Canada wants to eliminate internal combustion engines and make all vehicles electric-powered in 17 years. Its decarbonization plan in the transportation sector is that all future sales of cars, SUVs, and light trucks must be electric.
The federal government targets electric vehicle (EV) market shares as follows: 10% by 2025, 40% by 2030, and 100% by 2040. With the fast-evolving market and anticipated boom, the value proposition for EV stocks and EV-related businesses has become appealing to ESG (environmental, social, and governance) and growth investors.
Ready to electrify
Lion Electric Company (TSX: LEV) has yet to electrify investors since the EV stock started trading on the TSX and the NYSE on May 7, 2021. As of this writing, the current share price of $2.62 is 87.8% lower than the closing price on its market debut. Also, the year-to-date loss is 13.82%.
However, things could change for the manufacturer of all-electric school buses, urban trucks, and midi or minibuses for special needs could electrify investors soon. This $586.12 million company is North America’s leading OEM (original equipment manufacturer) in transportation electrification.
Lion Electric also manufactures and assembles vehicle components like battery packs, cabins, chassis, and powertrains. About 1,100 of its purpose-built all-electric vehicles are on the road today. Management’s strategic initiatives include advanced battery systems, new customer solutions, and scale in a large addressable market.
The facility at Joliet, Illinois, manufactures all-electric school buses and trucks. Meanwhile, the newest factory at Mirabel, Quebec, produces lithium-ion batteries for medium- and heavy-duty vehicles. At full capacity, the plants can manufacture 22,500 electric buses and trucks annually and electrify 14,000 medium- and heavy-duty vehicles.
Marc Bedard, Lion Electric’s founder and chief executive officer, said, “With manufacturing operations at both our Joliet vehicle plant and our battery factory now underway, we are focused on achieving profitability and are putting the right elements in place to achieve this objective.”
In the first quarter (Q1) of 2023, revenue climbed 141.6% year over year to US$54.7 million, although net loss reached US$15.6 million compared to the US$2.1 net income in Q1 2022. As of May 8, 2023, the vehicle order book comprising 2,270 buses and 295 trucks is worth US$625 million.
Another validation of the stock’s growth potential is the decision of Power Corp of Canada to increase its stake in Lion Electric recently to 39.62%. The financial services company expects EVs to continue gaining traction in the consumer and commercial markets.
Riding the EV wave
Parkland Corporation (TSX: PKI) outperforms thus far in 2023 with its market-beating 15.6% year-to-date gain. At $33.94 per share, you can partake in the attractive 4% dividend yield. It boasts Dividend Aristocrat status owing to 11 consecutive years of dividend increases.
This $5.95 billion distributor of fuel and convenience products is riding on the EV wave. Its customer-focused growth platform has three accretive strategic initiatives: develop, diversify, and decarbonize. The last one aims to lower Parkland customers’ environmental impact.
Parkland is expanding and increasing the volume of bio-feed stocks and growing the renewable business. It plans to install and have 50 “On-the-Run” ultra-fast charging stations along highways and major destinations by early 2024.
Real growth potential
The Canadian government desire to improve the EV ecosystem and build a clean economy. Lion Electric and Parkland have real growth potential because of the ambitious goal.
