Nvve Stock Forecast – Nuvve (NASDAQ: NASDAQ: NVVE) was formed through a merger with Special Purpose Acquisition Corporation (“SPAC”) called Newborn Acquisition Corp. The company has bright prospects and is in the early stages of the EV revolution. While many electric vehicle operators in the market focus on hardware, Nuvve has carved a niche for itself by focusing on software. This allows them to have few assets and will translate into higher margins as the business volumes in the future. Nuvve has specific growth drivers – we’ll cover them with the guides below.
For the above reasons, Nuvve differs from other SPAC companies in that investors focus on the hype rather than the fundamentals.
Nvve Stock Forecast
In certain parts of the US, electricity costs vary based on supply and demand. In the graph below, we can see that between 4:00 p.m. m. and 8:00 p.m. m. increases the cost of electricity in California. (Source: California Wholesale Electricity Prices)
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How do we understand this scheme? In an interview with the Growth Investor Secrets Podcast, CEO Gregory Poilasne explained that electricity costs are cheaper in the afternoon because much of the power generated by the solar panels is fed into the grid. On the contrary, if there is no sun at night, the electrical supply decreases because the solar panels no longer generate electricity. Also, the demand is increasing as everyone in the city starts to turn on their lights. As supply falls and demand rises, electricity prices rise at night.
If we are almost certain that the cost of electricity will increase every day from 4 p.m. to 8 p.m., how can we take advantage of that? We can buy electricity when it is low at 12:00 p.m. m. and sell it at peak times between 6:00 p.m. m. and 8:00 p.m. m.
That’s what Nuvve’s V2G software is all about. They can help their customers charge their electric car batteries when it’s cheap and feed electricity from their electric cars into the grid when electricity is expensive.
In other words, they generate total energy balance revenue through the V2G services they provide. Nuvve will share 60-70% of total revenue with EV fleet owners, while 30-40% of the rest will be retained as profit.
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A common question most investors ask: it may not make sense if a car sits in the parking lot all day and is connected to a charging station for V2G services.
This is where Nuvve found a suitable unique use case for its services. They decided to target school buses, which were parked and unused most of the time. These school buses are only manned when sending children to and from school.
Nuvve’s next line of business is TaaS, where they buy and lease electric buses (“EBs”) from school bus fleet owners. This segment is aimed at fleet owners facing budget constraints to switch to buses with electric vehicles.
Nuvve offers TaaS through Levo, a joint venture between Stonepeak, Evolve (SNMP), and Nuvve. The chart below shows how the deal was structured.
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In short, Stonepeak and Evolve will inject $750 million into Levo while paying an 8% annual dividend. Nuvve, which owns 51% of Levo, will be the operator of Levo.
In short, TaaS is Nuvve’s act of buying and renting EB for a fee through Levo to school bus operators.
In the final part, I will discuss why this deal helps Nuvve secure its destiny and provides investors with a high level of certainty about future growth.
You can now see that the key to driving NVVE’s V2G business is for school bus fleet owners to convert internal combustion engine (“ICE”) buses to EB buses. Below I will cover the growth drivers that are driving this transition and will benefit Nuvve.
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The Biden administration recently approved the infrastructure plan. As part of the infrastructure plan, President Biden wants to convert 20% of all school buses in the US to EB buses.
According to the Blue Bird Show (NASDAQ: BLBD), we see about 611,000 school buses on the road. 20% of electrified school buses will cost EB122,000 in the next few years.
Each EB is expected to generate between $10,000 and $20,000 per year through V2G services. Through Biden’s infrastructure plan alone, this has created a $1.2 billion to $2.4 billion addressable market (“TAM”) for Nuvve’s V2G business. For comparison, Nuvve’s revenue for the first half of FY21 is no more than $1.7 million.
Additionally, a 2018 study showed that less than 1% of the school bus population is electrified. We expect exponential growth in the number of EBs launched, which will greatly benefit Nuvve’s V2G business.
Nuvve Holding Corp. 2022 Q2
Nuvve has a partnership with Blue Bird and Lion Electric (NYSE: LEV), the original equipment manufacturers (OEMs) that make electric vehicles. Where there are potential Blue Bird or Lion Electric customers, offering and bundling Nuvve’s V2G services alongside the sale of the electric vehicle is synergistic.
For the customer, buying an EV with V2G capabilities suddenly becomes cheaper in the long run, as the revenue they can generate from V2G services offsets the cost of owning an EV in the long run.
For partners like Blue Bird or Lion Electric, there is no problem bundling Nuvve services. Working with Nuvve sets them apart from other electric vehicle OEMs that do not offer electric vehicles with V2G capabilities.
With these partnerships established, we can look to Blue Bird and Lion Electric as representative of Nuvve’s success. If Lion Electric and Blue Bird do well, Nuvve will also benefit from customers registering electric vehicles with V2G capabilities when purchasing vehicles from OEMs.
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Fortunately for us, both Lion Electric and Blue Bird are public companies and we can track their 10-Qs and get a sense of how quickly fleet owners are switching from ICE to EB buses.
Blue Bird mainly focuses on manufacturing school buses. A quick look at the investor presentation shows that the number of EV buses sold has increased by 135%.
Additionally, Blue Bird plans to produce only zero-emission buses by 2030, and this aligns with Biden’s infrastructure plan, which hopes to convert all school buses to EV buses.
Blue Bird CEO Phil Horlock announced on his second quarter conference call that EB’s production capacity will be expanded from 1,000 to 3,000 a year. We believe that the demand for EB is already being felt on Earth and Blue Bird is preparing for it.
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We see the same trend at Lion Electric. They have almost tripled the number of electric vehicles they produce: 22 in the second quarter of fiscal year 2020 versus 61 in the second quarter of fiscal year 21. They will also increase their production capacity from the current 2,500 vehicles/year to more than 20,000 vehicles. /year when they start up their new plant. – a 9-fold increase in production capacity.
We love that these partners that Nuvve works with are not small players. Blue Bird has been the leading player in the school bus business, while Lion Electric is a fast-growing emerging EV player.
With these two partners, we can say that the electric vehicle revolution is not just propaganda, it is already happening today. Demand is growing rapidly, fueled by Biden’s infrastructure plan. I don’t think any of these companies would be wise to allocate a lot of capital to expand their manufacturing capacity unless they feel there is real local demand.
We can see that a large part of the commercial thesis relies heavily on fleet owners who need to switch from ICE buses to EB and Nuvve partners to get a set of recommendations for their V2G services. This is something that Nuvve cannot control.
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However, the Nuvve decided to take their destiny into their own hands rather than leave success to chance. They contracted with Stonepeak and Evolve as I mentioned earlier in describing their TaaS business model.
With that $750 million, they can buy 3,500 EBs and make money by leasing those EBs (TaaS) and offering V2G services. Mr. Poilasne shared that with this $750 million in capital, the business could generate $150 million in ongoing revenue. Note that his current income from 1H is only $1.7 million.
We think this deal is smart and beneficial for investors. This ensures that Nuvve’s expected revenue streams will come through for years to come. Nuvve will have full visibility and control over how quickly EBs are rolled out, rather than being left to chance and waiting for fleet owners to transition to EBs.
Additionally, we believe that the way security measures are organized between Nuvve, Stonepeak, and Evolve seems to benefit everyone. Since warrants weaken existing shareholders, we want to ensure that warrant strike prices are not low.
Can Nuvve’s Market 20x In The Next 10 Years?
Of the 6 million orders placed, 4 million shares were priced between $15 and $40. Given the current stock price, if
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