Atlis Motor Vehicles Stock: An EV Long Shot
Term Sheet, a newsletter from Fortune, was all up in arms yesterday morning about the ARK Venture Fund – “making this available to retail investors is a horrible idea.” What about all the other horrible ideas out there such as penny stocks, regulation A+ IPOs, SPACs, cryptocurrencies, ICOs, NFTs, crowdfunding ventures, and all the other garbage being peddled to retail investors? ARK Invest’s Venture Fund does present some risks, but they pale in comparison to the pitfalls awaiting investors who think the road to riches is about “finding the next Tesla.”
Another mistake newbie investors make is to confuse short-term price movements with the quality of a stock. When a company has an initial public offering (IPO) and shares soar +700%, that’s not a good thing, yet some investors in Atlis Motor Vehicles see this as a sign of good things to come. That could be a costly premise.
About Atlis Motor Vehicles Stock
We’ve talked about why equity crowdfunding should be avoided like the plague, and in that camp, we’d also place Reg A+ offerings because they’re a funding option for firms that institutional investors don’t want any part of. If you poke around a bit, it’s easy to find out why. Management teams that break promises, roll forward targets regularly, and raise capital as if they’re selling lottery tickets wouldn’t be taken seriously by any institutional investor who sees these red flags for what they are.
The 2018 Offering
Our story starts in March of 2018 when Atlis Motor Vehicles held their first crowdfunding raise. At that time, they’d raised $10,000 in funding with the CEO kicking in an additional $30,000. That sum of money might get you a few admins in the Philippines but it’s hardly enough to start an electric vehicle company. The Altis crowdfunding campaign on StartEngine was hoping to raise $1,000,000 to increase marketing and finish their prototype. As we often see with crowdfunding campaigns, plenty of perks were on offer to get investors to pony up a measly one million dollars – like 5 free trucks, only one of which can actually be delivered.
In the memorandum document outlining the offer the following statement is made under the header, “2021 Financial Expectations”:
Atlis Motor Vehicles believes that sales will increase to $68,000,000 as we ship our first 1,000 Atlis Motor Vehicles XT pickup trucks.Credit: Atlis Motor Vehicles
We’re told that the company needs $370 million over the next six years before “predicted profitability can be reached.” That’s expected to fund technological advancement like a battery that can charge in 15 minutes and “self-driving capabilities with all vehicles and vehicle platforms as standard features.” At that time, they ascribed a valuation to their company – one with assets totaling $609 – of $2.9 million. Still, they managed to raise $1,068,091 from investors (minus the cost of a Ford Raptor and the $62,000 in fees charged by StartEngine). A year later and they were at it again because they “had no cash available as of December 31, 2018.” Sounds like a case of bad planning because the March 16, 2018, Form C implied that 2019 was when the revenues would finally arrive.
It’s 2022 and they’ve yet to manufacture a single truck.
The 2019 Offering
In 2019, Atlis Motors looked to raise another million dollars at a valuation of (checks notes) $90 million. The sort of people plunking down money on this venture probably don’t know what “valuation” even means, so it makes little difference what the number is, but at least the company tries to provide some justification as to how they arrived at the number. (Hint: It’s based on those aggressive milestones actually being achieved.) The offering memorandum explains how the valuation is based on statements such as the below:
Atlis Motor Vehicle anticipates beginning sales of the XP Platform by Q3 2020, while our XT Pickup truck is expected to begin sales by Q1 2021Reg CF – December 10, 2019 Offering Memorandum Credit: Atlis Motor Vehicles
It’s almost as if the company didn’t think through what they were saying because it didn’t really matter. No serious investor would ever look at crowdfunding an electric vehicle company looking to raise their second million, so why bother providing estimates that have any remote possibility of being achieved, especially when the company knows they’ll only ever be able to raise nickel and dime funding rounds form retail investors (minus all the marketing expenditures it took to raise the money).
The memorandum goes on to talk about $1 billion in “projected reservation interest” consisting of “reservations that are ‘non-deposit and require no down payment to place.'” So essentially, these reservations mean nothing. The reason they’re not asking for deposits is noble – they’d rather offer potential customers the opportunity to become investors. (Rolls eyes.)
The 2020 Offering
For calendar year 2021, our volume targets are: 1000 XP Platforms and 100 XT Trucks. In calendar year 2022 we’re targeting production of 4,000 XP Platforms and 1,000 XT Trucks.Credit: Atlis Motor Vehicles
That’s what investors were told in the 2020 offering memorandum which valued the company at $165 million, a number that’s likely based on these projected milestones being met. The raise netted $14.8 million of the $35 million goal, and by now you’re probably getting the picture. Milestones come and go for Atlis, but the relentless need to raise funding remains. Prior to the IPO, the company had a self-ascribed valuation of $385 million courtesy of the 12,000 retail investors who funded the project.
As of March 31st, 2022, Atlis had 34,247,439 shares outstanding which were being offered for the price of $27.50 prior to completing their Nasdaq listing. That would have given them an implied market cap of just over $941 million. When trading began, shares of AMV surged to $243.99 before floating back down to $63 a share (last time we checked). That’s a $2 billion valuation for a company with $3.78 million of assets on their balance sheet:
The latest filing document talks about how a lack of funding and (wait for it) COVID put a crimp on their plans to deliver a vehicle. Now they’re on to talking about the Memorandum of Understanding (MOU) they’ve signed for some batteries that they hope to sell this year. Sales of their electric truck will happen sometime in the future. The latest crumb of hope being fed to investors is that revenues will happen this year.
In 2022, we plan to become revenue generating and to secure sufficient funding to execute on our operational milestones. The company will continue to leverage Regulation A+ crowdfunding campaigns to fund operations until significant capitalization occurs.Credit: Atlis Motor Vehicles FORM 1-A, 2022-08-26
One only thing you can be certain of is that the dilution will continue. In the meantime, the price action you see today is being driven by hype and speculation as wannabe Gordon Geckos try and trade their way to a better zip code while hedge funds have the last laugh. Management has wised up to their lackluster execution and now provides vague wave-your-hands-in-the-air estimates as to when their investors can finally expect to see some electric trucks produced (they opted for the hand-made approach as opposed to automation).
We expect to finalize development of the production model and begin producing trucks for delivery in the coming years.Credit: Atlis Motor Vehicles FORM 1-A, 2022-08-26
The latest 10-Q filing becomes even more vague as the company talks about how much they’re spending on marketing to raise small streams of money via crowdfunding so they can continue surviving. The latest? Revenues in 2023 with trucks to follow in 2024:
We plan to continue development in these areas with plans to begin generating revenue in 2023.Atlis Motor Vehicles 10-Q
Given their past track record of missed milestones, what’s the likelihood that happens?
Holding Management Accountable
While researching this piece, the same question kept coming up. What responsibility does management have to provide investors with accurate information about forward-looking projections? They did warn investors sufficiently that there were risks involved. The memorandum documents clearly state that their valuations are pure speculation, and that timelines and milestones are estimations.
Fair enough, but isn’t there some obligation to provide estimates that can pass a simple sniff test? Is it reasonable to believe that an electric vehicle prototype can be developed for $561,571.55? (That’s the amount of money from the first raise they planned to spend on completing a prototype.) Is it reasonable to think that a company can go from inception to selling an electric vehicle – profitably – in 6 years’ time, with just $370 million in funding?
We’ve stated emphatically that retail investors should never invest in a startup unless they’re doing so alongside experienced venture capitalists. That’s why we find ARK’s new offering to be quite compelling. There is no shortage of great technology startups out there that already represent a great deal of risk. Why invest in firms that spend so much time, money, and effort trying to eke out funding from a large pool of retail investors?
Whether the Atlis management team should be held accountable for their missed milestones or lauded for their successful Nasdaq listing is irrelevant because our approach has always been the same. If management teams state milestones and consistently fail to accomplish them, we walk away.
It’s always important to understand people’s motivations. The fundamental goal of a business is to survive. Atlis shows that they’re remarkably adept at surviving, but we’re looking to invest in companies that are thriving. That means they’ve managed to achieve meaningful revenues and traction. Atlis hasn’t managed to do that, and based on their track record, we doubt they ever will.
Experienced investors know better than to trust management teams that make absurd claims in hopes of attracting investments, regardless of how many warnings they put in their memorandums. Shares of this company now trade on the Nasdaq under the ticker AMV, yet nobody seems to be holding the management team accountable for their track record of missed milestones, absurd valuations, and the inability to execute on a stated plan. Maybe Term Sheet should write about this horrible idea.
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Back in the days when I worked in the industry, we generally assumed that a prototype cost around a quarter of a million bucks. That’s if you’re already a auto company and you have a team of engineers who’ve done it lots of times before and a ready supply of engines, seats, instrument panels and chassis bits on a shelf somewhere.
Bearing in mind that an EV is a bit more complicated and you now need ADAS systems and all the rest of it, you might manage to produce a driveable prototype for $100 million. Of course, that rather pre-supposes that you can somehow find the hundred or so blokes who know what they’re doing. I’ve got quite a few friends and ex-colleagues who went to work for the likes of Tesla and Rivian and they went ‘cos someone waved a big check in front of them.
You might build an electric golf cart for a million or so but, an actual road vehicle that passes all the rules and regs is a nine figure problem at best and closer to ten if you haven’t done it before and need to build a factory and develop a supply base.
Very useful comment Ian, thank you for taking the time to share!
Note: The contact information provided is for Atlis Motor Vehicles and Mark Hanchett, CEO if you wish to contact them. It is not the information of the sender of this message. A rather long, but interesting comment about Atlis Motor Vehicles of Mesa that you may find interesting, from QAD.WISTIA ——–(Archived by administrator, Nov 01, 2022) (begin) Just a few comments from my observations of over the past 7 years when AMV began as “Volta Motors LLC, of Mesa(602)309-5425” (>fd6201423b7fcc527cf397f7c1eb7974< Google it). Folks, AMV is falling behind, but you can still make a lot of money quickly as shareholders. They are attempting to go IPO in the Summer of 2022. AMV was just able to cobble together a plywood-Styrofoam (R) truck to show for the latest crowd-funding rounds. It does not drive per expectations, cannot tow anything, has no operating windows, air bags, weather seals, turn signal steering wheel stalk, windshield wipers, proper windshield safety glass, roll down windows, air conditioning-heating system, compressor-air tank installation, inverters, SAE approved mirrors or exterior lighting; it lacks tires and wheels that meet the load and speed rating, spare tire or tire carrier, has never been tested on a bi-directional chassis dyno or with an AMV battery pack. So far AMV has never even produced a complete battery pack, (Aug-2022) they claimed futuristic, unbelievable specifications six years ago for non-existent hardware, have no charging pedestals, or have an electrical service entrance to their facility (currently 600A, 277/480V, not even 300kW) large enough to develop and test a claimed 1.5MW charging system, just to mention a few deficiencies. The XT Prototype has never been seen driving on the road at highway speeds or towing anything, its limit seems to be under 2MPH traveling a few feet on level smooth ground. AMV does not own a bi-directional chassis dyno which is necessary for vehicle and battery road simulation performance testing. No independent laboratory test have ever been conducted, on the vehicle, cells, battery modules or battery packs or chassis, no hardware has never been shown at a trade battery or auto show (Sept-2022). Virtually nothing on the prototype vehicle is an example of anything close to "production ready" it would never pass crash testing or SAE safety standards. As of July 2022 Atlis has never displayed any hardware at a symposium, trade show, seminar, workshop or published detailed specifications or independent laboratory test verification of any hardware. The public has never seen or examined or driven the XP prototype in person. Any record of a customer ever riding in an Atlis vehicle has not been located. 30 patents claimed are just "applications" costing less than $100 to file and not requiring drawings or working models. AMV specializes in promotional videos and CGI (Computer Generated Imagery) that claim to show vehicles and scientific tests that they have conducted. Extensive paid syndicated content is published on the internet almost daily to raise funds. AMV claims to have generated between $1.2B and $2.0B in contracted commitments for XT pickup trucks, this is the value of "free, no deposit reservations"; there is no cash value. AMV claims to have MOU's and LOI's, for over $400M in battery pack interest but has never published the names of the actual organizations and has never delivered any product except for T-shirts and hats. They claim to have military government contracts for their technology but have never disclosed any details or documents. Their cell design is prone to leaking and is being surpassed by the BYD Blade Cell which has superior performance, cost and safety attributes, is currently in production and available to purchase, and used in numerous vehicles. BYD has positioned themselves to make billions of cells, has production factories that cover 100’s of acres of land, 250,000 employees, has world-wide patents publicly available, and is becoming the industry standard. AMV is attempting to make a cell production facility in an evaporate cooled warehouse out of 2 X 4's, plastic sheeting and a shipping container, which is laughable. They seem to be on their 5th revision of their basic cell, the 4th revision of their motors and 7th revision of their 1.5MW charging connector with no real test data on any of these devices ever revealed (Sept-2022). Over 25 key employees have left the company despite pay rates in the 6 figure area. The days of an individual or small company producing a complex vehicle seem to be over. You may see AMV's attempt to survive by farming out the body, cells, motors, drive system and other components to experts or buying off the shelf components. Employees that have recently left AMV, include: Roger Townsend, Vice President of Vehicle Engineering; Huda lmashhadany, Head of Energy; Eric Anderson, Electrical Technician; Kenneth Baca, Senior Firmware Engineer; Anirudh (Ani) Bhokarika, Mechanical Engineer – Battery Cell Division; Ching-Yen Chung, Lead Mechanical Engineer; Ross Compton, Rob Healey, General Manager; Lead Vehicle Designer XP – XT Program; Christopher Dawson, Vice President of Manufacturing Engineering; Matthew Wilkins Senior Design Lead; Jack Al Ferzly, Head of Energy and Director of Pack Development; Craig Trzebny,Director of Energy Engineer; Kishor Satish Gaikwad, Power Electronics; Bassam Raza, Senior Electrical Engineer; Devon Huck, Design Researcher & Materials Specialist; Keith Rose, Senior Mechanical Engineer; Karel Hage, Marketing Specialist; Michael Konstas, Chief Financial Officer, and Tamica Sears, VP of Talent, Matthew Wilkins, Senior Design Lead; Annadanesh Shellikeri, Sr. Battery Cell Design Engineer; Andrew Gwynn, Technical Program Manager; Chief Financial Officers Glenn Reese and Greg Hassler, Mark Nelson, Director, Robert Healey, General Manager of Energy; Director Of Operations, Demarco Cason; and Ishaan Puranik, Finnegan Lynch, Mechanical Engineer, Senior Battery Systems Engineers; Robert Mandrov, VP of Operations; more research will follow. Web information is gathered from Linkedin, Jobonom, Glassdoor, Myvisajobs, MilitaryDotcom, RocketeReach, Myjobhelper; Facebook, Twitter, Signalhire, Apollo, Lunchmeet, Xing, Bark, Doostang, MonsterDOTcom, JoobleDotorg, WayupDOTcom, JobekaDOTlk Wayup, ZipRecruiter, SEC documents, Zoominfo, Apollo.io, Redhired, Wayup, Ziprecruiter, Datanyze, Search4itjobs, wayup-dot-com, Lensa, Zippia, SalaryDOTcom, H1bdata, Engineersfinder, Theladders, WhatsApp, RemotejobsDot.com, LensDotcom, aInstagram, WeChat, Telegram, Pinterest, JobtodayDotCom,The Waback Machine, Arc.Dev, Grabjobs, citybiz.co Directlyapply, and others. If ever produced, AMV vehicles will not be cost effective, and be too expensive to be competitive. Watch for the next Crowdfunding Round, money is being made by manipulating the shares, by low, sell high. People have made thousands already. As far as actual hardware, the XT, XP, Cube Cell, 1.5MW charging, and 15 minute charging are all products that live in the computerized imaginary world of CGI (Computer Generated Imagery). These are products of the future, and always will be. AMV losses have totaled over $133 MILLION. See the latest loss figures from the SEC, page 5: https://sec.report/Document/0001214659-22-006889/ If you are interested in current real EV engineering and on the road technology currently available visit Youtube Chnnels of “Monro Live” (48,250,000+ channel views and “WeberAuto" (33,000,000+ channel views) … a final thought, you may want to visit AMV' World Headquarters in Mesa to see what's going on. (end) Inc: Thomas Edison in The Electrician (London) Feb. 17, 1883 said: "The storage battery is, in my opinion, a catchpenny, a sensation, a mechanism for swindling the public by stock companies. The storage battery is one of those peculiar things which appeals to the imagination, and no more perfect thing could be desired by stock swindlers than that very selfsame thing. … Just as soon as a man gets working on the secondary battery it brings out his latent capacity for lying." REFF: https://qad.wistia.com/medias/w688ohft8w?hss_channel=fbp-1586124775024416 SCAM INFORMATION: https://topedgefx.com/investinatlis-review-atlis-motor-vehicles-investing-scam/ Legal class action information: https://investorlawyers.org/atlis-class-action/?gclid=EAIaIQobChMIrdyikdWz-wIV2hTUAR2r5QhoEAAYASAAEgK6MPD_BwE
That is quite the verbose comment but we’ll leave it in case anyone’s interested. We cover over 430 companies here on Nanalyze and there are lots more interesting stocks to write about. This one we aren’t interested in writing about or looking at ever again.