Accelerating Demand For Step Vans Creating Big Opportunity For Xos Inc.

With the world going green, demand for electric vehicles is quickly accelerating. 

At the moment, global leaders want millions of electric vehicles on the road by 2030. President Biden, for example, wants 50% of all new autos sold in the U.S. to be electric vehicles by 2030. And so far, this year, global electric vehicle sales now make up about 18% of the auto market.

Even electric step vans are seeing big demand.

According to RMI, “electrifying vans and step vans would avoid about 43.5 million tons of CO2 emissions annually, equivalent to removing nearly 5 billion gallons of gasoline from our economy per year.” Better, according to Fortune Business Insights, the global electric van market could be worth $127.07 billion by 2030 from $16.7 billion today.

We also have to consider that electric vans will change the global mass transit market. All thanks to growing government initiatives for the promotion of e-mobility, reduction in cost of electric vehicle batteries, and increase in demand for emission-free & high-performance electric vans, as added by Allied Market Research.

Look at Xos, Inc. XOS, For Example.

Xos Inc. a leading technology company, fleet services provider, and original equipment manufacturer of Class 5 through Class 8 battery-electric vehicles, just announced it delivered 105 units to end customers in the third quarter of 2023. 

The period marks the highest quarterly delivery volumes to date for the company and the company’s first quarter delivering positive gross margin units to customers. Vehicles delivered in the third quarter include the first 2023 Xos SV Stepvans delivered to customers. 

The new Xos 2023 stepvan is designed to meet or exceed margin performance of legacy diesel trucks on a host of performance metrics. This makes Xos among the first gross margin positive commercial EV manufacturers in the entire commercial EV industry and propels Xos towards its stated objective of positive free cash flows.

We were able to deliver GAAP gross margins in the quarter ranging from 7% to 15% pending final closing. These margins were driven by unit gross margins of the new 2023 Xos SV Stepvan that range from approximately +10% to 20% per unit, depending on configuration.  

Proprietary technology enables Xos vehicles to deliver top performance to customers from a more cost-efficient battery system. Xos’ 140kWh Stepvan fulfills the needs of most last-mile delivery routes at a competitive purchase price. Xos’ long-range 280kWh stepvan option doubles the usable range for fleets with longer routes or heavier payloads.

Recent long-term agreements with battery suppliers and other vendors governing the cost and warranty of critical components enable Xos to achieve significant savings per truck compared to previous Xos stepvan models.

Lastly, Xos’ robust design engineering and testing processes contribute to lower manufacturing costs by reducing required labor input, and reduce service costs through improved vehicle quality.

The first profitable Xos vehicles compete directly with diesel last-mile delivery vehicles on total cost of ownership—a principal factor fleet customers incorporate in purchase decisions. When combined with available subsidies the cost advantages become even more significant. Compared to similarly equipped last-mile ICE delivery vehicles, the new 2023 Xos Stepvan offers an estimated 30-40% savings in those markets.

To learn more about Xos, Inc. XOS, click here.

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