Xos electric truck startup edging toward low-volume production

Xos Trucks leaders

Despite help from a Google map on a sunny February afternoon, finding the headquarters of  Xos Trucks in North Hollywood, California, was not easy. Block letters on a window to the left of the building’s recessed entry was the only signage.

Most Xos employees work from home these days because of the coronavirus pandemic. A few workers test battery packs and perform other duties in the back of the building, whose neighbors include an auto repair garage and a thrift shop.  

Though unintentional, the low profile fits the company formerly known as Thor Trucks, a name gaining recognition among electric truck startups until being wiped out in a trademark dispute in April 2019, 

Yet, despite that setback and COVID-19, Xos is growing as many technology startups struggle.

“We’re actually hiring in the midst of all this,” CEO Dakota Semler told FreightWaves in a May interview. “Given the current circumstances, there are tons of different manufacturing firms [and] engineering firms that are letting go of people.”

A donor business isn’t necessarily gone. Sometimes a delayed project or a relocation because of COVID-19 leads employees to seek other opportunities.

“We’ve obviously taken advantage of that… hiring folks who are incredibly talented, incredibly capable people that may not have had the best circumstances,” Semler said.

Xos has about 50 employees and is building an order book for trucks consistent with the steady growth in medium-duty battery electric trucks for short haul and last-mile delivery.

Semler declines to discuss company finances other than saying “We have a very stable runway.” Xos closed an early stage venture capital funding round in late February with Proeza Ventures and BUILD Capital Partners taking minority stakes, according to Pitchbook. 

Name challenge

Xos, short for exosphere — the outermost layer of the planet’s atmosphere — became the company’s name 14 months ago after RV maker Thor Industries sued for trademark infringement. Xos retained its logo.

“Identity crisis is probably not the right term, but we definitely had to refocus,” said Xos senior vice president Alex Coates.

Xos better represents the company’s development of cutting-edge technologies, said chief operating officer Giordano Sordoni.

It was as Thor Trucks that the company launched its ET-One Class 8 daycab prototype in December 2017, two months after Tesla debuted its battery-electric Semi concept. Tesla has delayed the Semi three times while focusing on regular production of its electric cars.

Thor won accolades for the ET-One, capable of hauling 80,000 pounds of cargo and traveling 150 miles on a single charge. Fast Company magazine named it a winner of its 2018 World Changing Ideas Awards.

In November 2018, Thor Trucks, which designs electric-powered battery systems and modular chassis for commercial vehicles, won the Automobility LA Top 10 Startups competition, beating out a location software startup and an autonomous mapping company.

Applications galore

The forced name change coincided with a shift to focus on the competition-thick medium-duty market, where opportunity is greater than for Class 8 electric trucks like those being tested in drayage and on delivery routes by Freightliner and Volvo in Southern California.

The Xos ET-One prototype Class 8 electric truck remains in company production plans but is taking a backseat to heavier demand for medium-duty battery-powered trucks. (Photo: Xos)

“We’re still working on the Class 8 vehicle, but it has taken a back seat,” Semler said. “There’s still progress being made on it and we do intend to take it to production.”

Food and beverage companies are interested in the Class 8 daycab. Semler sees great potential in vocational trucks that upfitters would create.

“Dump trucks, refuse trucks, cement trucks are all inherently short range, and have some sort of power takeoff load or auxiliary electrical load that generally relies on the diesel engines for idling, and now rely on a battery system,” he said.

“A lot of times the customer has more preference for the upfitter than they do for the actual underlying chassis. You could be almost chassis agnostic. So, I think building a partnership with key uptfitters is a critical part of our growth in that segment.”

Moving to medium

The most recognizable Xos Class 6 truck customers are cash-hauling Loomis Armored trucks and United Parcel Service (NYSE: UPS).

Xos Trucks and United Parcel Service are discussing whether UPS will order more delivery trucks from the startup. Two trucks equipped with the Xos chassis and battery system are being tested in the Los Angeles area. (Photo: Xos Trucks)

Xos and UPS are discussing whether UPS will order more trucks. Loomis is slow-walking its order for 100 trucks, satisfied with a 90-day trial of two Xos units that began in the second quarter of 2019.

“A lot of these fleets will delay the delivery timeline because some of their operations might be running less trucks or running only a single shift versus a double shift,” Semler said. “But we are still moving ahead with their order. A lot of the other fleets we’re working with are much smaller … from 20 to 500 trucks.”

A food delivery service for schools is one of those. But with schools in California closed, they switched to home and community center deliveries to get meals to where they were needed.

“We’re seeing that happen a lot where the day-to-day business operations may not look the same, and they’re making modifications to make sure they can retain their staff and be stronger on the tail end of this,” Semler said.

Manufacturing irony

Xos is partnering with Fitzgerald Glider Kits, best known for mating new truck cabs and chassis with rear axles with older powertrains built before current emission standards. The U.S Environmental Protection Agency estimated that in 2014, glider trucks accounted for about 50% of the air pollution from all trucks despite making up just 2% of heavy-duty truck sales. Electric trucks have no tailpipe emissions — or tailpipes.

The irony is not lost on Semler.

“I think it’s a great success story out of the evolving regulation that’s impacting the commercial trucking industry,” he said. “We have a facility that we lease from them and do all our manufacturing in it.” 

Another zero-emissions startup, Nikola Corp. (NASDAQ: NKLA) contracted with Fitzgerald to build its first 5,000 zero emission hydrogen fuel cell trucks. Nikola later formed a manufacturing joint venture with European truck maker IVECO and pulled back from working with Fitzgerald.

Platform to profitability

XOS starts with a core architecture that includes most of the wiring system, the battery, an electronic axle and suspension-mounting systems. The wheelbase, chassis and body mounts can be adapted to create options for bodybuilders. 

“It’s very modular, and that’s how the market is,” Semler said. “If you look at commercial trucks today, diesel trucks, they’re very bespoke, a lot of different variations, a lot of customizations, and that’s what customers need.”

Xos needs to prove it can save fleets money over the lifecycle of the truck because the purchase price of an electric vehicle is higher than a diesel truck.

Besides California, the epicenter of commercial interest in electric trucks because of the state’s increasingly stringent air quality regulations, XOS is delivering trucks to Texas and Illinois, with future customers in Michigan and New Jersey. 

Today’s pre-production builds are advancing to low-volume production as quality and inventory control processes firm.

“The only way we see this industry growing is if the vehicle can create beneficial economics for the fleet operators.” Semler said. “The way to sustainably build the business and allow fleets to see the benefits of electric [power] is through the economics.”

Click for more FreightWaves articles by Alan Adler.