Electric vehicle technology company Proterra is set to go public via a merger with special purpose acquisition company ArcLight Clean Transition Corp (ACTC). But despite having some impressive potential, it isn't one of the best-known EV stocks. In this Fool Live video clip, recorded on June 3, Fool.com contributor Matt Frankel, CFP, discusses why this could be a tremendous opportunity in the exciting EV space.
Matt Frankel: One that I am watching is called ArcLight Clean Transition Corp. That doesn't sound that fun to say. It doesn't really tell the story. But they are acquiring a company known as Proterra to take public. Currently, they are trading under the SPAC ticker symbol, which is ACTC, but starting in a couple of weeks, they will be trading under the Proterra ticker symbol PTRA. The shareholder vote scheduled for the 11th of this month. Assuming it gets approved, which it should -- investors seem to love this deal, it should start trading under its own ticker symbol within the next day or so after that.
What does Proterra do? Proterra is an electric vehicle stock but not like one of the ones that makes the super sports cars, that do zero to 60 in 1 1/2 seconds or any of that. That's not what Proterra does. Their primary focus is battery technology for heavy-duty applications, meaning commercial vehicles. They also produce some commercial vehicles themselves. They are the No. 1 electric bus maker in North America. They've about a 50% market share of the electric bus market in North America. They've already sold over 1,000 vehicles. But, the real potential is their battery technology. If you think it's hard and it's been a struggle for companies to develop batteries for small cars, you should see them trying to develop batteries for an excavator or something to that effect. It's a big logistical challenge, big technology. There is a lot of roadblocks there. That's really where their potential is. They see the commercial electric vehicle market as about $260 billion in size. That's a pretty big opportunity. Their current revenue, by the way, is about $200 million a year. They're not a pre-revenue company like a lot of these SPAC companies are that you hear about, especially in the electric vehicle space. But, they're still a pretty small operation relative to their potential. They have sold a lot of vehicles that they haven't delivered yet. They've about a $750 million backlog of business. They recently sold over 300 electric school buses to one school district, for example. The real value is they want to use their technology with other commercial vehicle manufacturers as more of a capital-light way to get their product into this giant market. They're not partnered with them yet. Think of companies like Caterpillar and Deere, that they could potentially partner with. They already have a partnership with Komatsu, I think I'm saying that correctly, to provide electric power systems for excavators. Big opportunity there. They could be a big beneficiary of the infrastructure bill if it comes to fruition, too. Because of that, companies will be investing billions of dollars in the next generation of earth-moving equipment and things like that.
The SPAC deal valued Proterra at $1.6 billion, but that was based on a $10 share price. It's trading much higher than that right now, because like I said, investors seem to really love this deal. Based on the current share price, the value of Proterra is about $3 billion, which compared to some of these other electric vehicle companies, is like $0.05. If you look at some of these others, even some that are pre-revenue, that's very small valuation. The trends are just pointing in favor of commercial electric vehicles. FedEx already said they want to be 100% electric by 2030, for example, 15 different states have already passed legislation for 100% electric trucks on their roads by 2050. Big, long-tailed addressable market here in the commercial vehicle space. Proterra has superior technology to anyone else in the market right now. It's one that I'm watching. I do not own shares yet, but it is toward the top of my watch list. The reason I don't own shares yet is because I talk about it too much on articles and on shows like this. As soon as I can shut up about it for a few days, I might add some to my portfolio. But that's Proterra, a company that a lot of people haven't heard of, and one that you should keep on your radar over the next few years.