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MOKE + EV Technology Group: The cost and value of brand equity in the EV value chain (EVTGF)

Beach moke

Getty Images stbaus7 / iStock editorial

A lesser-known fact affecting high prices when editing data for an alpha article titled “What is the outlook for the electric vehicle battery market by 2029?” On July 20, 2022. I found. EV Vehicle Costs-“Brand Equity” Costs.

Brand equity can be defined as the added value that a recognizable brand name adds to the product offering, and is created by customers becoming more and more personally aware of the brand and building connections with it.

Intensifying competition has prompted us to spend money to promote brand equity in our products. By 2024, about 50 new EV models are expected to debut in North America, and the flood of new supplies creates a highly competitive environment.

The benefits of brand equity that make products more competitive in the market are:

  • Development of larger market share
  • Price premium billing
  • Ease of recognition
  • Differentiate from competitors

When it comes to advertising, traditional carmakers spend an average of $ 495 per car. In 2021, automakers spent $ 248 million on national television advertising featuring EVs, an increase of 282% from $ 65 million in 2020.

In 2020, there were 8,000 EV national TV advertisements, and in 2021, the number surged to 33,000. Meanwhile, non-EV TV advertising fell from 563,000 in 2020 to 531,000 in 2021.

Table 1 shows advertising costs per vehicle sold, including EVs and ICEs.

table

Visual capitalist

This table shows the value of “brand equity”. Tesla (TSLA) is one of the largest brand equity values, spending $ 0 on advertising each year. But again, Tesla CEO Elon Musk has 102 million followers on Twitter.

Therefore, Tesla can save an average of $ 495 per vehicle by having high brand equity. This leads to the purpose of this article. If a brand has existing brand equity before the EV is released, it is a very powerful asset, providing demand certainty, marketing and advertising costs and billions of dollars in hiring time. There is a possibility of saving.

EV Technology Group-Changing the Dynamics of the EV Industry

One of the new EV entrants that caught my attention when researching previous Seeking Articles was the recently listed OTC EV Technology Group (OTCQB: EVTGF), which in my opinion was “symbolic. We are changing the market with the management’s vision of “electricizing the brand.” “” According to the press release:

“The EV Technology Group recently acquired MOKE International and has already begun rolling out electric MOKE with a MOKE range of 120km. The EV Technology Group aims to bring its iconic brand to the carbon-free future. Thousands of cult followers around the world. “

What is unique about this approach?

According to an article in the Robb Report:

Named after the slang term “donkey,” the funky MOKE was quickly endorsed by celebrity sets of the time, including Brigitte Bardot, Peter Sellers, and The Beatles. He also played a supporting role in several James Bond films. And here are some examples of survivors: In recent years, it is owned by David Letterman and Kate Moss. “

Photo 1 shows that MOKE is not an EV for everyday commuting unless you commute from the beach house to the golf course. Imagine these EVs as a means of transportation for guests on an island or vacation resort, or as a rental at a resort location, such as adding an alternative to a replica of the 1957 Porsche 356 Speedster Convertible rented on the Maui Roadster. increase.

photo1

Photo

MOKE

However, the uniqueness of this acquisition is that MOKE International is an established car company with brand equity. This is more than double the nearly $ 10 billion raised by companies in this sector in 2020, unlike the traditional venture capital approach that startups raised more than $ 20 billion in 2021.

SPAC is another approach, a listed company that has no real assets other than cash. They are formed as an investment vehicle whose sole purpose is to raise funds and find and merge private companies. This is a faster way to open a company than a traditional IPO, but many companies face financial and legal challenges following a crackdown by the SEC last year.

EV start-ups Nicola (NKLA), Rhodestown Motors (RIDE), Canoe (GOEV), Faraday Future Intelligent Electric (FFIE), Fisker (FSR) and Lucid Group (LCID) have all traded SPACs in the last two years. Published through. ..

Investor takeaway

This unique approach to entering the EV market seems to be an interesting choice for those who believe in the power of the brand and the EV Technology Group’s ability to extend this strategy to more classic brands. They are an experienced executive team, including CEO Wouter Witvoet, who founded companies such as SecFi and Valour, and automotive executives such as Dan Burge (former Lotus executive) and Isobel Dando (17 years under brands such as Rolls-Royce). Rally. They show a clear demand for MOKE and the ability to grow a “brand first” strategy.

I mentioned earlier that other approaches are being taken using SPAC. Not only are there legal issues, but these companies are less successful because they haven’t established brand equity, despite being published primarily through the shell.

Chart 1 shows the rate of change in stock price performance of these six companies over the year. Both show a significant double-digit market share decline.

Chart 1

chart

Y Charts

Figure 2 shows the EPS dilution (“TTM”) for these companies. This does not mean a comparison of EPS between companies, but it does help show that all profits have been negative over the past year.

Chart 2

chart

Y Charts

The rapid pace of introduction of EVs in recent years has been “boosted” by the fight against fossil fuels, with EVs up 104% in North America in 2021 while shipments of ICE (internal combustion engine) vehicles were flat. ..

In 2019, 2.2 million electric vehicles will be sold worldwide, accounting for only 2.5% of total vehicle sales. Although the global automobile market shrank in 2020, electric vehicle sales reached 3 million units, accounting for 4.1% of total vehicle sales. Electric vehicle sales more than doubled to 6.6 million units in 2021, accounting for 8.3% of the global automotive industry. As shown in Figure 3, electric vehicles accounted for all of the net growth in global vehicle sales in 2021. By May 2022, sales of electric vehicles reached 3.2 million units, accounting for 11.0% of the global automobile industry.

Chart 3

chart

InsideEVs

The strong growth potential of EVs is a catalyst for start-ups to enter the market as soon as possible. Unfortunately, many of these new EV players have similar futuristic designs with similar, if not the same, engine technology. But they are not the brands that people know and love. The EV Technology Group’s approach to acquiring companies with “brand equity” exposure is changing the market with the vision of “stimulating iconic brands” and monitoring future acquisitions of readers and subscribers. doing.

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