We are almost at the anniversary of the $2 billion dollar SPAC that made Xos famous and some are in fear of their jobs as an internal memo made public by Insider is making the rounds. So what is going on at the electric vehicle maker that is causing the culling?
Is it the case of just too much going on at once?
Special purpose acquisition companies, or SPACs, are not having a very good 2022. There have been quite a few in the headlines about SPACs having financial difficulties.
The “SPACsplosion,” as MarketWatch called it, is inverting. We are going from SPACs pouring money into businesses to SPACs hemorrhaging money and shrinking payrolls.
Being a laymen in terms of “big business,” I wanted to examine this quote from the Business Insider article, “The six-year-old Los Angeles-based startup is developing everything from electric last-mile step vans and 18-wheelers to medium- and heavy-duty trucks, along with its own fleet-management software, proprietary-battery tech, and charging infrastructure.”
That’s a lot of stuff to be juggling around at one time. The company is designing at least five classes of vehicles, back office software, batteries and chargers all at the same time. A common person, like myself, would see that there are too many eggs in Xos’ basket right now.
To quote Elon Musk, “It’s OK to have too many eggs in your basket as long as you have control over the basket.” But does Xos have control over its basket? A fourth culling, right before the first anniversary of the $2 billion nest egg SPAC, shows we might have a leaky basket.
Is it time to split Xos into different baskets?
In my opinion, Xos needs to split itself into separate specialties, or at least divide the nest egg and tell the divisions, “be successful or wither away.” It needs to focus on one thing at a time, be great at it, then add on another project.
The “everything-at-once” approach only works for big businesses or governments with near-unlimited budgets and resources. Xos does not have a population to tax into oblivion for their “bridge to nowhere.”
Xos boasted it would deliver 2000 vehicles to its contracts with UPS, FedEx, Loomis, Merchant Fleet and others. So far, only 10% of that goal is slated to be met in the second quarter of 2022.
Xos is running low on capital, with just over $85 million in the piggy bank as of the Q2 report. It has some options available, with $125 million more via an existing equity-purchase agreement with Yorkville Advisors. Xos has issued $55 million in convertible securities they can pull in as well.
Let’s see what happens with Xos going into the second half of the year. But I got a bad feeling that the company might be on the naughty list this holiday season. I hate layoffs right before Christmas.