This EV SPAC Just Scored a Big Order From Delivery Giant DHL

As it continues to march towards closing its merger with special purpose acquisition company (SPAC) GigCapital3 (NYSE: GIK), Lightning eMotors continues to score new customer orders and partnerships. Earlier this month, Lightning eMotors inked a deal with Proterra, which is merging with ArcLight Clean Transition (NASDAQ: ACTC), to provide battery technology for its commercial electric vehicles (EVs).

Lightning eMotors just landed a new deal with international delivery giant DHL, a subsidiary of Germany’s Deutsche Post (OTC: DPSGY).

Why DHL’s Deal With Lightning eMotors Matters 

As part of DHL’s broader efforts to reduce carbon emissions and fight climate change, the company has been looking to electrify its fleet of commercial delivery vehicles. In 2017, DHL set an ambitious goal to reduce logistics-related emissions to zero by 2050, but the company just recently accelerated its roadmap for decarbonization and now hopes to electrify 60% of its fleet by 2030.

DHL has been testing out 9 of Lightning’s electric transit vans as part of a pilot program in the United States since late 2020. After considering the pilot program to be successful, DHL now plans to deploy another 89 electric vehicles (EVs) in New York and California later this year. Lightning eMotors CEO Tim Reeser said that the company’s flexible and modular designs allowed it to cater the EVs to DHL’s specific operational needs.

The vehicles—based on Ford’s (NYSE: F) Transit 350HD chassis—offer up to 61 MPGe (miles per gallon equivalent), which is far more efficient than the 13 MPG that comparable gas-powered vans can get. The deal is a huge win for Lightning eMotors, which is also working to expand its relationships with other prominent companies, including (NASDAQ: AMZN).

Is GIK a Buy? Analyzing the Strong Pipeline of Lightning eMotors

DHL was one of several important fleet trials that Lightning eMotors had last year with customers. Typically, a larger commercial fleet operator will deploy a small number of vehicles, and once those pilots can demonstrate the operational benefits of electrification, such as lower operating costs, the customer ideally goes on to purchase more EVs.

Major customers, including DHL and Amazon, had already ordered 1,500 vehicles as of the end of September. Amazon has already deployed Lightning’s electric delivery vans in San Diego for Prime deliveries. If the e-commerce juggernaut follows in DHL’s footsteps, Amazon may opt to buy more EVs from Lightning as part of its own sustainability initiatives.

Existing purchase orders are already sufficient for Lightning eMotors to reach its revenue forecast of $63 million in 2021, as long as it can execute and fulfill those orders. Longer-term, Lightning hopes to grow sales to nearly $1.2 billion by 2024, which is an extremely ambitious target in just a few years.

The company’s merger with GigCapital3 is expected to close in the second quarter, at which point the ticker symbol will change to “ZEV.” Until then, investors can effectively own the company when purchasing GigCapital3 (Nasdaq: GIK). 

The transaction values Lightning eMotors as a pro forma equity value of $823 million.

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