Vmoto Ltd (ASX: VMT) shares are rocketing in early-afternoon trade following the company's announcement it has signed a strategic memorandum of understanding (MoU). At the time of writing, the Vmoto share price has risen to 47 cents, up an astonishing 14.63%.
Let's take a look at what's driving the electric-powered scooter manufacturer's shares higher.
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What did Vmoto announce?
The Vmoto share price is racing higher as investors weigh the potential market opportunity from the company's latest update.
According to its release, Vmoto has entered an MoU with one of India's largest travel technology companies, the Bird Group.
The MoU will see Vmoto work towards granting Bird Group an exclusive distribution agreement in India. This will involve the export of Vmoto's two-wheel electric vehicle products, the CUX, and its newest line-up, the CUmini model.
Bird Group will purchase 20 units of the CUmini model to take part in a trial. In further news boosting the Vmoto share price, this will see Bird Group set up in pole position to bid for a government-led ride-sharing project in New Delhi, India.
Should all go to plan, Bird Group will purchase a minimum amount of 10,000 units within the first year. This would generate revenue for Vmoto of around $13.8 million for the initial order alone.
The electric vehicle market for India is expected to significantly increase over the next several years, with consumers opting for clean and sustainable mobility. In a research piece from arizton.com, the Indian two-wheel vehicle market size is forecast to reach US$750 million by 2025. Over a 9-year period from 2011 to 2020, statistics showed that internal combustion engine (ICE) two-wheeler sales in India hit 162.2 million units.
The Indian Government is known to strongly support consumers adopting the use of electric vehicles as opposed to ICE two-wheelers. Considered a more environmentally friendly alternative, current policies enacted have aimed to accelerate the transition to their use. These include subsidies, stringent emission regulations and the proposed banning of ICE two-wheel vehicles.
What did the managing director say?
Vmoto's managing director Mr Charles Chen commented:
We identified Bird Group as an ideal partner for Vmoto within the Indian market, due to the size and scale of its reach and operations.
We have been in discussions with Bird Group for quite some time and are confident this MOU represents the first step in establishing a long-term successful business relationship. India is a market we have been researching heavily over the last 12 months and we believe our expansion into this market will be a tremendous success, with the potential to deliver exceptional growth over the coming years.
About the Vmoto share price
The Vmoto share price has gained more than 190% over the last 12-months. Year to date, the company's shares have lifted by around 9%.
Based on the current share price, Vmoto commands a market capitalisation of around $114 million.
