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Is This E-Commerce Giant Getting Into the Scorching Hot Electric Vehicle Market? Not Exactly...

By Danny Vena - Jan 14, 2021 at 2:22PM

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The wording in the company's recent debt offering led some to conclude it might build an electric car.

In a trio of press releases detailing the company's inaugural debt offering, MercadoLibre ( MELI -3.45% ) said that it was raising funds via "guaranteed senior sustainable notes." The purpose of this specific type of debt is to help support and fund sustainable-development projects for the company.

"MercadoLibre intends to use the net proceeds from the sale of the Sustainable Notes to finance or refinance ... environmental objectives such as: clean transportation, land conservation and preservation, energy efficiency, renewable energy, green buildings and pollution prevention and control." 

Electric vehicle (EV) charging at a power station.

Image source: Getty Images.

The wording above, specifically as it relates to "clean transportation," led some to conclude that the company might be getting into the electric vehicle (EV) space. While that's a logical conclusion, that isn't exactly what's happening.

A quick check with MercadoLibre's head of investor relations, Federico Sandler, revealed that the company is launching several sustainability initiatives, and it plans to use the debt proceeds in three specific areas. 

MercadoLibre will use a portion of the funds to "secure bulk purchases of electric vehicles at scale (as there is more demand than supply)," Sandler wrote in an email to The Motley Fool, "and then finance those vehicles to shift from diesel to electric [for] our third party merchants." These loans will then be paid back via deliveries made on behalf of MercadoLibre.

The e-commerce and digital payments giant will use some of the money to make loans to small and medium-size businesses (SMBs) that "are not able to access traditional financial loans," thereby increasing financial inclusion.

Finally, the company plans to offset a portion of its increasing carbon footprint by participating in land conservation and reforestation in some of the geographical areas it serves.

So it appears that MercadoLibre doesn't plan to become a major player in the EV market -- at least not yet.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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