Plucky LA Startup Xos Charts Multi-Billion Dollar Future in Sexy Unsexy Electric Work Trucks

Xos Trucks, a Los Angeles-based electric truck start-up that will go public in a few weeks, believes the shift from delivery trucks, armored cars, forklifts and other heavy work vehicles to food By battery isn’t a glamorous business, but it is one that will generate billions of dollars in future revenue and get some of the dirtiest exhaust fumes and carbon emitters off the road.

“If we all wake up tomorrow and buy an electric passenger car for ourselves, we will only dramatically reduce greenhouse gas emissions,” said co-founder and COO Gio Sordoni. Forbes. “It’s the last mile delivery vehicles that go through our cities and past our schools and workplaces and come to our house 12 times a day, which tend to be bigger, dirtier diesel vehicles. This is really the area we want to focus on.

The five-year-old company looked like a long shot when it started showing off a large electric platform with a distinctive sculpted exterior around the same time Elon Musk unveiled his futuristic Tesla Semi in late 2017. Sordoni and his co-founder and CEO Dakota Semler were avid 20s (and Forbes 30 Under 30 alums) but lacked the billions of dollars to invest in a new utility vehicle company Musk commanded. But they won a UPS contract to manufacture custom mid-weight delivery trucks, followed by a surprising deal to electrify armored cars for Loomis, eliminating large amounts of diesel exhaust produced by constantly running vehicles. idle and are never turned off when they are touring. . This month, the company launched a new powertrain unit to help companies like Wiggins Lift manufacture heavy-duty electric forklifts and other specialty vehicles.

A $ 20 million funding round last year helped it start to grow, but Xos recently announced plans to merge with blank check firm NextGen Acquisition Corp. set up flexible production lines in factory premises leased to contract truck manufacturers Fitzgerald in Tennessee and its partner Metalsa in Mexico. It plans to build around 2,000 heavy-duty electric trucks at the two factories next year, up from 116 in 2021. By 2025, it plans to ship more than 30,000 trucks and generate more annual revenue. of $ 5 billion.

The push to electrify cars and trucks is gathering pace as the Biden administration puts in place policies that would create federal incentives for domestic production of advanced batteries and key electronic components, as well as the vehicles themselves. All major automakers are announcing plans for new battery-powered models, and companies such as Daimler’s Ford, General Motors and Mercedes-Benz are stepping up their electric offering in the light commercial space, with particular emphasis on pickup trucks Delivery.

To avoid facing stronger competitors, Xos is targeting the somewhat neglected medium-duty market, which includes larger and heavier delivery trucks as well as a range of service vehicles used by utilities, in ports and shipments moving between warehouses. and distribution centers.

“With the explosive growth of e-commerce, if you’re a last mile delivery business, you see denser routes and higher parcel volumes,” says Sordoni. “You have this bigger, bulkier cargo in the back of these vans. So you will tend to need a larger vehicle, and that is why we are focusing on that larger van space.

Unlike competing EV start-up Arrival, for example, which is also gearing up to make electric delivery vehicles for UPS as well as transit buses, Xos is staying away from small utility vehicles. “It’s a more competitive space. A lot of people go after this category of vans. This is where the big guys go first. Ford and Mercedes will have electric versions of these products before they turn to larger volumes of any other commercial vehicle. “

Xos recently moved its North Hollywood headquarters to a new location on the Los Angeles and Glendale border, rehabilitating a former movie poster factory. In addition to the offices, the 80,000 square foot space also houses the R&D team, prototype and pilot production facilities and, for now, its battery pack production line. Over time, higher volume production of its proprietary battery modules, made with LG Chem cells, will shift to locations closer to where its trucks are built, said Dag Reckhorn, vice president of the manufacturing.

In addition to the improved facilities, Xos is now adding experienced automotive and engineering talent, such as Reckhorn, a German-born Tesla and Volkswagen veteran, and technical director Ron Ferber, who has also worked at Tesla during its founding period, as well as at electric vehicle pioneer AC Propulsion. and Virgin Hyperloop. Kingsley Afemikhe, its Stanford-educated CFO, joined last year after stints at UBS, Deutsche Bank and Swiss oil and energy company MET Group.

Because Xos already has potential orders for around 6,000 vehicles and has made arrangements to increase production to around 10,000 trucks through 2023 with Fitzgerald and Metalsa, it shouldn’t need to raise more funds beyond that. of the PSPC merger for the foreseeable future, says Afemikhe.

“We wanted to make sure we could raise enough money to get a positive cash flow and really execute our plan and not have to go back to the market in a year, two years, or three years and say, ‘Hey, we ran out of money, we need more money, ”he said. “We are extremely confident in our planning to be able to get there. “