Xos to merge with NextGen

Xos Inc., a manufacturer of fully electric Class 5 to 8 commercial vehicles, and NextGen Acquisition Corp. have entered into a definitive business combination agreement that will result in Xos becoming a publicly listed company. The combined company, now valued at $2 billion, is expected to be traded on Nasdaq under the ticker XOS.

Xos developed its vehicles to meet the demands and extended life cycles of last-mile, on-highway, and vocational vehicles. Xos believes it is well positioned to capitalize on the electrification of the $100 billion total addressable market for medium- and heavy-duty last-mile commercial electric vehicles.

“In 2016, my co-founder and I set out to build a company whose mission was to decarbonize transportation through the design, engineering and development of purpose-built commercial vehicles,” explained Dakota Semler, co-founder and CEO of Xos. “Our aim was to provide customers a superior alternative to traditional fossil fuel vehicles. As former fleet operators, we gained a deep appreciation for the challenges of operating and maintaining commercial fleets, particularly in light of accelerating emissions requirements. Xos developed its technology and product portfolio in close collaboration with established fleet operators who have provided invaluable ongoing feedback that has informed every aspect of our vehicle design, product engineering, commercial manufacturing and service strategy. As a result, we have developed commercial EV solutions that uniquely incorporate customer requirements.”

According to Xos, demand in the last-mile commercial EV market is expected to grow at a 35% CAGR through 2040 as electric vehicles replace traditional fossil fuel vehicles, driven by new emissions standards, continued growth of e-commerce, and the relocation of fulfillment centers to areas closer to consumers.

“NextGen reviewed over a hundred potential merger opportunities and conducted in-depth evaluations of several companies in the EV and automotive technology sectors,” added Gregory Summe, co-founder and co-chairman of NextGen. “Based on our work, we believe that Xos is best-positioned to capture the rapidly growing demand for commercial electrical vehicles with a compelling customer offering. We look forward to working with Xos' leadership team by providing strategic, operating and governance experience to help Xos realize its vision of decarbonizing commercial transportation."

Xos offers Fleet-as-a-Service–a bundled package that provides vehicle ownership services to fleet operators for a fixed monthly fee—in coordination with partners such as DLL Group (financing services) and Dickinson Fleet Services (vehicle maintenance). The Fleet-as-a-Service package aggregates otherwise fragmented fleet service offerings and is projected to increase Xos’ lifetime revenue per vehicle.

"The strong secular tailwinds of climate change and e-commerce anchor our investment conviction in Xos," said George Mattson, co-founder and co-chairman of NextGen. "Climate change is one of the world’s greatest challenges, and commercial trucks are the largest emitters per capita of greenhouse gases in the transportation industry. Simultaneously, last-mile e-commerce delivery is growing, accelerated by changes in consumer purchasing behaviors post- COVID. The dual drivers of strong underlying industry growth and the imperative to transition traditional fossil fuel vehicles to zero emission vehicles, set the backdrop for strong underlying growth for years to come. Xos has successfully commercialized its cost competitive proprietary product offering and is now poised to scale delivery of its customer-validated vehicles with the growth capital that NextGen will provide."

The transaction will provide $575 million of gross proceeds to the company, including a $220 million investment led by Janus Henderson Investors and a consortium of truck dealers led by Thompson Truck Centers. The deal is expected to close during Q2 2021.