Vicinity Motor Corp., a rising star in the electric vehicle (EV) market, just released its Q1 2024 earnings transcript, and while the headline numbers were impressive - a 400% revenue surge and positive cash flow from operations - something deeper lurks within the text. A subtle shift in language hints at a potentially massive catalyst for Vicinity: a full-fledged U.S. sales launch of their acclaimed VMC 1200 electric truck.

The clues are subtle, whispers hidden amidst discussions of Canadian dealer expansion and production ramp-up. But they're there. In Q4 2023, Vicinity focused almost exclusively on establishing its Canadian dealer network, with the U.S. launch framed as a future ambition. The Q1 transcript, however, marks a change. President Brent Phillips, newly appointed to spearhead this growth phase, states the company is "aggressively pursuing dealer partners in the United States currently" and that progress is "quite well, frankly." This is a far cry from the tentative "looking at that now" of the previous quarter.

Coupled with this increased urgency is the acknowledgment that U.S. regulatory certifications are "timing out" as expected. While specifics are kept under wraps, the confident tone suggests Vicinity is on track to clear these hurdles and achieve a second-half launch, "but we may be able to catch it a little bit sooner." This is no mere possibility, it's a deliberate tease, a wink to those paying close attention.

Why the U.S. Launch Matters

Why is this significant? Consider the Canadian success story. Vicinity has already secured six dealerships in Canada, each aiming for 100 truck sales annually. If they replicate this model in the significantly larger U.S. market, even a conservative estimate of ten dealerships yields 1,000 truck sales per year, adding a potential $50 million to Vicinity's top line, assuming an average truck price of $50,000 (inclusive of incentives).

"Potential U.S. Sales Impact: * 10 U.S. dealerships * 100 truck sales per dealership per year * Total potential sales: 1,000 trucks * Average truck price: $50,000 * Potential revenue increase: $50,000,000"

But the potential impact extends beyond raw sales figures. Vicinity's U.S. manufacturing facility in Ferndale, Washington, boasts a capacity of 6,000 VMC 1200 trucks annually. A successful U.S. launch could propel the facility towards full utilization, significantly enhancing production efficiency and driving down unit costs, further boosting Vicinity's margin profile. The Q1 gross margin of 14%, while already respectable, pales in comparison to the "over 20%" potential cited by CFO Dan Buckle, a figure more easily attainable with higher production volume.

Profitability on the Horizon?

Now, a word of caution: a successful U.S. launch is not a foregone conclusion. Vicinity faces stiff competition from established EV truck players like Tesla and Rivian. However, the VMC 1200 offers a compelling value proposition: a competitive price point, especially after generous Canadian and potentially U.S. federal incentives, combined with a lower total cost of ownership than traditional diesel trucks.

Here's where the hypothesis gets interesting. If we assume Vicinity successfully replicates its Canadian dealer model in the U.S., achieving 1,000 truck sales in 2025, and if we further assume an average gross margin of 17.5% (halfway between the current 14% and the potential 20%+), this translates to an additional $8.75 million in gross profit. This alone could swing Vicinity into full-year profitability, a feat that would undoubtedly send shockwaves through the EV sector.

Projected Gross Profit Increase from U.S. Sales (Hypothetical)

The Q1 transcript reveals more than just impressive quarterly performance. It whispers of a company on the cusp of a U.S. sales explosion, a catalyst that could propel Vicinity Motor from a promising contender to a dominant force in the rapidly electrifying world of commercial vehicles. The question is, will the whispers turn into a roar? Only time will tell, but the potential is undeniably electrifying.

"Fun Fact: Vicinity Motor was initially named Grande West Transportation Group. The name change in March 2021 reflects the company's broader vision, encompassing not just "grand" buses but a wider "vicinity" of electric vehicles, a move that now appears prophetic given the VMC 1200's ascendance."