Tauranga electric motorbike maker Ubco raises another US$10m, secures key production deal

Tauranga-based electric motorcycle maker Ubco has raised another big chunk of capital, and secured a new manufacturing deal that will allow it to dramatically scale up production capacity from batches of hundreds to tens of thousands per year.

The firm has raised US$10 million ($14m) from Jubilee Glory Investments, a firm affiliated with its Taiwanese production partner TPK.

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Ubco has also secured an expanded supply chain management and production deal with TPK.

The Taiwanese giant – which has annual revenue of around of $8.5 billion and numbers Apple among its component manufacturing clients – will increase production capacity, including dedicated factory for Ubco’s existing 2×2 product line – and provide dedicated capacity for models in the works that will be key to Ubco’s expansion: the FX1, which will improve top speed from 50km/h to 80km/h, allowing riders access to main arterial routes, and its first 4×4 or quad bike.

Ubco’s US-based chief product officer Colin Godby will confirm the announcement during a keynote address to the Micromobility America conference in San Francisco tomorrow.

The US$10m announced today was billed as a “jumpstart” on an anticipated US$30m Series B round.

It comes on top of a US$10m raise in June, which brought on three new investors: US venture capital funds Seven Peak Ventures and Nuance Capital, plus TPK. Existing local investor Global From Day One (GD1) also chipped in more funds.

Speaking to the Herald before today’s event, Ubco chair and CEO Katherine Sandford said “Ubco is considering several capital pathways in both the US and Australasia, given the appetite from both retail and institutional investors for EVs [electric vehicles].

A range of options were being assessed, including a dual NZX/ASX listing, or an IPO on the Nasdaq.

“Nothing’s off the table at this point. We really just want to have options if we take this business to dominate the global utility electric vehicle market,” Sandford said.

“We’ve seen Allbirds and Rocket Lab showing New Zealand innovation is of interest on a global basis. We’re rare setting ourselves up in a similar way to be able to access whatever [capital-raising mechanism] makes sense, when we get to that point in needing to make a decision.”

The CEO pitched the new TPK deal as a turning point for her company.

Ubco, which has been in the market for four years, will have around 4000 bikes in customers’ hands by the end of this year, she said.

But from here, there was potential for that number to head rapidly north.

With the new TPK deal, “We will move from being able to build hundreds of bikes to thousands of bikes, and potentially tens of thousands. In 2022 we’ll be looking at the next step up into the thousands. We’ll also have rolling production. Historically, we’ve, batch-produced.”

In June, then-CEO Timothy Allan told the Herald there was around a six-month wait time for new bike deliveries amid the pandemic supply chain issues that have hit so many companies.

Sandford said it was too early to say what impact the TPK deal would have on lead times but added, “They certainly bring some horsepower that was previously not had access.We’ll be able to leverage the relationships that they have across various supply networks globally.”

The new deal underlines the importance of supply chain resilience to success in EV, especially as shortages and delays have affected the transport industry the world over, she said.

The new TPK contract also comes with improved payment terms, and a focus on lowering costs while increasing quality Sandford said.

And the new investment “Will enable Ubco to double-down on its ESG [ environmental, socialand governance] commitments,” she said. The company is now “exploring battery chemistries that both boost performance and reduce dependencies on conflict minerals”.

Sandford framed co-founder Allan’s resignation as chief executive as a not-unexpected part of the process of a start-up evolving to be a global player.

“I think he just felt that it was time to step aside. It’s really not uncommon as a company scales up to have a founder CEO take that step.”

She added, “Tim has left a legacy of an amazing product platform, and he’s built an outstanding executive team across various locations around the world providing a solid footprint of people with local insight.”

Sandford, who has been a director since 2016, said she would lead the company as interim CEO through its Series B round and bedding in its new deal with TPK before a new chief executive was recruited.

Ubco first made a splash when it hit Fieldays in 2015 with its first model, an all-electric utility bike that appealed to farmers because its almost silent-running was animal-friendly, and the engine with almost no moving parts meant no running costs. It helped, too, that the removable battery could also be used to recharge power tools. The lack of noise also drew conservation and tourism clients. But with a top speed of 35km/h, it was too slow for roads.

Three years later, Ubco released its first road-registerable model, the 2×2 ADV, which could hit 50km/h, with a single-charge range of around 120km and a hot-swappable battery. (In legal terms, Waka Kotahi NZTA puts the ADV in the same class as a 50cc moped, meaning you don’t need a motorcycle license to ride one; a car or learners car licence suffices).

Now Ubco has a model in the works that will be able to hit 80km/h, giving it access to arterial roads. That should broaden appeal overall, but the company says it’s especially been a request from potential postal service customers (a fundraising document for the mid-year raise referenced talks with Australia Post).

Next on the list is a quad bike – a long-held Ubco dream. The 4×4 should expand Ubco’s core farm utility bike business, but it could also open up other areas. Ubco has long eyed the spot in the local market currently occupied by NZ Post’s 500 electric golf-caddy style four-wheelers made by Norway’s Paxster – which cost 131,390 krona ($24,000) each at today’s prices. At this point, there’s no ETA for Ubco’s 4×4.

In a mid-year update, Allan said sales would top $3m this year. Next year, he saw sales in a band between 1700 and 2300 bikes, which he said will bring in revenue between $12m and $20m, depending on the final volume, plus the models and accessories shipped.

Ubco is also piloting a subscription service, with Domino’s an early adopter with its NZ and UK operations.

While the electric motorbike space has become crowded, Sandford says the company can dominate the utility market with its on-road/off-road models.

Ubco is also positioning its cloud smarts as a point-of-difference.

The bikes all have GPS transmitters that feed mechanical and location data to a cloud-based dashboard developed in NZ by Ubco. That allows corporate customers like Domino’s to track the location of deliveries in real-time, and get instant alerts about any prangs that a driver, let to their own devices, might be too sheepish to report. A consumer version is of the software works for farming families with multiple bikes.

Ubco is also planning a new battery console, which will make it easy for urban riders to charge their smartphone and other gadgets from their bike.

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