Xos, Inc. (NASDAQ:XOS) Q4 2022 Earnings Call Transcript

Michael Ward: Okay. So, some of that are the industry growing pains, because I assume that the charging of structures in place next year or the year after that that won’t be as big an issue?

Dakota Semler: Absolutely. One of the things we talk about is infrastructure is an issue that we’re readily solving today and introducing solutions like the hub. But we believe this problem will continue to expand into the next five and even 10 years. The reason being fleets never convert 100% of their fleet today and so they’re not going to build up 100% of that charging infrastructure today. They’re going to build it up incrementally year-over-year. We always expect there to be some delay, but the more flexible, adaptable mobile solutions like the hub we can offer, the more we’ll be able to smooth that gap and really get trucks delivered per their original plans.

Michael Ward: Thank you. And Kingsley, you mentioned in the release that you had a range of options for raising capital. Can you discuss any of those?

Kingsley Afemikhe: Sure, absolutely. If you look on our business as we’re scaling, we’re investing in operations and also in assets like our inventory and our receivables. We are in a range of discussions with debt providers underpinned by those assets. We want to make sure that we get the right partner for us as we grow and we scale. Over and above that, we still have our equity line of purchase agreements with Yorkville, which is largely untapped. It has an access to capital that we can access. So, the capital is there and operationally, we’re really, really focused on growing deliveries, getting positive gross margin, and also making sure we are stewards of the capital to grow.

Dakota Semler: Mike, the only thing I would add to that is that we have several customers who are large strategic customers. And in many cases, when we take on new product specifications or configurations that we might not already be building, we generally ask those customers to share in some of the expense and bringing those customers on board. And so that also helps. It’s not nearly the contribution that any kind of asset-backed financing or an equity line will enable us to tap into. But it certainly does help accelerate those commercial conversations and offset some of the initial engineering costs that goes into those new platforms.

Michael Ward: Thank you very much.

Operator: The next question comes from Donovan Schafer of Northland Capital Markets. Please go ahead.

Donovan Schafer: Hey guys, thanks for taking the questions and I apologize if there’s any background noise. We’ve got some renovations going on right now, either hammering or something else. But — okay, so for my first question, I want to ask with the new step van model, I saw the mentions of having the centralized liquid cooling system. And I’m just curious, is this a reversal of the kind of prior approach where it was like, — well, I’m kind of assuming the cooling you’re talking about here’s for the battery, but maybe I’m wrong on that. So, maybe, there was always liquid cooling for the engine or something like that. So, is it kind of a reversal from — on the battery side from air to liquid, I guess, just as a starting point there?

Scott Zion: Yes. Hi, this is Scott. We are transitioning to liquid cooled batteries. Historically, all of our step vans bands did have liquid cooling for the power electronics that are on the vehicle. So, we basically have three separate cooling loops. Now, we have — our electronic cooling loop, we also have the battery heating and cooling loop, and then the heating and cooling loop of the cabin. So, that is a big transition from our previous models.