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INTERVIEW: XL Fleet’s SPAC Shows that Sales Matter in the $1 Trillion EV Market

John Jannarone
·5 mins read

XL Fleet Founder and Chief Strategy Officer Tod Hynes and Jon Ledecky, Chairman & CEO of Pivotal Investment Corp. II

By Jarrett Banks

XL Fleet Founder and Chief Strategy Officer Tod Hynes wants you to know one thing above all in the white-hot Electric Vehicle market: Sales matter. And with $220 million in the pipeline from electrifying commercial trucks, the company is well positioned to grow.

XL Fleet plans to merge with a SPAC called Pivotal Investment Corp. II (ticker: PIC), with Pivotal shares converting to shares in XL Fleet by the end of the year, under the ticker XL. The deal values XL Fleet at just under $1.1 billion — or 3.5 times its forecast 2024 Ebitda.

In an interview with IPO Edge, Hynes said although his focus is currently on North America, he does have plans to expand globally. The full interview is below:

IPO Edge: Why did you choose a SPAC over an IPO?

With over three thousand vehicles deployed thus far and over $220 million in our current sales pipeline, XL Fleet had several options for funding our rapid growth plans. Moving forward with a SPAC made the most sense for our business, as we expect that it should provide us with access to over $350 million in capital that can be used to quickly execute on our strategy and further position XL as a leader in the expanding fleet electrification market. With this funding, XL Fleet intends to scale our current customer and supplier relationships, expand our technology and service offerings and grow our business outside of North America.

IPO Edge: Can you talk about your platform to change fossil-fuel-powered vehicles into hybrid and plug-in hybrid vehicles?

XL has developed a flexible proprietary electrification powertrain platform that transforms traditional gas- and diesel-powered vehicles into hybrid and plug-in hybrids as they are being manufactured and upfitted for commercial use. Our system can be installed onto some of the most popular light- and medium-duty commercial vehicles from Ford, Chevrolet, GMC and Isuzu, including the popular Ford F-series and Chevrolet Silverado pickup trucks, as well as vans and larger vehicles used for delivery, emergency response, transportation and more. Additionally, XL is developing a range of heavy-duty vehicle applications for commercial uses such as refuse collection and long-haul freight transportation.

IPO Edge: Your systems are compatible with Ford and General Motors. Can you talk about how these partnerships came about?

XL was the first member of Ford’s e-QVM (Electrified Qualified Vehicle Modifier) program in 2017, which ensures that XL’s technologies do not void the manufacturer’s warranty when installed onto a Ford vehicle. In addition, XL has worked closely with General Motors to electrify many popular Chevrolet and GMC vans, cutaways and pickup trucks, including the popular Chevy Silverado HD / GMC Sierra platform. As a result, XL has maintained a complementary relationship with major manufacturers because XL’s hybrid and plug-in hybrid powertrain technologies enable a rapid path to electrification for many of the OEM’s most popular commercial vehicle models, thereby adding value to the companies’ mutual customers.

IPO Edge: You also have partnerships to provide parts for Coca Cola and Verizon’s fleets of vehicles. Are any more of these in the pipeline?

We are proud of the strong relationships we have developed with our customers, many of whom are Fortune 500 companies, local governments, and leading institutions. (A more complete list is available on slide 12 of our investor presentation, here.) Combined, they operate more than 1 million fleet vehicles globally, and these customers are continuing to place additional orders with us that are increasing in size. We also have many new, major customers in our pipeline.

We are also well positioned to bundle electrified vehicles, charging infrastructure and energy supply to provide “Electrification as-a-Service” and leverage the significant amounts of clean infrastructure capital looking for attractive returns. This is one of the largest opportunities we see in fleet electrification.

We are excited to continue to innovate and serve as the partner of choice to help our customers achieve their sustainability goals while driving decarbonization.

IPO Edge: What are you doing to boost your data-monitoring and analytics?

In addition to its electric powertrain platform, XL provides real-time monitoring and analytics via a cloud-based telematics system that is included in the installation process. As a result, the company is able leverage the value of over eight years of real-world operational data to help fleet customers maximize the sustainability value of their vehicles. In the future, this powerful platform will help pave the way for an expanded “Electrification as a Service” model which leverages power management, charging infrastructure, and onsite power and storage offerings.

IPO Edge: What are your international expansion plans?

The global vehicle electrification market is over $1 trillion when incorporating the money spent on energy consumption and vehicle costs for commercial fleets around the world. While XL sells exclusively into North America currently, we have plans to expand into other major markets around the world where electric vehicle demand is accelerating, most notably APAC and EMEA. We have customers and investors with global reach and we will leverage those relationships as we expand internationally.

IPO Edge: Finally, does Pivotal CEO Jonathan Ledecky have any lessons from his NHL days that he applies to the business?

Jon Ledecky, Chairman & CEO of Pivotal Investment Corp.: I have seen that success at any level — in sports or in business — is about rallying a talented team to support a shared vision of excellence. I am confident XL Fleet will be successful because Tod is a star player in alternative energy and Dimitri is an experienced coach managing a group of extraordinary colleagues. They have positioned XL as a first mover in fleet electrification where their fans—the XL shareholders—should have a winning investment.

Jarrett Banks

Editor-at-Large

IPO Edge

www.IPO-Edge.com

Editor@IPO-Edge.com

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