ElectraMeccanica and Tevva Announce Proposed Merger Agreement Intended to Create a Market Leader in Zero-Emission Commercial Vehicles 

ElectraMeccanica, a designer and assembler of electric vehicles, and Tevva, a pioneer in electric medium- and heavy-duty commercial vehicles (“Tevva”), today announced that they have entered into a definitive arrangement agreement, pursuant to which ElectraMeccanica and Tevva have agreed to combine by way of a British Columbia statutory plan of arrangement.

The attending members of the Boards of Directors of both companies unanimously approved the proposed transaction. The proposed transaction is intended to accelerate their combined ability to capture the growing opportunity in commercial electric trucks.

Tevva recently commenced deliveries of its 7.5t battery-electric truck to commercial fleet customers focused on urban delivery – a critical and high-growth segment of the overall retail truck market for delivery-dependent urban areas.

Tevva supports its current product with a unique and purpose-built, commercial-grade electric battery system, and its future product portfolio is being developed to include a proprietary hydrogen range-extender technology, which delivers a differentiated and sustainable dual-energy solution.

Tevva’s existing 110,000-square-foot EV manufacturing facility in Tilbury, United Kingdom, would be complemented by ElectraMeccanica’s recently-commissioned 235,000-square-foot facility in Mesa, Arizona, which is expected to enable the combined company to scale its production to serve the U.K., European and U.S. markets.

Steven Sanders, Chairman of the ElectraMeccanica Board of Directors, added, “By partnering with Tevva, we are providing our shareholders with a unique opportunity to participate in the accelerated and technology-driven growth prospects of the combined company in ways that also logically extend and leverage ElectraMeccanica’s existing assets and strengths.”

Tevva’s Focus on the Commercial Truck Market

Since founding in 2013, Tevva has focused on providing innovative zero-emission technology solutions for the urban delivery market. Tevva targeted this market given its size, rapid growth rate and its impact on the environment. Commercial vehicles, which stop frequently and primarily operate in urban areas, are a significant source of greenhouse gas emissions.

Transportation is one of the most critical contributors to CO₂ emissions globally, and medium- and heavy-duty vehicles account for 22% of the transportation industry’s emissions. While many fleet operators recognize zero-emission vehicles’ benefits, they also need reliable and cost-effective solutions.

Tevva’s products have demonstrated their reliability and ability to give customers a compelling return on investment. Tevva has built a commercial vehicle ecosystem alongside its technical partners, including strategic investor Bharat Forge, with which it has worked since 2018, to tailor its products to the needs of its customers accordingly.

Proposed Transaction Details

The proposed transaction with ElectraMeccanica and Tevva is the culmination of a formal process initiated by ElectraMeccanica’s Board of Directors (“ElectraMeccanica Board”) to explore a range of possible strategic alternatives for optimizing ElectraMeccanica’s assets and generating sustained shareholder value while still managing potential risks.

Following the completion of a comprehensive process in which Tevva and others were thoroughly evaluated, the Strategic Committee of the Board of Directors of ElectraMeccanica, comprising Steven Sanders (Chairman), Mike Richardson (Vice Chairman) and Dietmar Ostermann (Director), made a unanimous, formal recommendation to ElectraMeccanica’s Board of Directors to pursue a combination with Tevva and proceed with the proposed transaction.

Upon closing the proposed transaction, ElectraMeccanica shareholders will own 23.5% of the combined company, and Tevva shareholders will own 76.5% of the company on a fully diluted basis. The combined company expects a cash balance of approximately $70 – 80 million, with a roughly $26 million debt.

At the closing of the proposed transaction, the combined company will operate as Tevva, Inc., and is expected to be domiciled in Delaware. The combined company and its shares are anticipated to trade on The Nasdaq Capital Market under the ticker symbol TVVA, subject to the receipt of all applicable Nasdaq approvals.

The combined company is expected to benefit from the acceleration of Tevva’s U.S. market entry, supported by the complementary platform, team, and assets of ElectraMeccanica and anticipated long-term reductions in material costs. The transaction is also expected to deliver approximately $5 million in run-rate annual cost savings by year-end 2024.

The Board of Directors of the combined company will consist of nine directors, comprising five directors from Tevva and four directors from ElectraMeccanica, of which seven are expected to be deemed independent.

The senior executive team of the combined company will reflect the significant talent and experience at the leadership level of both companies. Following the completion of the proposed transaction, it is expected that Susan E. Docherty will become the Chief Executive Officer of the combined company. Ms Docherty joined ElectraMeccanica in December 2022 as CEO and has over 40 years of senior leadership experience, including 30 years of international automotive experience at General Motors, where she held many senior roles, including President and Managing Director of Chevrolet/Cadillac Europe, Vice President of International Operations, Sales, Marketing and Aftersales in China, and Vice President of U.S. Sales, Service and Marketing.

Ms. Docherty also serves as a Board Director of The Brink’s Company. David Roberts, who has served as a Board Director for Tevva for three years, is also expected to become Executive Chairman of the combined company. Mr Roberts is a recognized industrial, transportation and clean energy expert. In addition to his role at Tevva, Mr Roberts chairs the Board of Directors of TAE Technologies (a commercial fusion energy developer) and Evtec Group (an automotive supply chain company).

Previously, he held executive positions with Chrysler and Aston Martin Lagonda. During his time at Tevva, Mr Roberts has overseen Tevva’s rapid growth through commercialization and managed key supplier, partner, and customer relationships globally.

The proposed transaction will be completed, subject to the definitive arrangement agreement, by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), whereby a newly formed British Columbia corporation (“Tevva, Inc.”), created to manage and hold the combined business of ElectraMeccanica and Tevva, will, directly and indirectly, acquire all of the issued and outstanding equity securities of ElectraMeccanica and Tevva.

In addition, concurrent with the announcement of the proposed merger, the Board of ElectraMeccanica has approved, under certain conditions, the provision of a $6 million credit facility to Tevva which can be drawn in whole or in part until the closing of the proposed transaction. If illustrated, the credit facility is intended to provide Tevva with additional working capital to accelerate the delivery of commercial vehicles to fleet customers.

The proposed transaction is expected to close in the fourth quarter of 2023, following the satisfaction or waiver of closing conditions, including, among others, required approvals of ElectraMeccanica’s and Tevva’s shareholders of the proposed transaction, the support of the Supreme Court of British Columbia of the proposed transaction, and the conditional approval for the shares of the Resulting Issuer to be listed on of Nasdaq.

All Officers and Directors of ElectraMeccanica support the transaction and have entered into support and voting agreements (subject to certain rights of withdrawal) for all of their shares, including ElectraMeccanica’s founder and largest shareholder. This cumulatively represents 9.67 million shares or approximately 7.89% of ElectraMeccanica’s outstanding shares.

In addition, the aforementioned ElectraMeccanica shareholders and critical shareholders of Tevva (representing 49% of Tevva’s current exceptional shares) have entered into lock-up agreements in connection with the proposed transaction, which will subject them to a 180-day restricted period, subject to certain release exemptions based on the trading level of the combined company’s stock price.

In connection with the proposed transaction, ElectraMeccanica anticipates filing a proxy statement and management information circular (the “Circular”) in connection with a special meeting of holders of ElectraMeccanica common shares expected to be held in the third quarter of this year to approve the proposed transaction.