ElectraMeccanica Vehicles Corp. has reported a loss for the first quarter due to additional costs incurred by the company based in Mesa, resulting from a voluntary recall on its three-wheeled Solo Electric Vehicles.
ElectraMeccanica, (Nasdaq : SOLO), reported a loss of $12.3 in the first three months, compared with $17.9 in the same period of 2022. This was according to a report filed by the U.S. Securities and Exchange Commission.
After a voluntary recall, the company expects to incur expenses of more than $8.9 Million for a buyback of 429 Solo electric cars.
ElectraMeccanica announced to its shareholders in March that it had halted production of three-wheeled vehicles due to an unexpected loss in propulsion, which could increase the likelihood of a collision. However, the company claimed that no reports of accidents or injuries were received.
Customers can return their electric vehicles to the company for the full amount paid, including all taxes, fees and shipping. According to the company, customers who have reserved Solo vehicles for purchase will receive refunds.
The Solo Cargo and Solo three-wheel electric vehicles are priced at $18,500 and respectively $24,500. ElectraMeccanica will produce more than 500 electric vehicles by 2022.
ElectraMeccanica's CEO Susan Docherty stated in a letter to shareholders that the technical issues surrounding the Solo recall notice, and the barriers to customers accepting three-wheeled cars made it 'impossible' to manufacture and sell the cars.
ElectraMeccanica also terminated its contract with Zongshen Industrial Group after the voluntary recall of their electric vehicles. According to a regulatory filing, ElectraMeccanica has agreed to pay Zongshen $1 million worth of vehicle parts, $8 million in cash and $7.1 million of previously paid deposits in a settlement agreement relating to contract termination.
Four-wheeled Electric Vehicles to be Launched by Company
According to a regulatory filing, despite a recall on its Solo electric car, ElectraMeccanica plans to build the Project E4, a four-wheeled, electric vehicle at its Mesa plant.
GLV LLC is a partner in Austin-based Volcon Inc.'s offroad electric motorsports division. The company has agreed to design, develop and manufacture the Project E4.
ElectraMeccanica has agreed to pay $13.7 million to GLV for design services. 80% of the payment will be made this year, and the rest in 2024.
ElectraMeccanica plans to finance its operations in the coming year with cash already on hand, private placements and public offerings.
According to the company's quarterly report, as of March 31, it had $112,9 million in cash and cash equivalents.
ElectraMeccanica, a company that manufactures electric vehicles, decided in December to 'leverage resources and capabilities' at its 235,000 square-foot facility in Mesa.
ElectraMeccanica announced a contract with Volcon Inc. last month to assemble the Stag, an electric utility terrain vehicle at its Mesa plant. This contract is on top of ElectraMeccanica’s earlier announced agreement to assemble Volcon’s Grunt EVO electric motorcycles and Runt LT.