Xos, Inc., an electric truck manufacturer and fleet electrification services provider, and ElectraMeccanica, a designer and assembler of electric vehicles, have entered into a definitive arrangement agreement, pursuant to which Xos will acquire all of the issued and outstanding common shares of ElectraMeccanica in an all-stock transaction.
The members of the boards of directors of both companies unanimously approved the proposed transaction.
The proposed transaction represents a unique opportunity for Xos to meet the growing demand for zero-emission medium-duty electric trucks by providing Xos with access to ElectraMeccanica’s cash balance which is expected to be approximately $48.5 million at the time of the closing of the transaction.
Dakota Semler, Chief Executive Officer and Chairman of Xos, said: “For seven years, Xos has designed and manufactured commercial electric vehicles that are relied upon by several of the world’s largest and most recognizable commercial fleets. We are a leader in producing robust electric commercial vehicles and are delivering positive gross margins today. We believe leveraging ElectraMeccanica’s assets will strengthen Xos’ leadership position in the robust commercial truck market and allow Xos to scale profitable vehicle sales.”
Xos is a manufacturer of medium-duty commercial electric vehicles for parcel delivery, uniform rental, food and beverage, and cash-in-transit fleets across the United States and Canada. Xos vehicles meet the duty cycles of traditional diesel vehicles while saving fleet operators money on their total cost of ownership, prompting many of the largest customers in the industry to adopt Xos vehicles, including:
With over 600 units delivered to fleet customers since 2020, and approximately 12% GAAP gross margin in the third quarter of 2023, Xos has demonstrated its ability to profitably scale manufacturing of commercial electric vehicles in its Tennessee factory, capable of producing up to 5,000 vehicles per year at peak capacity, according to a company release.
Xos’ noted that its growth has been supported by regulations requiring the adoption of zero-emission electric vehicles beginning in 2024. Stackable U.S. federal and state incentives can provide customers with incentives equal to over 75% of the purchase price of a new Xos vehicle. Such incentives, combined with up to 80% reduction in energy costs and up to 40% reduction in scheduled maintenance costs versus diesel, mean that Xos’ vehicles can accelerate total cost of ownership (TCO) savings compared with diesel alternatives to within 12 months of purchase.
Xos’ commitment to operational excellence, customer-focused vehicles, and efficient capital deployment is expected to be strengthened by ElectraMeccanica’s strong cash position.
Susan Docherty, Chief Executive Officer of ElectraMeccanica, added, “In my last shareholder update, I stated that nothing was a higher priority than finding the right partner for us to create and re-accelerate shareholder value. We believe the proposed combination with Xos would achieve our management team’s objective to generate revenues, achieve credible long-term profitability and improve shareholder value. Today, we couldn’t be more pleased with the proposed combination with Xos, given its clear track record as an EV OEM with industry-leading gross margins; its proven ability to service demanding, large-fleet customers like FedEx Ground, UPS, and Loomis; and its talented, disciplined management team.”