Romeo Power Inc (NYSE: RMO), the electric vehicle battery maker which went public recently via a special purpose acquisition company, saw its shares close 59.60% higher on Tuesday.
What Happened: The California-based company has signed a long-term contract with medium- and heavy-duty truck maker Paccar Inc (NASDAQ: PCAR) to supply battery packs, modules, and battery management systems for its upcoming electric vehicles.
According to the deal, Romeo Power will supply batteries for Paccar-owned Peterbilt 579 and 520 battery electric vehicles in the United States and Canada through 2025. The production is expected to begin after 2021.
Romeo makes the lithium-ion battery modules and packs them at its California facility. It claims its battery packs deliver an average of 30% greater power density than competitors which in turn ensures more capacity on wheels, longer range as well as warranty.
Why It Matters: Competition among electric commercial vehicle battery makers is rising as more and more blank check-backed startups hop on to the ongoing electrification drive. Romeo, which counts Nikola Corp (NASDAQ: NKLA) among customers, had said in its October-listing event that it has secured $300 million worth of revenue and is in advanced talks to grab contracts worth $2.4 billion.
Romeo claims it has capabilities to address the commercial electric vehicle market from Class 3 to Class 8 trucks and it already has an order book with customers that make up 70% of the North American Class 8 commercial vehicle market.
Price Action: Romeo Power shares were down 4.30% in extended hours. Shares of Paccar closed 1.18% lower at $92.85 on Tuesday and were up 0.28% in extended hours.
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