Xos bolsters coffers with Canadian EV maker acquisition
Buyer is excited about its acquisition's coffers, rather than its plans to develop a new product
US electric truck manufacturer Xos has acquired Canadian EV designer and manufacturer Electra Meccanica for an undisclosed amount. But the former seems more interested in the latter's cash reserves rather than any of its ambitions to develop vehicles
Xos says the new combined company is "expected to benefit from favourable regulatory tailwinds, including California’s mandate requiring Xos customers to buy thousands of new electric vehicles by 2025".
This is after Xos CEO Dakota Semler hailed available US subsidies for class four and above trucks as a material boost to the commercial EV industry, saying that "the stackable federal and state incentives bring the cost of an Xos step van meaningfully below the purchase price of a diesel alternative".
"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 Electra Meccanica’s cash balance which is expected to be approximately $48.5mn at the time of the closing of the transaction," the firm says.
Electra Meccanica has been seeking a partner for some months. A merger between the company and UK hydrogen truck manufacturer Tevva Motors broke down in late October.
The Canadian firm is known for manufacturing an electric three-wheeled car called the Solo. Amid a worsening liquidity situation, the Solo was discontinued last year after experiencing problems "ranging from its exclusion from government rebates; to the difficulty for consumers of insuring, financing and servicing a three-wheeled vehicle; to consistent customer requests for more functionality", according to the firm's CEO Susan Docherty.
It is not clear if the new Xos-controlled venture will salvage plans for a follow-up four-wheeled EV that was subsequently trailed by Electra Meccanica. A joint statement announcing the merger focuses rather on its cash furthering Xos' goals in the commercial EV market.
“We believe Xos’ combination with Electra Meccanica will significantly strengthen our cash position and provide significant growth funding and runway to execute our business plan. We believe that the cash provided in the transaction, combined with the reduced cash burn we have achieved as we have improved our margins, will provide runway to achieve our goals.”
Xos shares rose by 12pc on Nasdaq after the announcement of the deal on Friday.