Lightning eMotors, which designs and builds electric vehicles for commercial fleets, has struck a deal worth up to $850 million to provide electric powertrains for shuttle buses made by a Berkshire Hathaway company.
Shares of the Loveland-based Lightning eMotors (ZEV) shot up more than 80% Tuesday after news of the agreement with Forest River Inc. The price hit $11.60 per share by late afternoon.
The agreement with the Elkhart, Ind., company is Lightning eMotors’ biggest deal to date, but it’s not the first partnership between the two. Tim Reeser, co-founder and CEO of Lightning, said one of the company’s first hybrid vehicles was a shuttle bus for Forest River 10 years ago.
However, Reeser said, the size of the new deal has the potential to galvanize other commercial vehicle manufacturers and fleets to speed up adoption of electric vehicles. Lightning eMotors will build the electric powertrains for up to 7,500 shuttle buses at its 231,000-square-foot plant in Loveland.
The powertrains will be shipped to Forest River’s factory in Goshen, Ind., for final assembly.
“To now get to consummate this relationship in a formal way and to be able to really accelerate together with the market leader is really a great opportunity,” Reeser said.
David Wright, president of Forest River’s bus divisions, said in a statement that the company believes “this will be a game changer for shuttle-bus operators.” The agreement calls for the two companies to produce shuttle buses seating between 12 and 33 passengers.
Amazon, DHL Express and IKEA are among the companies that plan to electrify their fleets. Reeser said Lightning eMotors has sold vehicles to 46 fleet customers, including DHL, Amazon, ABC Companies and Fluid Trucks.
The company designs and equips commercial vehicle platforms with electric powertrains. It produces medium- and heavy-duty electric commercial vehicles, including delivery vans, buses, passenger shuttles and trucks and also provides charging technology.
The state of Colorado wants to get more electric vehicles on the roads to reduce greenhouse-gas emissions and address climate change. Gov. Jared Polis has set a goal of nearly 100% of the vehicles in Colorado being electric by 2050. State regulations require carmakers to offer more zero-emission vehicles for sale.
President Joe Biden, whose priorities include dealing with climate change and increasing the use of renewable energy, signed an executive order Aug. 5 that calls for the federal government to try to ensure that half of all vehicles sold in the country be electric by 2030.
Transportation generated 29% of heat-trapping emissions, the largest of any sector, in 2019, according to the Environmental Protection Agency.
“We’re excited to be right time, right place. We’ve been working on these products for a long time and now the market is ready for them,” said Reeser, who helped start the company in 2008.
Electrifying transportation is important in efforts to reduce pollution and carbon emissions, Reeser said. Deploying one electric shuttle bus is the equivalent of taking about 60 gasoline-burning cars off the road, he added.
The other benefits of electric vehicles, Reeser said, are much lower operating costs, better performance, no oil changes and they’re quiet. A catch is that upfront costs are higher.
But Reesser said deals like the one between Lightning eMotors and Forest River will help reduce the costs as the volume of electric vehicles increases.
“We think about this as an anchor opportunity, an anchor customer,” Reeser said. “Part of what a customer anchor brings is the critical mass to drive the cost down.”
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