Xos and ElectraMeccanica have announced a definitive arrangement agreement for Xos to acquire all issued and outstanding common shares of ElectraMeccanica in an all-stock transaction.
Following its failed marger with Tevva last year, ElectraMeccanica appears to have secured its future with an agreement to sell its share to fellow US commercial vehicle producer Xos. The combined company anticipates sustainable long-term value creation, backed by a robust financial profile, a substantial backlog, and strong growth potential. The prospective combined entity is poised to benefit from favorable regulatory trends, including California’s mandate requiring Xos customers to purchase thousands of new electric vehicles by 2025.
In the fourth quarter of 2023, Xos achieved a record delivery of 110 units to fleet customers, including notable names like FedEx Ground, UPS, and Loomis, marking a 90% year-over-year growth. The acquisition is viewed as an opportunity for Xos to address the growing demand for zero-emission medium-duty electric trucks. The deal will grant Xos access to ElectraMeccanica’s cash balance, expected to be around $48.5 million at the transaction’s closing.
Xos, a leading manufacturer of medium-duty commercial electric vehicles, has demonstrated profitability in scaling manufacturing, delivering over 600 units to fleet customers since 2020. The company’s growth has been supported by evolving regulations mandating the adoption of zero-emission electric vehicles from 2024 onwards. Combining federal and state incentives, Xos vehicles offer significant cost savings, with the potential to accelerate Total Cost of Ownership savings compared to diesel alternatives within 12 months of purchase.
Dakota Semler, CEO and Chairman of Xos, expressed confidence that leveraging ElectraMeccanica’s assets will strengthen Xos’ leadership position in the commercial truck market, facilitating scalable and profitable vehicle sales. The proposed transaction is expected to be completed through a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and is subject to various approvals, including those of Xos’ stockholders and ElectraMeccanica’s shareholders.
Upon completion of the transaction, ElectraMeccanica’s shareholders are expected to own approximately 21.0% of Xos. The board of directors of the combined company will comprise nine directors, with six designated by Xos and three by ElectraMeccanica. The transaction is slated to close in the first half of 2024, subject to meeting closing conditions and necessary approvals.