Xos, the manufacturer of battery-powered step vans, or what I call ice cream trucks, has instituted three rounds of layoffs. Over the past few weeks, the Los Angeles-based company has fired 8% of its workforce.
SPAC is a four-letter word
The recent EV stock price flop has hurt numerous companies in that arena. Xos, which trades under the same symbol as its name, has suffered a 77.98% drop in its share price. It fell from its high of $13.18 on February 19, 2021 to the record low of $1.70 on July 1. That was a week after the stock was added to the Russell 3000 Index, a market-capitalization-weighted equity index maintained by FTSE Russell that provides exposure to the entire U.S. stock market.
For the past few Fridays, pink slips have been found hanging throughout the Xos facility. Employees in all departments have been let go by the company – from upper management personnel, such as vice presidents, directors, and managers, down to the workers in engineering, sales, logistics, and supply chain. No one has been safe from the layoffs.
Is Xos a sinking ship?
It appears that Xos is bleeding cash as well. The company reported $7 million in revenue and 56 customer vehicle deliveries in the first quarter, with most headed to FedEx. The company also reported a net loss of $21.2 million and cash and equivalents of $129.7 million.
Xos entered into a $125 million standby equity purchase agreement in March with an affiliate of Yorkville Advisors Global, a firm that also has deals with Lordstown Motors and Canoo. Is someone gobbling up the SPAC guppies as they shrink? Yorkville got into some trouble back in 2012, when the SEC smacked the company with fraud charges about a PIPE hedge fund scam.
It looks to be making some progress to redeem itself to investors
However, it looks like a light is at the end of the tunnel for Xos. The company recently made headlines delivering 58 100% battery-powered step vans to Merchants Fleet, a high-growth fleet management company. Xos has also sent trucks to FedEx and Loomis, and entered into a R&D agreement with Allison Transmission to add its “E-Axles” to the Xos powertrain.
The agreement with Allison is most interesting to me, as it adds “street cred” to Xos in a similar way the Hyliion/Cummins deal works. Again, we have an EV maker getting a boost from a name brand components manufacturer that can ease worries that a product will not be flopping anytime soon. Could this be the way the SPAC EVs survive the culling that seems to be occurring?
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