Cenntro fails to shrink losses
Commercial EV maker sees sales revenue rise but overheads skyrocket
US-based commercial EV maker Cenntro has failed to step closer to profitability after it reported a $12.1mn Ebitda loss for the third quarter, fractionally up year-on-year from the $12mn loss it registered in the same period last year.
Despite this, sales volume increased by 326pc year-on-year and by 27pc quarter-on-quarter to 298 vehicles. And the average selling price for its range of small and medium- sized electric vans increased by 15.7pc year-on-year.
Cenntro manufactures LCVs from class one to class four aimed at urban delivery fleets, as well as an FCEV semi-truck tractor and an all-electric utility task vehicle (UTV). The company’s class four truck, the LS400 was also approved for California’s commercial clean vehicle credit during the third quarter, management says, meaning that fleet buyers can apply for a tax credit on purchases on the vehicle.
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Class four has been described as the “sweet spot” for many commercial EV firms, as it is the weight threshold for qualifying for a $40,000 tax credit under US legislation.
To capitalise on California’s EV incentives, Cenntro is currently ramping up a new factory, announced in July, in Ontario, CA, as the state continues to offer tax credit discounts to fleet customers and approaches the 2025 deadline for 10pc of all large fleet operators’ vehicles to be ZEVs.
Despite the plateau in Cenntro’s journey towards profitability, CEO Peter Wang is confident that there is strong appetite for his firm’s products. “To date the demand for some of our newly launched vehicle models in Europe, such as the LS260 has outpaced our estimates. We have also experienced positive sales momentum for our iChassis, having sold 103 units in Q3,” Wang says.
And he reveals that “these 103 units are not inclusive of the number of vehicles sold, because iChassis is not considered a complete vehicle”.
But the CEO hints at having experienced some growing pains in the company’s sales and services division. “We continue to build our sales momentum in 2023 from quarter to quarter to improve the effectiveness of our sales process, including having streamlined our North American sales team structure during Q3,” Wang says.
The company posted a small gross profit of $0.7mn in the quarter, which was an increase from a gross loss of $0.6mn in Q2, amounting to a gross margin of 15.8pc on vehicle sales. But total operating costs at the firm rose by 38.5pc in the third quarter, primarily due to a $1mn hike in salary and marketing expenses. Cenntro also spent 45.8pc more on G&A.
But while controlling cots and taking full advantage of subsidy-fuelled growth opportunities in California remain challenges, the firm is hopeful. “We are cautiously optimistic that the growth momentum will continue in the fourth quarter, reflecting our investment in expanding our product offerings and strengthening our global distribution capabilities,” says CFO Edmond Cheng.