Gaussin is a family-owned company dating back more than a century. Founded in 1880 by Eugène Gaussin, it is currently headed by Christophe Gaussin. It is essentially an engineering company that designs, assembles, and sells innovative products and services in the transport and logistics sectors. The company’s know-how spans across off- and on-road vehicles, manned as well as autonomous, with valuable expertise in the integration of all types of batteries, particularly electric and hydrogen fuel cells. With more than 50,000 vehicles worldwide, Gaussin enjoys a strong reputation in four fast-expanding fields: Port terminals, Airports, Logistics and People Mobility. The company also owns an important subsidiary in Metalliance, which specialises in the design and construction of industrial and mobile equipment used in infrastructure in the transport sector (road, rail, underground rail) and the energy sector (oil and gas, gas and steam, etc.). Over the years, the company has positioned itself well to tackle the sustainable transport space and leads the way with its innovation, diverse customer base, and an established partner network.
Meeting an important need
Being in the industry for so long, the company’s CEO Mr Christophe Gaussin had the foresight to assess the demand for sustainable transport in off-road vehicles early on. Consequently, since 2018, the company has fully shifted its focus on the production and sale of electric vehicles. The company’s product offerings are based on various key differentiators such as:
- proprietary modular platform design with or without the cab; manned or autonomous
- energy-agnostic platform with the flexibility to be battery electric or hydrogen electric
- energy diversity with battery swap and/or fast charging
- end-to-end offering including turnkey solutions such as autonomous driving and robotics
With these advantages, the company proposes holistic offerings to its customers covering energy generation, storage, charging, refuelling, and autonomous driving/fleet management software. Additionally, Gaussin’s modular platform makes its vehicles suitable for a variety of applications in different end-markets such as Logistics (Industrial and Traditional), Seaports, Airports, Mobility, and Marine. From a near-term perspective, the company believes that the Logistics and Seaports markets are where the transition to emission-free vehicles (autonomous or manned) is the fastest growing. With the Transport and Logistics sectors accounting for about one-fifth of global carbon emissions, the players in these sectors are investing heavily to shift to zero-emission vehicles to fulfil their ESG targets and meet net-zero commitments on various levels. Furthermore, there is also a push from governments across the world to meet similar targets. Thus, Gaussin is ideally placed to capitalise on this crucial need across these sectors to decarbonise themselves fully at most by 2050.
With large addressable markets
According to various market reports, the global terminal tractor market stood at c. $700m in 2020 and is expected to grow to $1.05bn by 2027 at a CAGR of 6%. The company’s main markets are Logistics, Seaports, Airports, and Mobility, with the first two markets being the key addressable markets in the near term. Within Logistics, there are about 150,000 warehouses globally with a third located within EU and the US. An average warehouse uses 2-10 vehicles for movement within the premises and assuming a conversion rate of 10% from diesel to electric vehicles, the case for demand is solid. The second key market, Ports, is also a lucrative market as the number of containers is expected to grow. Additional capacity will also be added from various greenfield projects and, given that this particular market suffered from driver shortages, there is a conducive environment for autonomous sustainable transport. The remaining two markets offer similar opportunities but it may be some time before that demand comes through. Lastly, given the increased emphasis on sustainability by corporations and governments across the globe, we postulate that the conversion rate will be higher than anticipated. Assuming this is true, the electric vehicle sub-segment within this market will grow at a faster pace, whereas growth in diesel vehicles will moderate.
Innovation driven
Gaussin is one of those organisations where innovation sits at the heart of what it does. The company has been consistently investing in R&D for many years and has spent about €22m in this area between 2017 and 2022. It uses this R&D budget not only to innovate but to also show its customers its wide range of capabilities. Consequently, owing to this intent to innovate, Gaussin has c. 100 patents on key strategic technologies that are still valid (under patent protection). On average, the company files 10 patents per year. These patents focus on important areas such as robotics, modular design, and energy management software for electric & hydrogen-powered vehicles, etc. Lastly, given Gaussin’s steadfast commitment to innovation, we believe that the company will continue to invest in R&D, which in turn will give it more levers to grow.
Wide and burgeoning customer base
Following a sustained development in R&D and testing, Gaussin is now scaling up its operations. Even before entering into purchase contracts with Amazon and UPS, Gaussin’s customer base comprised of global, regional and national customers. To date, it has signed contracts with more than 60 customers across various sectors including Logistics, Seaports, and Airports. Such a diverse base with a stream of steady orders minimises customer concentration risk and ensures a stable revenue stream. Additionally, this diversified customer base offers resilience under volatile demand environments. Please see the image below highlighting some of Gaussin’s customers. (Please read Money Making for details about the Licensing business model.)
Entrenched yet diverse partner network
Over numerous years of operations, Gaussin has developed a number of collaborative partnerships including ecosystem partners, suppliers, and strategic stakeholders. With the help of its ecosystem partners, Gaussin can fulfil the majority of its customers’ requirements and facilitate the ease of transition as the latter increasingly opt for sustainable solutions. These partners include companies such as Plug Power, McPhy, Lhyfe, HRS, etc., to support the hydrogen-run products to names such as ABB, and EDN for charging solutions. In addition to its ecosystem partners, Gaussin also has several partners to ensure the supply of critical components and technologies. These include NVIDIA, Meritor, Plastic Omnium, Faurecia, Bosch, and more. In other words, Gaussin has a minimum of two or three suppliers for most of its inputs so that supply-chain risk is well diversified. This dual or triple sourcing strategy also helps purchasing power and delivery assurance. Overall, these partners not only provide Gaussin access to the latest technologies, resources and expertise to enhance its offerings and establish a strong platform for future growth across the global market, but they also help the company become a one-stop-shop for its customers.
A leg up on the competition
Thanks to its well-rounded portfolio, wide network of partners (suppliers as well as strategic partners), and investments in innovation, Gaussin has an edge over its peers. At a time when Gaussin is offering modular end-to-end solutions for sustainable transport systems, its peers are still mainly selling diesel-run systems and are only in the early stages of developing sustainable alternatives. Moreover, with more than 50,000 vehicles (mostly diesel) and equipment in operation already, its products have been validated by its customers and can operate even in challenging conditions. Some of Gaussin’s peers are Terberg, Kalmar, Sany, etc.
But execution risk remains
Gaussin plans to scale-up its deliveries immensely in 2023 and most of these deliveries are in the US for Amazon. The company has the manufacturing capacity to fulfil this order in France but doing so would require increased investments in working capital and manpower. While the company aims to expand Gaussin’s commercial and production footprint in North America, there have been no definitive indications yet of a potential licensee. Without such an arrangement, we see a potential execution risk, which could make things tricky for future large orders.
