Exro Provides Corporate Update with Letter to Shareholders
CALGARY, AB, March 6, 2024 /PRNewswire/ - Exro Technologies Inc. (TSX: EXRO) (OTCQB: EXROF) (the "Company" or "Exro"), a leading clean-technology company focused on developing new generation power-control electronics that expand the capabilities of electric motors and batteries, is pleased to announce the release of a CEO letter to shareholders. The letter provides additional rationale behind Exro's transformational merger with EV technology company SEA Electric Inc. ("SEA Electric"), discusses important factors in electric vehicle ("EV") adoption across vehicle segments, and outlines Exro's market positioning. The letter also discusses recent events including filing of a supplement to Exro's base shelf prospectus, completion of UL testing for Exro's Cell Driver™ energy storage technology, and details of a technical presentation by Exro's Chief Technology Officer (CTO) Eric Hustedt this week at the International Conference of Advanced e-Motor Technologies, including data demonstrating the Coil Driver's ability to overcome traditional 3 phase drive limitations.
Dear Shareholders:
Thank you for your interest in learning more about Exro and our proposed merger with SEA Electric. As I write this letter, I find myself energized and more optimistic about our future than ever before. I strongly believe that our best days are ahead of us. With the merger of Exro and SEA Electric, we will be uniquely and ideally positioned to not only navigate the current market dynamics, but to also emerge stronger to take full advantage of the transition to electric commercial vehicles. I want to share Exro's perspective on the current landscape, how we are evolving our strategy in response, and the exciting opportunities that lie ahead for Exro and our shareholders.
Merger with SEA Electric: A Strategic Power Move in the Commercial EV Space
The commercial vehicle sector is indicating high market-readiness for electrification when compared to the current sentiment towards passenger vehicles. Unlike the passenger vehicle space, where purchasing an EV remains predominantly a lifestyle choice, in the commercial vehicle sector, state-level regulatory and environmental mandates are set to accelerate fleet electrification starting this year. This transition represents an opportunity for Exro as our technology is well-positioned to meet the emerging needs of this market segment.
Our decision to merge with SEA Electric reflects a strategic choice that capitalizes on the market transitions around us. To be clear, we are not acquiring a truck company; we are acquiring an EV technology company that has blue-chip OEM validated technology. While targeting over C$200 million in revenue in 2024, backstopped by these blue-chip OEMs and a strong order book, we will lead with a new business model to electrification in the commercial EV space – leveraging the OEMs (which build the vehicle), while Exro provides the electric propulsion system. This enables a low capital expenditures model, mainly stepping inside the OEM approved assembly facilities while the vehicle is being built to install our patented technology (i.e. no requirement for heavy overhead or large capex to build out manufacturing infrastructure). Our propulsion technology is industry-leading, equipped with Exro's Coil Driver™ and SEA's patented SEA-Drive® vehicle control unit (VCU) technology, filling short term demand and long-term differentiation. The merger is a calculated step in leveraging synergies between our complementary propulsion technologies, streamlining revenue and cost structures, and enabling a projected path to profitability within 12 months of closing the transaction. This decision underscores Exro's focus on electrification and bridging the gap between total cost of ownership and performance.
In connection with the merger, we have filed a supplement to our base shelf prospectus on SEDAR to include information pertaining to SEA Electric. With this, we are on track to mail our information circular next week which sets the stage for a special meeting of shareholders on April 4, 2024. The information circular is a document that contains the information required about Exro and SEA Electric to help shareholders make an informed decision on the merger and to provide information on how to vote. This document will be mailed to you next week, filed on SEDAR, and available via a link added to our website. The circular will offer comprehensive details about the merger and what it means for you as a shareholder.
The merger with SEA Electric solidifies our foundation and marks a significant leap forward in our mission to drive the global transition of commercial vehicles to electric mobility. With a low capital-intensive business model, a defined path to profitability, and access to an expanding market, the merger acts as an accelerant to capture market share in the electrification technology space.
Progressing the Business
While we continue to work towards closing the merger with SEA Electric in the month ahead, from an operational perspective we continue to progress the base business at Exro. We are proud to announce that Exro has completed the testing program required to receive UL certification for our Cell Driver™ stationary energy storage system. The test results are currently being reviewed by approved UL certifier Intertek Laboratories and will be followed by an audit of Exro's contract manufacturer for the Cell Driver™, Re:Build Manufacturing. We anticipate receiving the official UL certification by mid-Q2 while in tandem continuing to pursue our commercial path that sees us on track for Cell Driver™ revenue in 2024.
On the Coil Driver™ side of the business, Exro is committed to develop the most differentiated, sustainable and efficient electric propulsion systems in the world that provide solutions for system efficiency, total cost of ownership and infrastructure constraints. We are excited to share a new technology advancement for Exro as we release data that shows the Coil Driver™, paired with a rare-earth-free induction motor, achieves better performance and better highway efficiency when compared with well-known highly efficient permanent magnet systems. Through electric gearing, the Coil Driver™ enables the use of rare earth free electric motors to meet or exceed performance requirements of today's leading automotive OEM applications which all utilize permanent magnets in their technologies.
This week Exro CTO, Eric Hustedt, presented in Munich at the Advanced e-Motor Technology Conference data and simulations demonstrating that the Coil Driver™ with induction motor delivers better performance and highway efficiency against Chevy Bolt, Tesla Model Y, and commercial trucks, all of which are dependent on motors with rare earth permanent magnets today. The ability to achieve this performance cannot be accomplished with current 3-phase inverter technology – it can only be achieved with Exro's Coil Driver™ technology. The Coil Driver™ is designed to provide material cost benefits to electrified vehicles and eliminates the dependency on rare earth metals which are costly, environmentally harmful to mine and produce, and are predominantly found in China. A summary of the presentation can be viewed [here].
Our Linamar e-axle program continues to progress on-schedule with collaborative efforts focused on completing our medium-duty commercial truck demonstration vehicle (complete with Coil Driver™ technology) for delivery in Q2 2024. Coil Driver™ deliveries continue through Q1 with low voltage products shipped to HB4 for commissioning launch of electric light duty vehicles, and high voltage deliveries to Giaffone in Brazil for commissioning on delivery trucks, and Vicinity (VMC) for shuttle buses for major metro airport applications in Canada and the US.
For your information and engagement, we have launched several initiatives:
- Merger website: Visit our dedicated merger website with SEA at www.exroandsea.com for detailed information about the merger and its strategic benefits.
- Information circular: This document will be mailed to you next week, filed on SEDAR, and made available via a link added to our website. The circular will offer comprehensive details about the merger and voting instructions. The special meeting of shareholders is scheduled for April 4, 2024.
- Shareholder "Ask Me Anything": Our next AMA will be tied to the release of our information circular. A link to submit your questions on the merger will be available on March 15th with our plan to post our video replies to these questions on March 21, 2024.
Market Overview and EV Sector Dynamics
In the last five months, despite a robust overall market the EV sector has faced significant headwinds, impacting sentiment and valuations of all EV manufacturers. Amidst this, Exro has found itself navigating through these turbulent times with a stock performance placing us among the middle tier of our small and mid-cap EV technology peers. This market correction reflects a broader investor caution, particularly towards EV OEMs yet to reach full-scale production and profitability. Following the merger with SEA Electric, Exro's diversification across both the passenger and commercial EV sectors will assist with mitigating the near-term headwinds in the EV sector.
It is Exro's belief that the passenger EV sector is the primary focus leading to the overall negative market sentiments in the EV space. In addition to the electrification barriers the world is grappling with (performance, infrastructure), there have been substantial macroeconomic pressures like rising interest rates and inflation which decrease consumer affordability. These have slowed down both adoption and the excitement for passenger EVs. Market consensus expectations point to an easing of interest rates towards the end of next quarter which would hold the potential for a more positive sentiment and upward facing potential towards the space.
To be clear, Exro will continue to pursue the market opportunity in the passenger EV sector with our differentiated Coil Driver™ technology. While this market continues to press forward with adoption in a material way, the rate has been slower than many had forecast. Exro continues to progress on track with its global automotive passenger vehicle OEM innovation project providing the platform for an in-vehicle demonstration in 2024. During this interim period, and in line with Exro's commitment to delivering shareholder value, the company prioritized markets that show faster returns on investment, as evidenced by their market-readiness.
Closing Remarks
We are embarking on a transformational next phase for Exro that aligns to our vision to reshape the way the world consumes energy. Our patented technology will allow for a future where we consume less while doing more. As we focus on our path to profitability, the journey will require some steadiness as we challenge the status quo and bridge the cost performance gap.
We remain committed to our future, emphasizing diligent execution, establishing Blue Chip customer partnerships, advancing our technology, and expanding into new markets. We thank all our shareholders for your ongoing support as we work to building value for our company.
Regards,
Sue Ozdemir
CEO
Exro Technologies Inc. is a leading clean technology company that is developing new generation power control electronics that change how the world optimizes energy by expanding the capabilities of electric motors and batteries. The company's innovative technologies serve to bridge the performance-cost gap in e-mobility (Coil Driver™) and stationary energy storage (Cell Driver™), and act to accelerate adoption towards a circular electrified economy by delivering more with less – minimum energy for maximum results.
For more information visit our website at www.exro.com.
To view our Corporate Presentation visit us at www.exro.com/investors
Visit us on social media @exrotech.
This news release contains forward-looking statements and forward-looking information (together, "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements. Generally, forward-looking statements can be identified using terminology such as "plans", "expects", "estimates", "intends", "anticipates", "believes" or variations of such words, or statements that certain actions, events or results "may", "could", "would", "might", "will be taken", "occur" or "be achieved". Forward looking statements involve risks, uncertainties and other factors disclosed under the heading "Risk Factors" and elsewhere in the Company's filings with Canadian securities regulators, that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Although the Company believes that the assumptions and factors used in preparing these forward-looking statements are reasonable based upon the information currently available to management as of the date hereof, actual results and developments may differ materially from those contemplated by these statements. Readers are therefore cautioned not to place undue reliance on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed times frames or at all. Except where required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
This information is qualified in its entirety by cautionary statements and risk factor disclosure contained in filings made by the Company with the Canadian securities regulators, including the Company's annual information form for the financial year ended December 31, 2022, and financial statements and related MD&A for the financial year ended December 31, 2022, filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Neither the Toronto Stock Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this press release.
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SOURCE Exro Technologies Inc.
