing the demand for electric transitions. Among the highlight transactions include:
- General Motors (NYSE: GM) purchased a 25% ownership stake in Pure Watercraft, an electric boat startup. GM’s $150 million investment gives Pure Watercraft a valuation of $600 million
- In early 2022, electric boating startup, Arc, raised $30 million in a Series A funding round backed by former SpaceX engineers and major celebrities. The funding round was also led by Greg Reichow of Eclipse Ventures who previously served as Tesla’s VP of Production. Will Smith, Kevin Durant, Sean “Diddy” Combs, Andreessen Horowitz, and others participated in the round.
- Electric boating startup, Evoy, announced it raised 7.3 million Euros in a funding round to produce longer-range electric motor systems for the marine industry. The European startup maintains a factory in Floro, Norway.
- In December 2021, John Deere (NYSE: DE) subsequently acquired a majority stake in Kreisel Electric to begin the electrification of its tractor and farm heavy machinery products.
- Swedish electric boat startup, X Shore, entered into a 5-year battery partnership with Kreisel Electric. The deal is valued at 50 million Euros and will allow X Shore to build its planned line of electric boats with Kreisel-produced battery packs.
- Hydrofoil electric boat startup, Candela, hauled in a 24 Million Euro investment round in December 2021, which was led by EQT Ventures.
Overall, Vision Marine has continued to demonstrate a clear proof-of-concept for its electric boating business. The company is already producing revenues from its operations; a feat that most electrification startups cannot claim. Furthermore, the company’s E-Motion™ E180 electric outboard motor is a real threat to the traditional ICE motor and allows consumers to retrofit their existing boating assets with an electric alternative for zero emissions, zero pollution, and big savings on maintenance costs.
The company and its management team have continued to make all the right moves thus far and as a result, have created a solid foundation that can be further built upon. With its strong partnerships, the overall growth trajectory of the electric boating industry, support from the government to electrify, and major transactions in the industry, Vision Marine appears to be an enticing investment opportunity for long-term investors.
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