Wpr101's August 2025 portfolio review

Investment Analysis Clubs Saul’s Investing Discussions
21

The Mississauga facility doesn’t produce any power. It consumes power to manufacture batteries.

The 300MHh metric in the investor materials essentially quantifies how many batteries Electrovaya could manufacture there. If we take an average capacity of 40KWh per forklift battery (pick an AH rating, multiply by battery volts [typically 36] and divide by 1,000), then that facility, when it reaches 300 MWh, could produce 7,500 forklift batteries a year, in this example.

That’s all it says.

The $0.05/KWh cost of electricity factors into their manufacturing power consumption overhead (running the machines that make the batteries, plant heating/cooling/lighting/computers/etc. They probably don’t even charge the batteries until they’re installed in a forklift. You don’t want to be shipping fully charged batteries about if you don’t have to.

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22

Got it, that makes complete sense. I guess that is just another limitation of AI tools that it filled in the blank for 30 MW of power production, rather than explain my question makes no sense.

As for the question of why to invest in ELVA, the main reason I see is there is a clear path to scaling up even on just forklift batteries. It seems like their batteries would work well in Robotics, but I would not look to start counting that too heavily yet until they land some bigger sales there.

Here’s my understanding of how their power consumption will look like if they are able to hit the stated timelines,

Current: 300 MWh

April 2026: 600 MWh

December 2026: 1300 MWh

late 2027-2028: 3000 MWh

If they are able to hit these targets, it would mean scaling up 10x in the next three years. I was already looking at this company last quarter as well when they were saying April 2026, and now it is only six months away now till capacity doubles.

Their market share as I could gather for forklift batteries is 2-3% in the US, and 5-7% in Canada. While the larger competitors in the space make up about 30% and 25% of the market. Just getting to par with those companies in the US from their Jamestown facility would also be 10x’ing sales. It’s possible they end up capping out there, but I’d expect the stock to be up significantly if they are able to 10x power consumed for production, and 10x sales over the next three years or so.

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23

Here’s a May presentation from the company:

The factory capacity numbers aren’t in there, but there is some misleading info on slide 12 comparing their batteries to NMC and LFP batteries for passenger cars. I suspect there are issues with power/energy density, or something else performance related, which is why they’re not targeting that market. Their “low margin” claims for that business are nonsense, as slide 18 has them trying to enter that business with their future solid state batteries.

The latest presentation from the company can be downloaded from:

Slide 5 shows current and future applications, and passenger cars aren’t there, but then on slide 12 they show up again on that slide that’s also in the May deck. Slide 19 is almost the same as the May deck’s slide 18, except the future went from
“Passenger EVs, Over the road (OTR) trucking, aerospace”
to
“Drones, Consumer Electronics, High-performance Vehicles, & Aerospace”

Seems their future applications are still shifting significantly.

On slide 13, they say they’ve sold 30k+ battery systems. That’s in how many years - over 10 maybe?

What’s interesting is that the company no longer seems to be talking about battery production capacity in terms of watt-hours, but in “revenue capacity generation.” They do about $50m/year today, and are claiming Jamestown will eventually support $150m-$200m. Is that good enough for our investment dollars?

Interestingly, it seems the company got lucky when Canada rejected Electrovaya’s application for a loan, and got a US loan instead:

which worked out considering tariffs and such. The company claims they’ll fund future growth from here organically from profits. Is that enough money to grow as we’d want them to, and won’t that look bad on the balance sheet? Even when it’s a good thing to do, investors don’t like deferring profits (think Amazon from 2005 to 2015).

Anyway, it’s good that we’re finally talking about what ELVA actually makes - forklift batteries - and not speculative and risky potential futures with solid state batteries.

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24

Why not molten salt?

I haven’t invested in battery tech simply because there are so many exciting technologies that look promising across as many different applications. It all feels so right-place-right-time. How do we know sales this year will happen again next year vs a moment in time where a system just happens to be the best at a particular application?

One of the latest in auto seems to be mixed-chemistry batteries, so it isn’t even only one tech to watch out for now. Fun stuff though.

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25

All,

Energy units are already in time, a watt is a joule per second. It’s a flow rate and we normally charge customers on quantities, to do so we have to multiple it by a unit of time. Like how much gas you used to fill up the tank, not how much gas came out per second.

If they excluded the h, it’s a rate. If it has the h or a s it’s a quantity. So IREN has MW as it’s rate of power consumption but it sells the service as a Mwh because it’s a measurable quantity.

Battery manufactures like to talk about their total battery output in terms of Mwh because that’s the industry standard and it let’s people compare output based on different sizes of batteries.

If you have any questions on electricity and batteries please ask.

Drew

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26

This is one of the most interesting conversations on Saul’s board in a long time. I applaud wpr & Smorgasbord for the info and keeping it civil.

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27

This could be a great company, and I may buy it. However, two things I noticed. When a company changes metrics, it is a yellow flag. If they go from gaap to non gaap earnings, or earnings, to EBITDA for example. I am referring to this. “What’s interesting is that the company no longer seems to be talking about battery production capacity in terms of watt-hours, but in “revenue capacity generation.” My other issue is selling data analytics software. There is a business law that says companies should stick to what they know. An oil company should not start growing tobacco. They don’t know how to do it. In the 1970s, there were a lot of conglomerates, and they failed. Only Warren Buffet can do it. So, what makes elva think they can sell data analytics software. They are a battery company. They could waste a lot of time and resources trying to something they are not qualified to do.

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28

I am big believer that for a growth company to be successful they will need to continue innovating through it’s R&D org into new product lines and adjacent markets. They are talking about developing software which is being applied to its existing product. That seems quite a bit different from your example of an oil company growing tobacco.

I’m trying to understand why there would be a double standard for Electrovaya versus other companies on this board with regards to expanding their product lines?

A couple recent examples,

  • Credo CRDO just announced their PRISM software platform a quarter ago. I didn’t see anybody mention they should stick to hardware
  • Nvidia has been looking to get into auto with their platform. Again I didn’t see anybody post Nvidia is making a poor choice getting into a business line they are unfamiliar with
  • Larger companies like Amazon the board likes are constantly attempting to expand into new unrelated product lines like tele-health

One more thing people should be aware of with Electrovaya is that the original founder is Sankar Das Gupta who still owns 25% of the shares. His son Raj is the CEO now. Sankar was CEO from 1996 till 2022 before retiring. Raj worked at the company since 2009 as well.

At first I saw it as a bit of a yellow flag the former CEO owns this many shares, but Sankar is still executive chairman. However, I’m more seeing it as a light green flag now, the CEO Raj can still carry on the legacy with new energy as he is just 42. Since Raj has been CEO since 2022 revenue has 4x’d during that time frame. For people interested in this company, the MidWest ideas conference is a must listen to audio. I was very impressed with Raj and how he was able to explain how big their vision is.

My one concern with the business being passed down is it could become a “one man show” with the former CEO potentially having a ton of influence over the current CEO. Why I am not too concerned though, is the CFO is also front and center and has been at other conferences. The reasoning behind this is I’ve seen time and time again where a business tries to scale up behind one person trying to do everything, but it doesn’t work because scaling up also requires a capable team.

I understand the point that this seems like a stodgy old company from the 1990s. Companies like this are often going to be overlooked by the market since it doesn’t fit into investor’s current paradigm. However, many other thought leaders like Jensen have been repeating over and over we are entering a new industrial revolution. There’s going to be tons of companies reinventing themselves to take advantage of the new opportunities as industries are radically changing. I’d much rather see a company looking at expanding to adjacent markets rather than doing no innovation, as that is not a recipe for growth.

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29

I recant my statement. I did not realize the software was for their product. However, historically, companies that expanded into non adjacent businesses did not do well. Fidelity investments, expanded into a chauffer service, and owned newspapers. They have since sold both of those businesses. Maybe it is different now. Amazon makes movies, Apple has apple TV. I’ll perform my own valuation and maybe buy it.

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30

This is a mischaracterization. Nvidia has been supplying chips and systems and software for automotive uses for well over a decade. They started with infotainment, taking their existing GPUs and boards containing GPUs with some modifications to support graphics on automotive displays. Clearly something they knew well. And the software to drive that hardware.
Nvidia did branch their software out to utilizie their hardware for ADAS and autonomy, but they mostly targeted that as demoware to show how good their hardware was. That led to deals with OEMs and developers, and as such Nvidia has hardened and expanded its software such that parts of it are production suitable.

The question for Electrovaya is what kind of software development, sales, and marketing expertise they have internally, or are partnering with another company that does have that expertise.

What are the company’s plans for software? They’ve had “Evision” since 2021:

The software tracks battery operational usage in Electrovaya powered applications such as material handling trucks, forklifts, electric bus and automated guided vehicles (AGVs) in real time.

EVISION monitors the battery health, utilization and charging in real-time remotely. Therefore, it helps optimize the utilization of the battery systems in electric vehicle fleets, which allows full control over fleet scheduling and planning their charging schedules. Furthermore, the system improves the capability and efficiency for troubleshooting and maintenance of the battery systems.

Seems tied to their hardware, so more of a potential value-add business - maybe even something large customers get thrown in for free - than any actual growth business.

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31

@wpr101 Please don’t think I am trying to criticize your ideas. You add so much to the board, and I love your videos. I think that bringing up anything possible that can go wrong with an investment gets us all to make better decisions. That is my only intent.

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32

Thank you all for the detailed discussion and potential bear cases against the company! It is always good to hear the counter points to any investment. Sometimes it can be frustrating to sell an investment because of a valid bear case that gets raised, but it’s always better to know about those cases.

About a year and half ago I had started an 8% position in Arm, the chip manufacturer and posted on here. The very first reply was a one line statement, something like “are you really comfortable to hold a company that is 90% owned by Softbank?” I was indeed not looking to invest in a company that was so owned by a bank and sold my shares the next day. It’s likely I would have found out about the ownership structure at some point, but it’s all much better to learn right away about some issues!

@Smorgasbord1 When I mentioned Nvidia I should have been more specific to say the DRIVE Hyperion AV platform that Nvidia launched at CES 2025. From my viewpoint this product could be a game changer in auto as it’s described,

“A full end-to-end platform for autonomous vehicles, integrating sensor suites, AI computing, and a modular software stack to meet modern automotive safety standards”

It may have been a natural evolution for Nvidia to enter this space, but at some point they had to take some product chances to get their foot in the door for auto. Another lesson I have from Amazon back in the day was that I thought them expanding to Cloud was a poor business choice, because they were already losing money in e-commerce. I was very set in stone that a company needed to be producing profits for me to want to invest.

One more interesting take away I had from the product development cycle for Electrovaya is they said a lot of their R&D is paid for by their customers. That is quite an unusual arrangement in any business. For some reason Toyota is paying for independent testing, and funding research on behalf of Electrovaya. Walmart also seems to be nurturing this company. So why are these big mega corporations even interested in helping this company?

My understanding as the CEO explained, is Electrovaya saves Walmart and Toyota a ton of money because the total cost of ownership of these batteries is superior to existing battery products on the market. In this case if Electrovaya fails, then Walmart and Toyota lose those efficiency gains in the warehouse.

I was taking another look at that Midwest Ideas conference just to be sure I was not getting too hyped up on a read through there. They did say there are customers already using their analytics software, but they have caveated that heavily by saying it will be a tiny amount of revenue. I am not too sure how sophisticated this software is and will take a bit more of a look at what they are actually providing.

They said they’ve shipped batteries to three OEMs this last quarter directly for industrial robots. The Robotics use case is still a big question mark for sure, but it seems like there is traction there. Again a lot of the thought leaders at the mega-cap companies are very big on the idea of robotics. It is hard to estimate the TAM for robotics right now, but I like seeing that Electrovaya is already getting sales in this newer field.

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33

It was natural and easy evolution for Nvidia. It leveraged products they already produced, including that they already had massive software teams in place. They always regarded software as a means for selling their hardware, so this wasn’t any different.

For Electrovaya, they seem more a chemistry company. Software doesn’t seem to be in their wheelhouse as it was already for Nvidia. With Nvidia, ADAS software helped drive sales of hardware. Software may also be a driver for Electrovaya as well, but that doesn’t mean it’s going to turn into a profit center on its own.

The big lesson to take from Amazon, myself included, is that a company not showing profits on the bottom line may still be incredibly profitable and only investing (almost) all those profits back into the business so it could grow faster.

Amazon showed me you can’t just “trust the numbers.” You have to understand the business and what’s going on internally. Amazon was actually producing profits, but the standard business metrics and numbers didn’t show that.

What percentage of machinery has Walmart converted over to Electrovaya batteries?

Is Toyota converting its own machinery, or is it exploring a potential deal with Electrovaya to equip some of the forklifts it makes/sells (https://www.toyotaforklift.com/ ) with its batteries?

I believe these are two separate and different kinds of business opportunities - one a customer and one essentially an OEM potentially choosing ELVA as a supplier. The profits/volumes will be quite different as well, I expect.

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34

All,

I feel like this discussion is missing the difference in growth via capex and operating expense. Capex expenses are on cash flow statement and not income statement.

Why capex expense is outside the income statement is because these expenses are normally a one time expense. The company builds a factory. Once the factory is built the cost of running it will transfer over to operating expenses.

I like to think of operating expenses as salaries that have to be paid every year. Which is why investors tend to scrutinize growing operating expenses more than capex. This company is using it’s profits to build a factory, which falls under capex not operating expenses. So those expenses will not show up on the income statement. So this company will still be profitable. Amazon on the other hand was spending money in capex and operating expenses which upset it’s investors. You can also look at non GAAP metrics to see to see if a company is starting to become profitable.

Drew

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35

I listened to the ELVA’s presentation at the 16th annual Midwest Ideas Conference. Here are a few of my observations, which have probably already been touched upon by Wrl and others. Management made it clear that their core business is heavy duty batteries for fork lifts. It’s clear that their batteries are technically better than the lead acid batteries they are replacing, but the CEO dodged the question of the TAM of that opportunity, which is something that I would like to know. He said that 16 Fortune 100 companies are using their batteries, but it’s not clear if their deployment is just starting, or nearing the end, or somewhere inbetween. Nor is it clear how many of the remaining 84 Fortune 100 companies are candidates for their technology. He did say that there is a long lead time for fulfillment and that they have visibility out a year or more. I think he said the new factory in Jamestown NY will triple their production capacity, which suggests the runway for growth is visible. The CEO said that they were near bankruptcy in 2018 when WalMart placed their initial orders. I think being so close to bankruptcy is like a near death experience … it makes you humble and vigilant and motivates you to be laser focused and disciplined. Apart from forklifts, warehouse robotics seems another sizeable opportunity, and ELVA has agreements with a few OEMS to pursue it. I think there is a valid argument that there are multiple years of growth from these two lines of business alone, and I can’t see why the opportunities shouldn’t be international in scope. The other verticles that were discussed … defense, for example … may also become significant over time, but the CEO to my ears downplayed them, suggesting that they are relatively insignificant at this point, and that it wasn’t clear how large they might grow. The CEO left me feeling optimistic about growth but did not exaggerate the size of the opportunity.

Wrl was once a professional poker player … he seems to have learned to quickly assess the odds and play the hand and fold when that’s called for. Some of the criticism levied at Wrl’s ELVA idea might be more reflective of the way he operates than anything fundamental. I’m relatively new to Wrl’s system, but it’s clear that he’s pretty good at quickly sizing up opportunities, and when he changes his mind, he doesn’t hesitate to walk away. Stanley Drukenmiller has said that his own ability to change his mind quickly, not making it an ego thing, is central to his success. In August alone Wrl sold 7 of his 12 positions. Despite this, he is having a very good year. So what I am saying is that it is possible for both Wrl and those with a divergent point of view to both be right. The dissenting opinions are indeed valuable, but his track record makes me want to give him the benefit of the doubt.

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36

From the link I posted earlier, here’s the latest deck from ELVA on its TAMs:

Screenshot 2025-09-06 at 9.06.36 PM
Screenshot 2025-09-06 at 9.06.36 PM1920×871 99.1 KB

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37

I am not sure Amazon is a good example. It breaks every investing rule I can think of. It was losing money on e-commerce forever because it had the lowest prices. It’s p/e was through the roof. Companies like that, don’t usually do well. Also, it reached a high on 11/1/99 and it took until about the beginning of 2008 to reach it’s old high. That is a long time to wait. It this is off topic, please delete.

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38

This, for me, is a great conversation. I learned more here, than I did reading the earnings call. Thanks to WPR1 for bringing this company to our attention.

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39

I bought the stock. I think I am more into valuation than a lot of people here. There are only analyst estimates going out to 9/27. I had to use revenue to value the stock. I figured the dilution would continues at the current rate. I picked a p/s of 3 - 6 for that date. I calculated that the revenue would grow by 49% through 9/27. From there it was easy to come up with a price at that date of 8 - 16. But if it was that easy, everyone would be rich.

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40

The company makes batteries. A tangible, hard good that requires supply chain management, capex for factories, and operational expenses to run those factories, plus sales and marketing. Even the promise of a software product from them is inextricably tied to their batteries, so they can only upsell to purchasers.

I would think the reason to invest in this company is not for its organic growth, but the possibility that a forklift OEM buys them to get the technology and then scales up production to offer the lithium battery option on initial sale. That would be a company like Toyota, for instance.

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