Homeaway, Inc

Electric Vehicles (EVs). January 7, 2021

Executive Summary

Rather than issue a fundamental report on a single company, we’re writing about a sector that has generated a great deal of speculation, even for companies with dim prospects. With a tailwind from the huge rise in Tesla stock this year and hopes for new green energy legislation, many electric vehicle (EV) stocks have soared from between five times to 30 times since March on minimal news. However, the collapse of truck-maker Nikola and battery-maker QuantumScape serve as a warning that these concept stocks can collapse as quickly. The following companies in the sector have few if any sales with emerging red flags.

o Lordstown Motors (RIDE). Closing price = $23.29 o Workhorse Group (WKHS). Closing price = $27.60 o Arcimoto (FUV). Closing price = $15.60 o GreenPower Motor (GP). Closing price = $32.41 o Blink Charging Co. (BLNK). Closing price = $44.20 • Our report excludes companies such as Tesla (well-known), Fisker (almost 30% of shares already sold short), Luminar Technologies (76% of float sold short) and Chinese companies such as Kandi, Xpeng, Nio and Li Auto that fall outside our geographic purview.

• To date, EV demand has been tepid. Post-pandemic, McKinsey forecasts EV sales in the US to grow by only 600,000 units in the next four years, or 200,000 units per year. EV unit growth fell sharply in 2019, and during the pandemic declined further. EV Companies Apex Equity Research January 7, 2021

• Supply of EV vehicles is about to break out. More than 50 new EV models will enter the US market in the next few years, which should encourage price competition and lead to larger initial losses on EV production – a process that requires high volumes to reduce unit costs.

• Lordstown Motors (RIDE) will build its first Endurance pickup truck this year. Since March, the company’s stock has risen 145% to a market cap of $3.56 billion. Announcements from truck companies already project the manufacture of 250,000 EV pickups per year within three years, but AutoForecast Solutions predicts demand of no more than 70,000 a year by then. At the company’s announced future production rate, Lordstown’s price-to-sales ratio is seven times higher than that for Ford and GM.

• Since its only real product is the license for Lordstown’s Endurance truck, Workhouse (WKHS) trades largely in tandem with the former’s stock. Workhouse stock has risen 1844% since March to a market cap of $2.85 billion, but its share of Lordstown stock is only worth $350 million. Given that the company spent only $15 million on R&D in the last two years and has little proprietary technology, its stock has a great deal of additional air for no apparent value.

• Arcimoto (FUV) sells fun utility vehicles, which are souped-up three-wheel motorcycles, for $17,900. The stock has risen 1500% since its low in March, and it rallied recently on news that the City of Orlando Florida is testing the company’s FUVs in a few municipal departments. Unfortunately, even if Arcimoto wins the contract, the order would at best amount to only $12.5 million, which compares to the company’s market cap of $460 million. The company sold only 31 vehicles in 2Q20 and produced just $2.5 million in sales in the last 12 months.

• GreenPower (GP), which manufactures electric mini, school and transportation buses, stock rose 3850% since March to a market cap of $770 million to trade at 72x sales. EV buses are 50% to 100% more expensive than their gas-powered counterparts, so they depend entirely on government incentives. As a result, 74% of GreenPower sales in the last two years came from California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program, which has run out of credits and anticipates any future funding will

Copyright 2021 – Apex Equity Research, LLC, Post Office Box 159, Concord, MA 01742. All rights reserved. Federal copyright law makes it illegal to reproduce this report by any means for any purpose without our express written permission. Copyright infringement carries a statutory fine of up to $100,000 per violation. No responsibility assumed for the use of this material and no express or implied warranties or guarantees made. Facts, opinions and advice are subject to error and change without notice. Persons involved with the content of these reports may have positions in these securities.

 Page 2

EV Companies Apex Equity Research January 7, 2021

occur at lower levels. Subsequently, the company’s revenues fell by 48% year- over-year in the September quarter.

• Blink (BLNK) produces, sells and operates charging stations for electronic vehicles, which many believe the country needs before substantial EV adoption. EV manufacturers recognize this as well and have begun installing large networks of super-chargers which reduce the need for independent stations. In addition, charging stations have very little proprietary technology, so the few independent companies that survive – among the many current competitors – will do so on very thin margins. Finally, no one knows how many chargers the US really needs as most EV charging is done at home overnight. Since the March low, Blink stock rose 2950% to trade at 293x sales for a market cap of $1.34 billion.

• Three of the above companies (RIDE, WKHS and BLNK) have a market cap in excess of $1 billion with no appreciable sales. Finance professor Jay Ritter found that the average three-year return for companies that go public with these features is negative 41%.

 Page 3

EV Companies Apex Equity Research January 7, 2021

Demand: Will Consumers Buy EVs in volume?

Will consumers buy enough EVs to justify the current tulip bulb valuations of the companies discussed below?

• So far, EV sales are miniscule. Global sales soared 65% in 2018 off a tiny base, rose by just 9% 2019, and then fell 25% in 1Q20 as the pandemic hit. In 2019, EV sales comprised 2.5% of the global light vehicle market, which reminds optimists of a huge untapped market and reminds pessimists of the still relative unattractiveness of EVs to gas-powered cars..

• The EV market has well-known catalysts, but they’re likely to evolve over many years. The market will grow with tighter emission standards, restricted access in urban areas, government tax incentives and wider charging networks. But, these effects are long-range and evolutionary.

o Government policies to reduce carbon dioxide in the atmosphere produce tax incentives for EVs. The Europe offers the largest tax incentives with as much as $10,000 per vehicle, followed by China at $2,000 per vehicle. China and Europe also have stronger regulatory incentives.

o Currently, the US has no national incentives, but analysts expect the Biden administration to act.

• EVs, however, carry much higher sticker prices than gas-powered vehicles at a time of both lower gas prices and lower consumer purchasing power during the recession, reducing the total cost of gas cars over EVs.

o Surveys show that consumers also worry about EV driving ranges, which are considerably lower than that of gas cars, and the time to recharge an EV, which can be as long as eight hours. of the is growing but at a measured pace.

o To a lesser extent, the number of charging stations remains a barrier to wider consumer acceptance.

 Page 4

EV Companies Apex Equity Research January 7, 2021

• Post-pandemic, McKinsey forecasts EV sales in the US to grow by only 600,000 units in the next four years, or 200,000 units per year. As mentioned before, unit growth fell sharply in 2019, and recent EV sales growth declined. The companies below are concentrated on the US market, and these projections depend on a strong economic revival – McKinsey’s less optimistic targets are dramatically lower.

Supply: A flood of new EV vehicles

With manufacturers spending hundreds of billions on the design, development and production of electric vehicles, they’re about to unleash hundreds of new EV models on the market.

• A huge number of new EV models should encourage price competition and lead to larger initial losses on EV production – a process that requires high volumes to reduce unit costs. Unlike the companies covered in this report. major auto manufacturers with large resources are much more likely to weather that financial pressure than stand-alone EV companies.

• The new EV supply could swamp existing demand. VW alone is investing $86 billion to produce 1.5 million EVs in China and 3 million globally by 2025.

• Without belaboring the point, here’s a map from Deloitte that outlines the substantial upcoming introduction of EV models from just major OEMs.

 Page 5

EV Companies Apex Equity Research January 7, 2021

• Europe serves as a guidepost for the supply that will soon enter US market. In the first quarter of 2020 alone, manufacturers introduced 42 models. BMW plans to sell one million EVs in Europe by the end of the year, and within the

 Page 6

EV Companies Apex Equity Research January 7, 2021

next two years, Fiat will introduce 30 new EVs, Honda plans 100% of its sales will be EVs while Nissan targets 42% of total sales.

• In addition to western OEMs, Chinese manufacturers will introduce more than one hundred new models. With 1.2 million EV vehicles sold in 2019, China has significant internal demand, but with government support, Chinese manufacturers also plan to export to the US and Europe.

• Among the new Chinese entrants, Byton plans to introduce a car in 2021 that will sell for $49,000 with a screen for every passenger and a screen in the steering wheel. NIO, with four models in production and an initial 30,000 cars sold, lets customers subscribe for car batteries – a substantial initial price discount to buying the battery with the car. Other major Chinese producers include Xpeng (with a $35.6 billion market cap), Li Auto and Kandi Technologies.

• In addition to major OEMs and foreign manufacturers, start-ups will also add supply to the US EV market.

o Canoo, run by the manager who built the BMW i3 electric car, has a joint venture with Hyundai to develop a platform for a car that the company will rent, rather than sell, to consumers for a monthly fee.

o Rivian – with $6 billion in funding – is producing three S.U.V.s, in addition to a pickup truck (more later).

o Using NASA technology, Faraday Future will introduce a luxury car with multiple screens and reclining rear seats.

o With $1 billion from the Saudi Arabian investment fund, Lucid will introduce a luxury model in 2021 that will sell for $100,000 but offer more inside space in a smaller overall footprint. It plans to produce lower priced cars later.

o Canadian manufacturers will also introduce new EVs, including Fisker, Westport Fuel Systems and Electromechanica.

 Page 7

EV Companies Apex Equity Research January 7, 2021

Pickup Trucks: Lordstown (RIDE) and Workhorse (WKHS)

With a leading share of the North American light vehicle sales, pickup trucks are an obvious market for EV companies. In 2020, pickups accounted for 20% of vehicle sales and ranked as the first, second and third best-selling vehicles in the market. It won’t be easy for an untested independent to break into the Detroit automakers largest profit center.

• Lordstown Motors (RIDE) will build its first Endurance truck in 2021. Since March, the company’s stock has risen 145%. Founded by the former Workhouse CEO, it licensed its truck design from Workhorse (WKHS) for $12.2 million in cash, a 10% stake in the company and a small 1% initial commission on the first 200,000 Endurance sales.

• Lordstown is focusing on the commercial truck market and designed a truck with a motor attached to each wheel for 7,500 pounds of towing capacity. The company purchased a closed GM assembly plant in part for Lordstown stock. Initially, the company will sell only to fleets, which will reduce the need for a dealership or service network.

• Bulls hope that it can garner a portion of the US Postal Services’ plans to update its aging fleet, which is far from assured from a company that has yet to produce a truck, never mind crash, engineering, and validation testing.

 Page 8

EV Companies Apex Equity Research January 7, 2021

• Unfortunately, the USPS has repeatedly delayed awarding its anticipated $6 billion contract for 180,000 mail delivery vans, which is now put off until sometime this year. Even if it wins a portion of the contract, Lordstown will compete with a joint venture from Ford and Oshkosh Motor that uses Ford’s popular transit van, and a joint venture from Turkish EV truck-maker Karsan Otomotiv and commercial-van specialist Morgan Olson for a plug-in hybrid. This matchup at the least ensures a degree of price competition.

• While Lordstown announced 50,000 pre-orders in November, it will take until 2022 at best to produce a target 31,000 trucks per year. And, pre-orders for a $52,500 truck don’t necessarily convert to sales as the Tesla Model 3 proved. In addition, the company has only recently begun construction of its battery plant. If it sells all of that 31,000 production run, that translates to $1.6 billion in annual sales, meaning the stock trades for 2.1x 2023 sales, compared to 0.2x ’23 sales for Ford and 0.4x for GM.

• Selling that many trucks and maintaining its list price will be tough. Announcements from truck companies already translate to projected production of 250,000 EV pickups per year within three years, but AutoForecast Solutions predicts demand of no more than 70,000 a year by then. Of course, that balance will fluctuate over the next few years, but a lot has to change to avoid a blood bath.

• Part of the problem is E-pickups are expensive and the consumer isn’t there yet. The cheapest EV truck is more expensive than the top of the line gas truck, and pickup drivers are brand-loyal, less wealthy and more concerned with performance than the environment compared to car buyers. And, E-pickups raise the same concerns with consumers as do EV cars – the trucks have a limited range, long charging times and few charging locations.

• Lordstown faces significant new competition from at least eight truck manufacturers that plan to introduce electronic trucks this year. This includes GM and Ford, with dominant positions in gas-powered trucks, as well as Tesla and a slew of startups, such as Bollinger Motors, Hercules Electric Vehicles, Neuron, Fisker and Atlis Motor Vehicles. Pickups account for more than 30% of sales at Ford, GM and Fiat Chrysler, so they’re unlikely to cede share without a fight.

 Page 9

EV Companies Apex Equity Research January 7, 2021

• Specifically, GM and Ford plan to produce 40,000 trucks each by 2024, and Ford just raised the initial production run of its electric F-150 by 50%.

• Ford will be tough to beat. Its F-series trucks have been the best-selling light truck for 43 years, so the company already has millions of potential buyers that currently drive these vehicles. The company says that the electric F-150 has enough power to tow a freight train weighing a million pounds. Pickup drivers are highly brand loyal, and EV truck sales will require a high degree of trust, which Ford has earned.

• Ford is also the leader in the transit van market and will launch an all-electric van within the next two years.

• GM will be less of an obstacle initially. While its Hummer EV truck will be the most powerful EV truck on the market, it will list for $80,000 to $112,600, twice as expensive as most trucks. The Hummer has planned 1,000 horsepower and 11,500 pound-feet of torque, and all its wheels can turn, which means the truck can drive diagonally. GM says the truck will have a range of 350 miles, which matches most EVs coming to market.

• Tesla plans several models of pickups and started construction of a truck factory in Texas. The company claims 500,000 pre-orders for its Cybertruck line and plans to begin production in late 2021. In the past, the company has been unable to convert this level of pre-orders to sales and has major problems meeting past production targets. However, the trucks are priced between $40,000 and $70,000 with a promised range of 250 miles to 500 miles, comparable to the Lordstown truck.

• Started in 2009, Rivian will begin production of its R1T truck in June 2021, which means it will sell the first EV trucks on the market. With $6 billion raised to- date and a $500 million investment from Ford, the company bought a Mitsubishi factory in Illinois for $200 million. Amazon also invested $7 million investment and plans to buy a significant number of these vehicles by 2022. The trucks will list for $70,000 to $75,000.

• Bollinger Motors will also introduce an SUV (the B1), a pickup (the B2) and a delivery van by the fourth quarter of this year. Boxy and military looking, the B2 has the largest bed and highest payload capacity, but compared to its rivals, a Copyright 2021 – Apex Equity Research, LLC, Post Office Box 159, Concord, MA 01742. All rights reserved. Federal copyright law makes it illegal to reproduce this report by any means for any purpose without our express written permission. Copyright infringement carries a statutory fine of up to $100,000 per violation. No responsibility assumed for the use of this material and no express or implied warranties or guarantees made. Facts, opinions and advice are subject to error and change without notice. Persons involved with the content of these reports may have positions in these securities.

 Page 10

EV Companies Apex Equity Research January 7, 2021

shorter range of only 200 miles and one of the highest sticker prices at $125,000.

• Nikola had planned to compete in the light truck segment but canceled hydrogen-powered Badger pickup on November 30th.

• Lordstown came public at the end of October and raised $675 million via a SPAC deal with DiamondPeak (DPHC). The company issued shares at $10 per share, or about half the current price. The lockup period for investors Workhorse, GM and BGL expires in April, with another expiration date set for insiders and DiamondPeak in October. Warrant holders, with a conversion price of $11.50, are just now eligible to sell shares.

• Since its primary product is the license for Lordstown’s Endurance truck, Workhouse (WKHS) trades largely in tandem with the former’s stock. The company also makes drones, but those are incidental to sales. It says it will compete in the transit van market against Ford, but it has spent only $15 million on R&D in the last two years and has little proprietary technology.

• Since its low in March, Workhouse stock has soared 1330% for a current market cap of $2.7 billion. Given that its 16.5 million share stake in Lordstown is currently worth about $350 million, Workhouse stock has a great deal of additional air for no apparent value.

Funny Cars: Arcimoto

Arcimoto sells fun utility vehicles (FUVs), which are souped-up three-wheel motorcycles, with extra room for a passenger or a small package. Touting low maintenance, overnight charging, a 102 mile range and a 75 miles-per-hour maximum speed, the FUV starts at $17,900. The company is targeting the first responder market and the delivery market.

 Page 11

EV Companies Apex Equity Research January 7, 2021

• As the above photos show, the FUV presents several operator challenges. First, the driver needs a motorcycle license to operate on the public roads. Second, three-wheel vehicles aren’t subject to the National Highway Traffic Safety Administration’s crash tests required for four-wheel cars. Although the company touts its safety, after a decade in development, the FUV still suffered through 9 recalls in 2018, 10 in 2019 and 3 in the first half of 2020.

• The stock has risen 1500% since its low in March, and it rallied recently on news that the City of Orlando Florida is testing the FUV for its police and fire departments. Unfortunately, even if Arcimoto wins the contract, the order is minimal. Orlando already owns 1,700 EVs, and this would add another 700 at most. At the FUV list price, that would amount to only $12.5 million in sales, which compares to its market cap of $460 million. And, these sales will take time because Arcimoto plans to ramp up production in March to only four vehicles per day.

• Current demand for FUVs is tepid – Arcimoto sold only 31 vehicles in 2Q20. Although the company’s valuation is based on future performance, in the last 12 months the company produced just $2.5 million in sales, a net loss of $16.3 million and a free cash flow bleed of $16.1 million. The company raised $25 million of stock in last summer and another $15.2 million – or 1 million shares – in a November direct placement.

• With more than $30 million in cash, Arcimoto can sustain its free cash flow bleed for about seven quarters, but this came at the cost of substantial dilution. Copyright 2021 – Apex Equity Research, LLC, Post Office Box 159, Concord, MA 01742. All rights reserved. Federal copyright law makes it illegal to reproduce this report by any means for any purpose without our express written permission. Copyright infringement carries a statutory fine of up to $100,000 per violation. No responsibility assumed for the use of this material and no express or implied warranties or guarantees made. Facts, opinions and advice are subject to error and change without notice. Persons involved with the content of these reports may have positions in these securities.

 Page 12

EV Companies Apex Equity Research January 7, 2021

The company’s 24 million shares outstanding at the end of 2019 rose to the current 34 million shares outstanding plus another 7.3 million stock units, options and warrants struck at much lower prices.

• Microcars have not caught on with the driving public. The market-leading three- wheeler – the CanAm Spyder – is much less expensive than the FUV yet sells only 12,500 units per year. The Fiat 500 microcar sold only 6,556 units in 2019 and the Mercedes Smart car, just 680 cars. Toyota discontinued its microcar.

• At its current price, the stock sells at 171x sales. The sales multiple for Harley Davidson – a company that knows how to produce motorcycles – is 1.2x and Polaris (PII) is 0.9x. If Arcimoto sold at the same multiple, it would need to sell about 20,000 vehicles per year, but after many years, it still has pre-orders of only 4,000 (requiring a refundable $100 deposit). BRP (DOOO) – the company that sells the competitive Can-Am Spyder – trades at 0.1 x sales.

• Electrameccanica (SOLO) – a Canadian company – has also produced an electronic three wheel car (see below), which sells for $18,500, comparable to the fun vehicle. Since it also targets the fun and delivery markets, it competes directly with the FUV. Hindenberg Research has issued a short report on the stock.

 Page 13

EV Companies Apex Equity Research January 7, 2021

Electronic Buses: GreenPower (GP)

Based in Vancouver, GreenPower (GP) manufactures electric mini, school and transportation buses and came public through a reverse merger with Oakmont Minerals. Like other EV stocks, Green Power rose 3850% since March to a market cap of $770 million and to trade at 72x sales.

• Like other electric vehicles, EV buses are 50% to 100% more expensive than their gas-powered counterparts. GreenPower is only registered as a motor vehicle dealer in California, and the vast majority of sales came from Los Angeles County.

• Since 2019, 74% of GreenPower sales came from California’s Hybrid and Zero- Emission Truck and Bus Voucher Incentive Program. These are substantial subsidies that cut the price of a transit or school bus to the same level as a diesel fuel vehicle.

• Unfortunately, this program allocated all of its credits by November 2019, and given the state of California’s huge budget deficit, anticipates declines in future funding. As a result, GreenPower revenues fell by 48% year-over-year in the September quarter.

 Page 14

EV Companies Apex Equity Research January 7, 2021

• In addition, GreenPower imports its buses from China, and therefore, some question the company’s ability to receive federal subsidies under Buy America Compliant program. The company claims otherwise. This program subsidizes the production of up to 30 buses per month. GreenPower could also face problems with an escalating China/US trade war.

• As for the future, GreenPower spent a tiny $2 million on product development in the last five years and owns no patents or licenses.

• White Diamond Research and Mariner Research have issued sell reports and point out that the CEO and a major stockholder of the company have history of regulatory problems. In addition, Canadian authorities had sanctioned the company’s auditor.

Charging Stations: Blink Charging Co. (BLNK)

Blink (BLNK) produces, sells and operates charging stations for electronic vehicles. To allay consumer fears of range-bound EVs, many believe the country needs to install a network of charging stations before substantial EV adoption. Investors see EV charger growth as an easy road to riches, but EV manufacturers recognize this as well and have begun installing large networks of super-chargers which reduce the need for independent stations. In addition, charging stations have very little proprietary technology, so the few independent companies that survive will do so on very thin margins. Finally, no one knows how many chargers the US needs as most EV charging is done at home overnight. Since the March low, Blink stock rose 2950% to trade at 293x sales for a market cap of $1.34 billion.

• To sell more EVs, manufacturers realize they need to build a network of charging stations to reduce consumer worries of being stranded. Tesla’s network, using the Tesla Supercharger, is perhaps best known, but others who are building networks include: Nissan, VW, Porche, Audi, BMW, Ford and GM.

 Page 15

EV Companies Apex Equity Research January 7, 2021

• Charging stations have very little proprietary technology, so Blink also competes with a raft of large and small independent operators, such as Chargepoint (SBE) with the largest independent US market share. Blink claims it has fast level 2 AC charging units, but they still take more than three hours for a full charge, and other public fast-charging stations are much quicker, such as the Tesla Supercharger, Ionity and Electrify America networks.

• Other major independent players in the market include: EVgo (building US networks for GM, BMW and Nissan), Volta (free ad-supported charging), FLO, Signet, Efacec, Eaton, Bosch, BTC, Engie Group, ABB, Schneider Electric, Siemens AG, Liikennevirta Oy (Ltd.), SemaConnect, ClipperCreek, Allego B.V., Leviton Manufacturing Co., Inc., Alfen N.V. and AeroVironment, Inc.

• In the last 12 months, Blink produced $4.5 million in sales but lost $12.8 million (and growing) in net income and $11.2 million in free cash flow. Analysts project a loss of $0.39 for next year on revenue of $10 million. While sales of charging stations have grown, the company’s charging service revenues have plummeted, implying lower usage of existing sites. The company has $15 million cash on hand, which would last about 5 quarters at the current rate.

• Culper Research alleges the company vastly exaggerates the size of its charging network. While Blink claims it has a network of more than 15,000 charging stations, the Culper report estimates a network closer to 2,200, and a class action lawsuit alleges most of the company’s stations are damaged or non- functioning. Blink denies the claims.

• Blink has been a penny stock for years. To even list on NASDAQ, Blink underwent two reverse 1-for-50 splits in 2011 and 2017.

Catalysts

• Many possible catalysts for the above companies are idiosyncratic to their specific situations. The USPS may again delay its contract for delivery vehicles, and even if it doesn’t, Lordstown and Workhorse may not win a portion of the

 Page 16

EV Companies Apex Equity Research January 7, 2021

deal. The same is true for Arcimoto and the City of Orlando. Anticipated success is already built into their stock prices. Before investors lose patience, GreenPower needs to find a lot of new customers as does Blink, who are both producing almost no sales. As Nikola and QuantumScape prove, disappointments tank these stocks.

• The electric vehicle companies (RIDE, WKHS, FUV and GP) have yet to produce any vehicles in volume, and all these startups are likely to run into production problems with such a challenging process.

• Once volume production begins, those with pre-orders will have to prove that they can convert initial commitments into substantial sales and produce vehicles at a profit. There are loads of trip wires that aren’t apparent to investors who view these stocks as glowing concepts.

For further information contact:

Nathaniel B. Guild, President Apex Equity Research (978) 254-5920 [email protected]

 Page 17