Conclusion:
Electrovaya's new deal with Raymond may be one of the most important in forklift history. First it may answer the question of what will be the next standard power source for forklifts? This deal and Raymond's behavior indicates Lithium will be the winner. The biggest forklift company, Raymond, appears to have decided that Lithium which today has tiny penetration (3%) of this huge market is where the future is and has strongly jumped on board. Raymond has not OEM private labeled Plug Power's hydrogen fuel cells, it has OEM private labeled Electrovaya's Lithium batteries. Another indication that Lithium will win and hydrogen fuel cells lose is that much bigger Plug Power has $79 million negative EBITDA on $307 million in sales. However with Electrovaya in the last two Qs it has positive EBITDA with just $4.8 then $6.9 million of revenue and projects much higher revenue in 2021. As a person that has run businesses this indicates to the author that it is possible that fuel cells can never compete with Lithium except in special circumstances (5 minute refuels). That is because Plug Power with about 15 times more scale and slower growth and has dismal negative EBITDA.
The next big question is who will be the big winner and number one Lithium forklift battery company? There are competitors. Flux Power Holdings Inc. (OTC:FLUX) is Lithium forklift batteries too. In trailing 12 month revenue it has $19.4 million about 35% more than Electrovaya. However it has negative EBITDA of $12.5 million and gross margins of just 15%, whereas Electrovaya has 33.4% gross margins and has achieved positive EBITDA in the last two Qs. So Electrovaya is inherently much more profitable that than Flux Power. Flux Power does have UL certification. Looking at their website see no mention of ceramic separators or other standout technologies which Electrovaya does have. I see no mention patents for Flux Power whereas Electrovaya has over 100 patents. Flux Power does say "Private label with a top five global OEM" and mentions only one other Lithium Forklift company has UL listing and an OEM private label, which has to be Electrovaya. They also say Lithium has just a 3% penetration of the market now. So it would seem between these two companies that Electrovaya has all the advantages. And that OEM company Flux Power mentioned as a top five, more likely is the 5th biggest, not 2nd biggest with maybe 25% as high of sales as Raymond.
So with this new deal who do you think will win? This is where it gets a little mind boggling. Stepping through this it appears Lithium is the most likely next standard and Electrovaya the dominate supplier. If you think differently please comment.
If Electrovaya is the winner as now appears to be the most likely candidate, then they would far exceed the above calculations of just 10% of new forklifts only from Raymond high use sales and with no conversions. That would give Electrovaya $280 million in sales and based on Plug Power's valuation an $8.7 billion market cap or 55 times higher than now at $69 a share. However many billions of annual sales would happen if Electrovaya is the winner as is possible. Is Electrovaya really worth $8.7 billion for a private takeover with $280 million in sales? Not to me. But would pay that in a millisecond if the alternative was to pay $13.4 billion for Plug Power today. Although valuations are insane for Plug Power in the author's opinion, that does not mean Electrovaya will get an even higher valuation at the same sales rate being that Electrovaya will be highly profitable at that sales rate and much more likely to be the big winner for the future of forklift power. None of this may happen, however in 2020 just about everything has gone right for Electrovaya. What stands out to the author is that this potential even exists. Can not think of another company that has the potential to over 100 bag.