ElectraMeccanica Acquired by Xos for Strengthening Cash Reserves
In a significant move for the electric vehicle industry, Xos, Inc. (NASDAQ: XOS) and ElectraMeccanica (NASDAQ: SOLO) have entered into a definitive arrangement agreement for an all-stock transaction. The merger is expected to strengthen Xos' leadership position in the commercial truck market and accelerate the growth of both companies.
The CEO of Xos, Dakota Semler, stated that Xos has designed and manufactured commercial electric vehicles relied upon by several large, recognizable commercial fleets, including FedEx Ground, UPS, Penske, Cintas, and Loomis. This merger will allow Xos to meet the growing demand for zero-emission medium-duty electric trucks with ElectraMeccanica's cash balance of approximately $48.5 million.
Susan Docherty, CEO of ElectraMeccanica, expressed her enthusiasm for the proposed combination, stating that it would achieve the management team's objective to generate revenues, achieve credible long-term profitability, and improve shareholder value. The transaction represents Xos' opportunity to leverage ElectraMeccanica's resources and expertise to scale its operations.
Xos' Tennessee factory is capable of producing up to 5,000 vehicles per year at peak capacity. The company has delivered over 600 units to fleet customers since 2020 and has a GAAP gross margin of approximately 12% in the third quarter of 2023. Xos vehicles meet the duty cycles of traditional diesel vehicles while saving fleet operators money on their total cost of ownership. In fact, Xos vehicles can accelerate total cost of ownership (TCO) savings compared with diesel alternatives to within 12 months of purchase due to up to 80% reduction in energy costs and up to 40% reduction in scheduled maintenance costs.
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. This, coupled with the merger with ElectraMeccanica, is expected to drive sales and revenue growth for Xos.
Liana Pogosyan, CFO of Xos, believes the combination with ElectraMeccanica will significantly strengthen Xos' cash position and provide significant growth funding and runway to execute its business plan. The cash provided in the transaction, combined with the reduced cash burn achieved by Xos, will provide runway to achieve its goals.
The CEO of ElectraMeccanica, Jerry Kroll, stated that the merger with Xos would position the combined company to be a leading player in the growing electric vehicle market. Docherty encourages shareholders interested in learning more about Xos and the exciting opportunity ahead to visit the microsite at www.xosandemv.com.
Regulations requiring the adoption of zero-emission electric vehicles beginning in 2024 support Xos' growth. As a leader in producing robust electric commercial vehicles and delivering positive gross margins today, Xos is well-positioned to capitalize on this trend. The merger with ElectraMeccanica is expected to further solidify Xos' position in the market and drive long-term growth and profitability.
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