Nuvve Corporation appears to be an intriguing company, so investors should keep their eyes on both Newborn Acquisition Corp.Â (NASDAQ:NBAC) stock and Nuvve.
California-based Nuvve provides technology that enables electric vehicles (EVs) to both be charged and to provide electricity that theyâ€™ve stored to businesses and the grid. Nuvveâ€™s system is known as vehicle-to-grid (V2G) technology.
And, as you may have guessed, Nuvve has decided to sell a portion of its shares to the public via a merger with Newborn Acquisition, which is a special purpose acquisition company, or SPAC.
Why Nuvve Is Intriguing
With EVs and renewable energy rapidly proliferating, electricity is likely to become much more expensive in coming years, while electricity shortages will probably become much more common. (The nationâ€™s leader in EVs and solar energy, California, suffered a wave of electricity shortages earlier this year, showing that the impact of conventional battery-storage technology remains limited.)
Those utilities that donâ€™t already charge different prices for electricity at different times of the day are likely to respond to these issues by implementing such tiered pricing systems. Moreover, utilities are likely to respond to this â€œnew normalâ€ by buying electricity wherever they can get it.
In light of these points, V2G technology is likely to be profitable for businesses, homes and utilities. Companies and consumers will be able to use V2G to charge their EVs during times when electricity prices are low and sell a portion of that electricity back to utilities when prices are high. For their part, utilities will be able to buy electricity from EVs at relatively low prices and sell it for relatively high prices.
Moreover, V2G technology also enables EVs to be used as a source of backup power. In other words, with V2G technology, EVs will be able to provide power to homes and businesses during blackouts. And finally, using V2G, consumers and businesses can buy electricity for relatively low prices and use it at times when itâ€™s more expensive.
Promising Signs for Nuvve
Encouragingly for Nuvve and for NBAC stock, Nuvve has already made a few significant deals, indicating that its technology works and that there is some demand for it.
For example, Con Edison (NYSE:ED), the huge New York utility, recently agreed to allow Nuvve to provide electricity to its grid, using five school buses. And Canadaâ€™s The Lion Electric, which develops electric trucks and school buses, is partnering with Nuvve to develop school buses with V2G capability. The fact that Lion in September won a deal to provideÂ Amazon (NASDAQ:AMZN) with 10 electric trucks indicates that the EV maker is a serious company.
Finally, since 2016, Nuvve has been providing Danish grid operator Energinet with V2G software that enables EVs to feed electricity to Energinetâ€™s grid.
Moreover, Nuvve has developed an â€œenergy regulator aggregatorâ€ that determines how much power EVs on the platform need before calculating how much capacity is available to sell. Finally, its Vehicle Smart Link software allows EVs to control and regulate their battery charging and discharging.
Nuvve Will Face Competitive Threats From Automakers
Unfortunately for Nuvve, there are indications that automakers with very deep pockets are looking to enter the V2G sector. Last March, Volkswagenâ€™s (OTC:VWAGY) chief strategist said that the company planned to utilize stored electricity from its EVs to create â€œa new area of business.â€ And the EV heavyweight, Tesla (NASDAQ:TSLA), has, in past years, indicated that it will look to enter the V2G sector.
While Nuvve has a first-mover advantage in the V2G space, that advantage appears to be limited because the firm does not appear to have yet obtained many customers or made large deals with any huge companies.
The Bottom Line on NBAC Stock
After Nuvveâ€™s merger with Newborn Acquisition is complete, the combined company is expected to have a pro forma enterprise value of $132 million. Thatâ€™s relatively low, compared with the huge opportunity in the V2G space.
Still, with Nuvve apparently still yet to land big deals with major customers and looking poised to face competition from huge automakers, the risk/return ratio of NBAC stock doesnâ€™t appear to be favorable yet.
As a result, I think risk-tolerant, longer-term investors should watch the company for now. If and when it starts making multiple, bigger deals, indicating that it has obtained a major foothold in the V2G sector, its shares could be worth buying for such investors.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.Â
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israelâ€™s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.