Saietta Group Plc (LON:SED), the multi-national business which designs, engineers and manufactures complete Light-duty and Heavy-duty eDrive systems for electric vehicles, has provided an operation and trading update across its core business units.
Axial Flux & Light Duty integrated eDrives
Further to the announcement of 6th December 2022, that the Company had entered into its first set of commercial agreements with one of the largest OEMs in the Indian light-duty mobility market, the Company is pleased to update that the supply chain for the Saietta complete eDrive system is now ready with technical collaboration agreements in place with major 1st tier companies in the region for the key components including the gear box and power electronics. Unit pricing and delivery timing is confirmed and therefore the Company is confident that the start of mass production in India will commence on plan later this year with volume targets of 80,000 eDrive systems in a five year period.
Engineering Design Services purchase orders of c£986,000 have been received from the OEM so far this financial year with the balance of the £3.2 million being receivable in FY 2023/24. Site selection and capital equipment ordering is underway for the Saietta VNA assembly facility in India, targeting completion in August 2023.
Saietta VNA therefore remains confident of receiving its first formal purchase orders later in H1 2023 which would formally contract the client to the commencement of commercial production targeted for September 2023.
Building off the work conducted for the first set of commercial contracts described above, Saietta now has a further 11 OEM live enquiries at various stages from RFQ (Request For Quotes) through to final selection stage for its primary Light-duty vehicle applications. The combined market the Company is now actively seeking to address is for circa 2 million vehicles over the next five years as the anticipated rapid increase in demand for eDrive solutions in this market gathers pace. Saietta products have the key benefit of being complete eDrive systems incorporating electric motor, integrated inverter, transmission and if required VCU (vehicle control unit). In addition, the patented AFT 140i motor is now proven to deliver class leading performance as evidenced by the commercial contracts with the Company’s initial OME partner.
The Saietta technical centre at Silverstone is completing its fit out and by the end of March 2023 almost all staff will be collocated, bringing design, procurement, sales, workshop and test facilities all together for the first time. The Company has retained some facilities at Upper Heyford so as to continue to use the test tracks to cater for engineering and customer vehicle testing.
Initial pilot production has now moved from Upper Heyford to Sunderland with early sample motors starting to head to Europe, the US, the Company’s India Joint Venture and to its Propel division in the Netherlands. Specialised machinery to manufacture the core motor components at volume are now on site in Sunderland with even more advanced equipment on track for delivery in late summer.
Throughout the winter the Propel team has been demonstrating both the inboard and outboard electric marine systems with clients and has now reached commercial agreements with distributors in the UK, Ireland and Finland. However, delays have occurred in the supply of key electronic components which has impacted sales performance in the immediate term. This delay has not affected the long-term potential but the Group does not expect material sales for the 2023 boating season and will seek to advance these downstream products in Q4 2023 once the mass production of AFT motors is fully underway.
The collaboration with Duracar in Europe, has resulted in them taking over the lease of Saietta’s “Retromotion” facility in Apeldoorn and seven staff have been permanently transferred to them to assist with the build of their vehicles which will include AFT eDrives.
Product design and sales commercialisation is progressing on the Joint Commercial Development programme with ConMet which continues to a revised plan with the expectation that prototype parts will be ordered during the next quarter. A restructure at the Saietta R&D Centre in Apeldoorn (a separate facility to the Retromotion facility) has seen a significant reduction of headcount to optimise the team size and structure to support the ConMet JCDA programme and remove unnecessary costs. Some aspects of the programme are being adapted as the technical specifications are optimised. While the overall outlook for the US e-truck market remains compelling we are adjusting our internal expectations as to the timing of material revenue contribution to the Group.
Guidance and Outlook
FY 2022/23 revenues are expected to now grow by 40% year on year vs FY 2021/2022 and the outlook for FY 2023/24 indicates further growth of at least 100% year on year. The revenues for the current financial year incorporate an important change in the joint financing of our Joint Venture in India. The Group has committed to completely fund some key components within the eDrive system, notably the stator industrialisation, the inverter and VCU hardware and software designs. These are key Intellectual Property components that now are ensured not to be exclusive to any end user so as not to limit future potential. It is likely that these components will be supplied to the Joint Venture directly from facilities in India, fully owned by Saietta Group.
Overall, the Board of Saietta is confident that the Company is now in position to fully finance the coming financial year (2023/24) without recourse for further external fundraising by removing excess costs, reviewing all key relationships and focussing on the delivery of major revenue streams flowing from late summer. The Company’s cash balance as at 28th February 2023 was circa £11 million.
These actions are expected to deliver a positive EBITDA from early calendar 2024, in line with the announced business strategy. As part of this assessment, the Board has factored in the adjustment to timelines on developing certain aspects of the marine and heavy-duty divisions described above. Consequently, Saietta is in detailed discussions with APC to ensure to maximise the potential for the grant that was awarded for industrialisation at Sunderland. There is a risk that the Company may have to reapply for some elements of the grant.
The vision of the Group at the time of its initial admission to AIM was to launch and develop the world’s leading automotive electric drivetrain business using a combination of IP, excellent UK engineering talent and key international relationships. This vision was aimed at initially serving the large-scale opportunity of the Asian market with ground-breaking lightweight and highly efficient eDrives. Although the journey has not been strictly linear it is evident that the plan, technology and market opportunity were correctly calibrated and next calendar year will see Saietta-powered vehicles in volume on the roads.
Proposed Management Changes
Wicher (Vic) Kist has proposed to focus primarily on strategic business development, particularly with the objective of accelerating the market development for our Propel marine division. Accordingly, as and when the details of Vic’s role with the Group are agreed the Board will communicate the associated management structure changes. Vic Kist has worked closely with Tony Gott, Executive Chairman, since before the 2021 IPO to deliver the progress to date and will continue to do so beyond the changes envisaged.
Tony Gott, Executive Chairman, commented:
“As previously communicated in October 2022, the core business of Saietta in light-duty integrated eDrives is developing at a greater scale and faster pace that the Company originally envisaged. Meeting current customer demands for volume mass production in Q3 2023 in order to allow the associated vehicle platforms to be launched in Q1 2024 has become an absolute priority for the Group. While the board is confident that it has the technical and financial resources to meet this goal it is also cognisant that it remains a challenging task and has resolved to make all necessary refinements to its strategy to ensure its achievement without recourse for further external fundraising.
“Over the coming months we will be regularly updating the market on further progress with our launch products and facilities in India where scheduled volume production orders to support the start of vehicle production are expected from May 2023.”