ElectraMeccanica abandoned its three-wheeler and merged into Tevva's electric trucks
After recalling every Solo sold, ElectraMeccanica merged into UK truck maker Tevva; its stock jumped 19% and shareholders kept 23.5% of the combined company.
What was changed
ElectraMeccanica built the Solo, a tiny three-wheeled electric car, and struggled to produce it profitably. In December 2022 CEO Susan Docherty flagged an unsustainable cost structure, an unprofitable contract manufacturing agreement with a Chinese company, and an addressable market too expensive to capture. In February 2023 the company recalled every Solo sold since 2019 over a loss-of-propulsion issue while driving, then offered to buy back all vehicles at full purchase price and refund reservation holders as sales of the Solo were discontinued.
The answer was a merger with Tevva, a UK maker of medium- and heavy-duty electric commercial trucks, announced in August 2023. ElectraMeccanica shareholders would hold 23.5% of the combined company, Tevva shareholders 76.5%; the combined company trades as Tevva, Inc. under ticker TVVA. Docherty becomes CEO, Tevva director David Roberts executive chairman, and the nine-seat board splits four to ElectraMeccanica and five to Tevva. ElectraMeccanica also extended a $6 million credit facility to Tevva as working capital until closing.
The logic is incentives and assets. Commercial electric trucks qualify for US government support the three-wheeler never could — $1 billion set aside for electrifying heavy-duty trucks and up to $40,000 back per medium-duty commercial vehicle. ElectraMeccanica brings its US footprint, balance sheet, public listing and Mesa, Arizona plant — expected to start building Tevva's 7.5T truck in 2025 and reach full capacity, about 10,000 units a year, in 2026 — while Tevva is already delivering the 7.5T to fleet customers from a UK factory capable of 3,500 units.
The companies expect about $5 million in run-rate annual cost savings by the end of 2024 and $1.3–1.5 billion in revenue by 2028. ElectraMeccanica's stock rose 19% on the announcement.
Why it worked
The Solo was excluded from government rebates, hard for customers to insure and hard to service — the consumer market was too expensive to capture.
An unprofitable contract manufacturing deal and an unsustainable cost structure meant the three-wheeler never made money.
Commercial electric trucks qualify for US incentives the Solo never could, including up to $40,000 per medium-duty vehicle.
The merger pairs ElectraMeccanica's US footprint, Mesa plant and balance sheet with a Tevva truck already delivering to commercial fleets.
What can be applied
When your product category dies, merging into the adjacent category your assets can already serve may save the company — even at the price of your name.
Aftermath
The deal was expected to close in the fourth quarter of 2023, with ElectraMeccanica continuing to trade as SOLO until then and the combined company relisting as Tevva, Inc. under TVVA. Project E4, the four-wheeled consumer EV announced in March 2023, was cancelled as part of the pivot from consumer to commercial vehicles. The Mesa plant, originally commissioned to onshore Solo production, was repurposed to build Tevva's 7.5T trucks from 2025.