Aug 15, 2023

UK electric truck pioneer Tevva is to merge with ElectraMeccanica in the US, adding manufacturing for the UK and Europe in the US. The deal will initially focus on the UK, where Tevva has its operations, then Europe and the United States. ElectraMeccanica is a contract manufacturer that has designed a single passenger, three wheel electric vehicle called Solo, and is opening a manufacturing plant in Mesa, Arizona, later this year. The combined company will operate as Tevva, Inc and be domiciled in Delaware with shares traded on the Nasdaq stock exchange. This is largely driven by the opportunity for support from the US government, says the CEO of the merged company. Deliveries of Tevva’s 7.5t battery-electric truck to commercial fleet customers started earlier this year. The current trucks have a unique and purpose-built, commercial-grade electric battery system, and its future product portfolio is being developed to include a proprietary hydrogen range-extender technology. This was developed as part of a £12.2m UK government project called Sangreal project for a patented time triggered vehicle-control strategy with on board telematics to optimise the use of the hydrogen range extender to eliminate range anxiety. It uses rare earth free electric motors from Advanced Electric Machines (AEM). Tevva had raised nearly $174m in venture and corporate financing, with additional backing in grants from the UK government via the Advanced Propulsion Centre (APC). Under the deal, Tevva’s existing 110,000-square-foot EV manufacturing facility in Tilbury, United Kingdom, would be complemented by ElectraMeccanica’s recently-commissioned 235,000-square-foot facility in Mesa, Arizona. The Mesa plant is “expected to enable the combined company to scale its production to serve the UK, European and US markets,” says the deal documentation. This is confirmed by the US-based CEO of the merged company, Susan Docherty. “Tevva is extremely well positioned in the UK and European market and our world-class manufacturing facilities, combined experienced senior executive team and balance sheet, will help take our combined company to the next level,” she said. “We believe this is the right time and Tevva is the right partner with which to pivot from consumer vehicles to commercial vehicles and respond to commercial fleet customer demand for superior, reliable and cost-efficient trucks. The complementary operations of the two companies and our similar values and mission give me complete confidence we can jointly create significant shareholder value,” said Docherty, a former senior manager at General Motors who is also a board director at the as a Board Director of The Brink’s Company, which is a large potential customer. The Mesa plant is partly funded by the US government through the Inflation Reduction Act (IRA). “We believe this market will benefit from strong government incentives, including the $1 billion set aside for electrifying heavy-duty trucks as well as an up to $40,000 rebate per medium-duty commercial vehicle in the US,” said Docherty in a letter to US shareholders. “Since Tevva’s founding more than ten years ago, we have focused our engineering and product development capabilities on developing a portfolio of zero-emission commercial vehicles that have generated significant customer interest,” said David Roberts, current Director of Tevva and anticipated incoming Executive Chairman upon the closing of the deal. He also chairs the Board of Directors of fusion energy firm TAE Technologies and at Evtec Group, an automotive supply chain company). Previously, he held executive positions with Chrysler and Aston Martin Lagonda. “Our vehicles have undertaken more than 300,000 miles of testing and operating experience in real-world conditions by demanding fleet operators. We are excited to merge with ElectraMeccanica and accelerate the growth of the combined company. Throughout the process, we have been impressed with ElectraMeccanica’s management team and strongly believe that ElectraMeccanica’s complementary assets, skills and capital will further enhance our advantages in this large and rapidly growing market,” he said. While many fleet operators recognize the benefits zero-emission vehicles deliver, they also need reliable and cost-effective solutions. Tevva’s trucks have demonstrated reliability in trials, and the company has built a commercial vehicle ecosystem alongside its technical partners, including strategic investor Bharat Forge, with which it has worked with since 2018, to tailor its products to the needs of its customers accordingly. The proposed merger was initiated by ElectraMeccanica’s Board of Directors to explore a range of possible strategic alternatives for optimizing ElectraMeccanica’s assets, evaluating Tevva and other companies. Upon the closing of the proposed transaction, ElectraMeccanica shareholders will own 23.5% of the combined company and Tevva shareholders will own 76.5% of the combined company on a fully diluted basis. The combined company expects to have a cash balance of approximately $80 million, with debt of approximately $26 million. The Board of Directors of the combined company will consist of nine directors, comprising five directors from Tevva and four directors from ElectraMeccanica, of which seven are expected to be deemed independent. The deal, which is expected to close by the end of the year, will be via a newly formed company in British Columbia, Canada, also called Tevva, Inc, to manage and hold the combined business of ElectraMeccanica and Tevva. This will directly and indirectly, acquire all of the issued and outstanding shares in ElectraMeccanica and Tevva. A $6 million credit facility to Tevva can be drawn in whole or in part until the closing of the deal.