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ELMS CEO breaks down the EV boom amid pandemic

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Jim Taylor, Electric Last Mile Co-Founder and CEO joins Yahoo Finance Live weighs in on why the company is going public via SPAC and the outlook for the EV market post-pandemic.

Video Transcript

JULIE HYMAN: I know we have talked a lot about how electric vehicle stocks have been all the rage. We talk less about a less sexier part of the electric vehicle market, shall we say, and that is delivery vehicles, and specifically delivery vans.

Our next guest is aiming to get those vans on the road, so-called class one electric vehicles. Jim Taylor is the Electric Last Mile co-founder and CEO. The company, by the way, is set to go public in several weeks through a SPAC deal. It's scheduled to close.

Jim, thank you for being here. First of all, I'm just going to dive right into it. Here you guys have about 45,000 preorders. And as we know from some of the other companies developing these types of vehicles, it can get a little tricky. What does preorders mean in this case?

JIM TAYLOR: Yeah, I think it's best to translate that into several plain English words. Hand raisers, reservations, standing in line. Certainly non-binding. But in this business, to gauge demand and to take a pulse, you know, early on, it's the way that this industry typically measures that.

In our particular case, given that we're going to be the first entry in a so-called class one segment, the smallest of the cargo delivery vans, our preorder, let's say, call it backlog, but preorder list has been growing and growing, primarily because there will be nobody else in that segment but us. We'll be the first movers in that segment.

The demand, as you guys know, from e-commerce down to all of the delivery van business, is extremely high, given the growth of e-commerce. And so people are basically, again, raising their hand, putting in a reservation to say, count me in. Because they don't want to lose out on this opportunity to be one of the first to get our particular product.

BRIAN SOZZI: Jim, that van behind you, is that a workable van? Can you drive that? And what are some of the specs on that? Because I imagine that's one of the key selling points for these preorders.

JIM TAYLOR: It is, yeah, that's a working van. In fact, if you've got the video up that I'm watching, you can see it there in a working form. And the most important specs, A, it has the lowest total cost of ownership. We can come back to that. But if you compare that to the existing gas powered vehicles in the segment today, it's about 35% lower overall total cost of ownership. It carries 170 cubic feet of carrying volume. And of course, that's extremely important, as opposed to the maybe historical weight classification, so-called class one.

And the second is really important, as a full electric vehicle, is 150 miles of range, which is more than adequate in this particular segment, given it's literally last mile, short distances. Typical range in these vehicles on a duty cycle today, of vehicles in that segment, would be about 40 to 60 miles. So 150 is more than ample to avoid anything like range anxiety and those sorts of things.

MYLES UDLAND: And you know, Jim, right now the electric vehicle space has really been focused on consumers. And we've seen a lot of companies, you know, say they want to focus on commercial clients, commercial customers. We haven't seen too many of those products come to market yet. As you look at what your potential customers would need from their vehicle, what are some differences as you approach development of, you know, not just this first one, but future versions of this van? What are some things that your commercial clients are going to need that a consumer, for instance, might not particularly be interested in with their electric vehicle?

JIM TAYLOR: Well, I think I'll pick back up on what I just mentioned. Consumers, of course, are very concerned about range. They're not really sure where they're going to go every day. And so there's a feeling of somewhere north of 300 mile range is adequate for the consumers.

As I mentioned, this particular case, when vehicles, especially commercial vehicles that are on planned routes leave in the morning, they know exactly how far they're going. The companies that manage all these fleets, of course, have it predetermined right down to how many turns per route that they're going to take. It's a very heavy focus on efficiency.

And given that these are business support tools, it's business to business transaction, the number one issue is reliability and cost. And so they're going to look at this as an investment. And uptime, of course, is super critical, that these vehicles are doing business, you know, not in the shop, obviously.

And then second, cost. And they're going to measure that across the lifetime of the vehicle, not just the daily operating cost but the overall lifetime until it's replaced. And so we have in place a very extensive execution system. From my background and the team that I've assembled, it's all focused on people who've been through many, many launches and are looking at the details and all of the important building blocks of ensuring that we have a good execution process in place, from an engineering standpoint, the plant, of course, quality, but lastly, reliability and uptime, to ensure that we meet those customers' goals.

The second thing that is a requirement is data. These, again, are managed, these vehicles, as fleets, and looking at the overall efficiency on a day-to-day basis of how they can be improved, you know, watching the vehicle itself, if there's any issues with it. And so again, we have an extensive data system in place to be able to give to the fleets and the fleet management companies that operate this.

The third aspect of delivering what the customers want is so-called upfitting or customization. Each one of these vans, of course, starts as a pretty plain white van, but ultimately is customized to ensure that it meets exactly the use case that each of these customers are going to put these vehicles into place.

BRIAN SOZZI: Jim, I noticed you had UPS' longtime CFO, Richard Peretz, on the board. I've talked him a good amount of time through the years. Do you have orders from UPS? And if not, would a UPS or a FedEx, would they be giving you orders? Do you want to work with them?

JIM TAYLOR: Yes, definitely. Many of the other early entries in this space have got UPS orders. In our particular case, yes, having Richard would be a natural. We're very happy to have him on the board, with his knowledge and background in that space, especially as we become a public company, and all of his guidance in that regard, for compliance and all of the things that are going to be required. But in addition, of course, his knowledge of the space.

In UPS' particular case, they start their purchases from so-called class three and up, a larger van. They don't actually purchase these small vans. However, FedEx does. They have both small and, call it, medium and large size vans. And so we're definitely pursuing these large fleets and looking to get them moving from, as I mentioned earlier, this preorder space down into confirmed orders.

And to do that, you know, basically it's a technical exchange. We have to first get their requirements, and then we have to go back to them with a proposal, and finally a test drive to say, we meet your specifications, they physically demonstrate that, and then they'll be changed to confirmed orders.