Even Warren Buffett is getting into electric vehicles.
Thursday afternoon, small-cap electric-bus maker GreenPower Motor (ticker: GP) announced a deal with Forest River, a Berkshire Hathaway (BRK.A) unit that makes a diverse range of recreational and commercial vehicles. Buffett is Berkshire’s longtime chairman and CEO.
Forest River is buying up to 150 GreenPower EV Star cabs and chassis to be used in new all-electric offerings sold by Forest River. Forest will build its own line of shuttle buses and commercial vehicles on top of GreenPower chassis.
GreenPower expects to deliver the first six units in the first quarter of 2021, with the remainder delivered at a rate to be determined later this year.
GreenPower investors will likely cheer the news, although they might already be used to incredible gains. Shares are up about 186% over the past three months and more than 1,500% over the past year. Several EV stocks Barron’s tracks have more than doubled and tripled over the past year as many investors have become convinced EVs are the future of personal and commercial transportation.
GreenPower focuses on buses, but many other EV makers are building medium-duty commercial-vehicle offerings, including Workhorse (WKHS) and privately held Rivian as well as Arrival. Arrival is becoming a publicly traded company by merging with CIIG Merger (CIIC), a special purpose acquisition company.
Electric commercial vehicles can make even more economic sense for a business than personal EVs can make for consumers. Commercial vehicles are driven more miles a day, so the fuel savings pile up faster. And EVs have proven to be cheaper to maintain than comparable gas- and diesel-powered models. There are, for instance, no regular oil changes with EVs. That can save businesses even more money, offsetting what is usually a higher upfront cost for vehicle acquisition.
Berkshire’s entry into the EV space is notable, but it isn’t its only foray into EVs. Another Berkshire subsidiary, Fontaine Modification, is building heavy-duty fuel cell trucks for Hyzon Motors‘ customers. Hyzon is becoming a publicly traded company by merging with Decarbonization Plus Acquisition (DCRB), another SPAC.
Berkshire also owns about 21% of Chinese battery, EV, and auto maker BYD (1211.Hong Kong), whose stock is up about 480% over the past year.
GreenPower shares closed down 4.6% Thursday, at $28.52, before the Forest news was announced. The S&P 500 and Dow Jones Industrial Average were both roughly flat.
GreenPower has a market capitalization of less than $600 million, but Wall Street likes its shares. Five analysts cover the company, and all five rate shares Buy. The average Buy rating ratio for stocks in the Dow and S&P is about 55%.
GreenPower is due to report fiscal-third-quarter earnings later Thursday evening. Analysts are projecting about $4 million in sales.
Write to Al Root at [email protected]
