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
ABOUT EXRO TECHNOLOGIES
INC.
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.
CAUTIONARY STATEMENT REGARDING
FORWARD LOOKING STATEMENTS
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.