Lordstown Motors and Camping World unveiled a deal that has big implications for many electrical-vehicle startups: The seller of recreational vehicles will provide service for the Endurance, the light-duty pickup truck the EV company plans to bring to market in 2021.
The two companies also plan to develop electric products and solutions for the RV market including lithium-ion battery replacements for onboard RV generators and, eventually, battery powered RVs. Fully electric RVs, however, are down the road.
“The service network is number one,” said Camping World CEO Marcus Lemonis at a press conference with Lordstown CEO Steve Burns on Tuesday afternoon. “Steve and I plan to launch the first class E motor home in America.” E, in this case, stands for electrified.
Camping World sells RVs and accessories nationwide. It also services RVs with roughly 2,000 service bays and 1,800 technicians at its 175 locations
Lordstown is an EV start up. Manufacturing its pickup truck is the first task for the company, but how to sell and service that and other vehicles once made isn’t a simple problem to solve. Many of the new EV startups don’t have legacy dealer networks like established car companies. What’s more, dealers make a lot of money servicing traditional vehicles.
Car dealer AutoNation (AN), for instance, generated about 17% of its sales from parts and service in 2019. Those sales generated 46% of the company’s gross profit. Services offer higher margins than vehicle sales.
Service revenue from an EV is lower than for a comparable internal combustion engine. There is no traditional engine or transmission to fix, and no oil changes. That can make selling an EV a difficult decision for an legacy auto dealer.
Servicing EVs is all new business, however, for Camping Worldwide. That is something investors appear to recognize.
News broke before the market closed Tuesday. Camping Worldwide shares rose 12.2%, while Lordstown stock rose 9%. The S&P 500 and Dow Jones Industrial Average, for comparison, both rose a bit more than 1%.
Lordstown stock has fallen 24% over the past three months but shares are up 118% since mid-March.
RV stocks, including Camping World, have had a very good year amid the pandemic. Covid-19 has pushed consumers to reconsider the amount of leisure spending allocated to the great outdoors, and RVs offer a way to travel while minimizing the risk of infection. Shares are up almost 120% year to date.
Down the road, other EV startups, as well as legacy auto makers wanting to sell more EVs, have decisions to make about distribution and service, just like Lordstown.
Tesla (TSLA), the EV behemoth with a market value around $600 billion, has its own distribution and service network. It was once a start-up too. The company was able to build its distribution and service—and vehicle charging—network from scratch. Still, car startups are difficult. Tesla spent billions in capital before becoming consistently profitable.
Investors didn’t seem to fully recognize Tesla’s potential until recently. Tesla stock has added roughly $550 billion of its $600 billion in market value over the past 18 months.
Write to Al Root at [email protected]
