Lightning eMotors, a Colorado-based medium and heavy-duty electric fleet vehicle manufacturer, has received a non-compliance notice from the New York Stock Exchange (NYSE).
The notice was triggered by the company’s average market capitalisation failing to exceed $50mm for 30 consecutive trading days. A the same time, the firm’s last reported stockholders’ equity was also less than $50mn.
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The firm’s market cap currently sits just below $12m as valuation has decreased amid concerns for mounting inventory and dwindling cash reserves. But Lightning stresses that “the notice has no immediate effect on the listing of the company’s common stock on the NYSE, subject to the company’s compliance with the NYSE’s other continued listing requirements”.
The company’s line-up of products includes Class 3 cargo and passenger vans, Class 4 and 5 cargo vans and shuttle buses, Class 6 work trucks, Class 7 city buses, and Class 8 motor coaches.
Despite the company largely targeting Class 4 and above, a segment eligible for the most lucrative tax credit incentives under the Inflation Reduction Act (IRA), company CEO and founder Timothy Reeser in fact blames the incentive legislation for sluggish sales performance.
“These new incentives and the associated cumbersome application and award processes have elongated the sales cycle due to lack of definition and extended award timing,” Reeser said at the firm’s Q2 results.
Lightning’s share price hit a year-to-date peak of at $20.20 in February, but in recent weeks company stock has traded at around $2 per share, a year-to-date decline of 77.4pc.
Despite his frustration with delays owing to red tape, Reeser still echoes the sentiments of other commercial vehicle manufacturing executives in identifying Class 4 as a “sweet spot” under the IRA. Class 4 is the threshold for vehicles being eligible for a $40,000 tax credit, compared to only $7,500 made available for smaller vehicles.
“I think one of the reasons we have spent a lot of time focusing on Class 4[…] is the incentives landscape with both IRA and FTA, and EPA all combining together for that Class 4 product,” Reeser said at Q2 results.
“The other thing is our Class 4 product is quite utilitarian in the sense that it can be a school bus, it can be a shuttle bus and it can be a work truck, so it is a unique product in that sense,” he continued.
Despite healthy demand in the company’s main market segment, Lightning’s production stumbled in the second quarter of this year, with the company producing only 46 units, including both vehicles and powertrains, down from 53 units in the first quarter, Its best performing quarter ever has still only seen it produce 74 units.
The firm was hit this year by problems involving a recall of faulty batteries made by manufacturer Romeo, which is currently being liquidated by Arizona-based HDV manufacturer Nikola. Inventory has mounted up to $57mn, up to $25mn of which is expected to be sold off in the second half of the year, according to company CFO David Agatston.
Concerns about dwindling liquidity have also surrounded the company, as it admitted that it was searching for funding options to take it beyond 2024, after reporting only $12mn in cash and cash equivalents at the end of the second quarter.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
