U.S. commercial electric vehicle maker Electric Last Mile Solutions Inc. on Wednesday said a surge in shipping costs will hinder its output in the remainder of the year. It also reported a $17.8 million third-quarter net loss.

The Troy, Mich., company said it was now revenue-generating because it shipped the first units of its Class 1 Urban Delivery van, or UD-1, to customers. The company reported revenue of $136,000 in the quarter ending Sept. 30.

While ELMS ordered enough materials for its initial 2021 production target, a global shipping container shortage has bumped up the cost of transporting components to its manufacturing facility. That forced the company to revise its target from 1,000 to between 300 and 500 vehicles.

“Our spot-rate shipping costs are running as high as $25,000 per container, which is over five times higher than traditional pre-COVID rates,” ELMS CEO James Taylor said during a Wednesday earnings call. “These elevated shipping and logistics costs have cut our margins per vehicle from double digits to low single digits.”

Taylor said those shipping rates might decrease after the holiday season, an outlook the company is basing off historical trends. Remaining orders will be delivered in the first quarter of 2022, according to the company.

ELMS also confirmed production on its Class 3 truck is slated to start next year.

“In response to strong customer demand, our board has formally approved production of our next vehicle, the Urban Utility vehicle,” Taylor said.

The goal is to launch the vehicle in the second half of 2022, Taylor said. Like the UD-1 van, the new vehicle will be assembled at the company’s plant in Mishawaka, Ind.

Canada responded well to the UD-1 launch, ELMS noted. The company cited that as its reason for adding a regional headquarters in Montreal that “materially increases” how much of the market it can address. The Canadian government’s EV incentives also contribute to increased sales opportunities, Taylor said.

ELMS expects its Asia Pacific Operations Center in Shanghai, opened in mid-September, to exceed 100 employees by year’s end.

The company’s operating expenses were $22.3 million in the quarter, with $5.6 million of that going toward R&D expenses and $16.7 million going toward personnel, consulting services and marketing expenses.

The company expects its total operating expenses for the year to be $65 million to $70 million.

By Mistas

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