Sono Motors

Follow-on

Profile
Become a global mobility and energy service provider, to help improve the global CO2 footprint.

Location: Munich, Germany

Categories: Automotive & Transport Mixed Digital/Non-Digital Mixed B2B/B2C

Social Media

Website: sonomotors.com

Company number: HRB 224131

Incorporation date: 1 Mar 2016

Investment sought:: €5,503,099

Equity offered:: 4.76%

Funded 18 Oct 2018

Investment amount:: €5,771,903

Valuation (pre-money):: €110,164,970

Idea

Introduction

Business Highlights
- To date, 8,036 paid reservations for the Sion.
- Sion, as a technology platform, enabling car-as-a-service.
- Single product strategy, maximising carry-over-parts and -technologies.
- Engineering, design, development and commercialisation by Sono Motors.
- Production and assembly to be done by a contract-manufacturer in Europe.
- Anticipated market entry in 2019 with launch in 29 target countries.

USPs of the Sion
- Solar cells integrated into the entire outside skin of the car, allowing the vehicle to recharge itself.
- Innovative infotainment/telemetric, allowing for peer-2-peer mobility sharing.
- Bidirectional charging unit, allowing for peer-2-peer energy sharing.

Key Ops Facts
- No paint-shop required, due to PV integration.
- No press-tools needed, due to PV integration and alu-space-frame.
- Low complexity/low investment manufacturing, due to one-variant product strategy and system-based sourcing.
- Flexible, innovative distribution, due to one-variant product strategy and car-connectivity.

Intended impact

Sono Motors' ultimate goal is to protect the environment, as well as scarce, valuable natural resources. As Sono Motors' first project, the Sion plays an important role in reaching this objective, i.e. shifting the mobility and energy markets towards sustainable resource-utilisation.

Product Highlights.
- Solar integration to ensure that part of the energy required for operating the vehicle can come from a renewable source.
- Bidirectional charging to address the demand for power sources for applications that require conventional generators.
- Innovative infotainment-system to improve vehicle-utilisation.

Corporate Responsibility.
- Aim to offset all unavoidable CO2 emissions caused by manufacturing and execution of the business.
- Operation of a strong environmental/social protection policy, e.g. use of Fairphones, no-paper-policy, low-emission business traveling and sustainable banking.
- Employee stock option plan, to share the success of the business with employees.

Substantial accomplishments to date

So far, Sono Motors considers it has achieved all company milestones, in full and on time.

Major Accomplishments.
- Seed-funding campaign, closed in April 2017.
- Crowdfunding campaign worth €800k, closed in July 2017*.
- Development and construction of fully functional prototypes, by July 2017.
- Release of the Sion to the global press, supporters and community, in July 2017.
- Completion of a European test-drive tour, with more than 12,000 test-drives.
- Crowdinvesting campaign worth 1.8m€ closed in November 2017+ 1.6m€ debt based.
- Start of series-development, incl. design upgrade, first steps of industrialisation.
- Contractual arrangements are in place for major components and systems in the vehicle, including the battery.
- Media exposure in over 600 renowned newspapers, magazines, online media and television channels worldwide.
- Awarded the German Mobility Prize 2018 and Solar Impulse - efficient solution, by the Piccard Foundation
- Acquisition, to date, of 8,036 paid reservations, which would equate to revenues of more than 145m€.**
- Acquisition of a strong, high-impact leadership team.

Current Activities.
- In process of completing the final steps of series-development.
- Start of the industrialisation/validation of the vehicle/vehicle-parts and manufacturing.
- Start of the development and construction of series-prototypes for validation.
- Growth of a strong, international team of more than 70 individuals, specialised in technology, innovation and support.
- Execution of a funding strategy to keep completing further milestones.

* Source: Unaudited management accounts
** This based on all individuals paying the full price and purchasing the battery.

Monetisation strategy

Sono Motors’ monetisation strategy is based on two pillars: The first pillar, partially scalable, is the sale of electric vehicles, and the second, highly scalable, comprises a transaction-based revenue model, from the sharing services.

The sharing services, namely power-, ride- and car-sharing, integrated into all Sion by default, allow for a higher capacity-utilisation of the car and, hence, income generation for the vehicle-owner. This concept creates an incentive for the vehicle-owner to share their car, and allows Sono Motors to generate revenue by providing peer-2-peer serivce to all users.

Use of proceeds

The proceeds acquired during the current crowd-investing campaign will be employed to finance the next investment activities, associated with the series-development of the vehicle. These comprise the construction of several next-generation prototypes, validation and industrialisation of the vehicle and vehicle-parts, as well as manufacturing processes. Additionally, funds will be used to strengthen research and development efforts for major USPs. Finally, funds will be employed to procure some of the required manufacturing equipment, i. e. long lead time production tooling.

A comparatively small portion of the funds will be employed to fund investments in business operations, e. g. growth/expansion of human resources capacities, required to uphold design and development efforts, as well as marketing activities, needed to support the ongoing pre-sale of the Sion. Expenditures on marketing activities represent only a minor portion of business-related investments.

Important information

Sono Motors currently has €1.6m in subordinated loans from a German debt based investment platform. The duration of the loan is 3 years and will be repaid at maturity (31.08.2020). The interest is paid annually and amounts to 5%, 6%, and 7% p.a.

In parallel to this fundraise, Sono Motors is raising additional funds using a profit participation loan through a German debt based investment platform. This loan has a fixed duration of 3 years and a fixed interest rate of 3.5% p.a. In addition, the investor receives a variable interest, which is based on the new reservations that the company receives from the start of the campaign until 31.12.2019.. For every 1,000 reservations during this period, an additional 0.52% interest will be paid on the capital invested. This variable interest is paid out at the end of the 3 years. The fixed interest is paid out annually and the capital is repaid to the investor at the end of the term. Only investors resident in Germany can participate in this campaign.

Sono Motors has a virtual stock option plan for its employees whereby they are entitled to receive 10% of company earnings as dividends or in the case of a sale (e.g. an IPO), as long as it is agreed on in the annual shareholders meeting.

Share price

Please note that the share price for this round is €3,433. Due to this high share price, we have decided to allow investors to hold fractional shares. This means that we have reduced the investment multiple to €34.33 (representing 0.01 of a share). As these shares will be held via the Seedrs Nominee, fractional entitlements are possible. In the event that shares were to be transferred out of the nominee structure, Sono would take the steps required to subdivide its shares so that fractional entitlements result in whole shares.

Market

Target market

Sono Motors’ current target group are private individual customers, most of which are male adults, aged around 50 years that have completed higher education and achieve middle to upper-middle-class incomes.

A second very strong customer group for which relative reservation-numbers continue to grow vis-a-vis the former group are males and females, aged 35 to 45 years that have completed higher education and achieve middle to upper-middle-class incomes.

Both current customer groups are of particular interest, as it is the largest demographic segment in Europe and resemble a substantial economic power.

As production of the vehicle starts and backlogs in deliveries are eliminated, Sono Motors expects a surge in demand from business clients, such as fleet-operators, or car- and/or ride-sharing service providers, foremost from low- to mid- income countries.

As relative product maturity is reached, the expectation is that younger customers aged 25 to 35 will enter the customer base.

Characteristics of target market

In 2017, the international automotive industry produced 73.5 million cars (Statista, 2018). According to the British market research firm IDTechEx, the market volume for electric vehicles alone will be US$ 1.1tn in 2028, which represents a tremendous increase in demand for BEVs in the next ten years.

In the first 6 months of 2018, Sono Motors collected 2,586 reservations from Germany alone, whereas in the same period and region 17,234 BEVs were registered. According to those metrics, the Sono Motors Sion would have been the second best selling BEV in Germany.

At the beginning of 2018, it was reported that more than 2 million people in Germany used carSharing. About 10% of the carSharing fleets operate electric vehicles. As a result, we believe that the Sion would have a massive impact on carSharing: 78 percent of customers in inner-city residential areas say they no longer have their own car. It is estimated that a station-based carSharing vehicle can replace up to 20 private cars.

Marketing strategy

Sono Motors successfully pursues a strategy of organic marketing, focusing on a strong presence in social and new media, but also exposure in standard media. This strategy entails the following aspects:

Public Relations.
- Ongoing reporting by renowned TV stations such as Pro7, ZDF, ARD, DW, TV5, as well as well-known newspapers such as the Daily Mail, New York Post, New York Times, Autobild, Handelsblatt.
- Press-coverage has been registered for over 600 media channels worldwide.

Online Marketing.
- Increased reach through strong online presence with focused targeting.
- Corresponding presence on social-media platforms such as Facebook, Twitter, Instagram and LinkedIn.

Website.
- Importance of high-quality content, videos and pictures on the website, as well as on different platforms.

Test-drive Tours and Events.
- Completed three test-drive tours in 7 countries.
- Fourth tour ongoing in Germany and the Netherlands.
- Execution of several events throughout Europe.

Competition strategy

Given the technical characteristics and USPs of the Sion, we consider Sono Motors to currently be operating in a market, that displays only limited competition, in terms of aggregated competition with other players.

Electric Vehicles Market.
- High competition in the premium-class segment, with focus on C-/D-size cars.
- Moderate competition in the entry-class segment, with focus on A-size cars.
- Sion, as an entry-class, B+ size vehicle, competes only with a few alternatives, e.g. the Nissan Leaf, for which we believe that the Sion has advantages in terms of size, mileage and technology

Mobility Service Provider.
- Car- and ride-sharing only offered by few incumbent, dedicated market players.
- Equipped with the required onboard technology, for peer-2-peer mobility-services, we understand that the Sion currently only competes with the new e-Smart forTwo.

Energy Service Provider.
- Equipped with a large onboard energy storage management system, as well as discharging technology, on a smart-grid level, the Sion currently sees no competition.