Exro’s Inaugural Analyst Day

November 14, 2024

0:24 Sue Ozdemir

If you take a look around, please take time to pop through our team members, customers, to experts that are in space and make sure that you get all the information that you want. We hope that you ask us a lot of questions and really get the best use of your time because we know that you all took time to flying during (this week?). So we really, really appreciate that, thank you.

I’m going to go ahead and jump in. I’m not going to talk a lot about the tech while I’m up here this morning. I’m going to talk about there we are in the industry, update you on some of our programs and give some guidance to what’s coming. Then, I’ll invite Darrell to come up and do the same. And I’m going to let the tech go through Eric and Joe as you walk outside and see our ride and drive and be able to experience why we’re so passionate about EXRO despite an industry that makes us feel sometimes like it’s rougher than I think it actually is. If I defined EXRO it would be resilient. It would be that ability to ride out what we’re doing. Arguably do financings that challenge some of our shareholders and how we did it. Funded our company to keep our tech going forward. The industry itself is at a pivotal moment. We had one of our global partners in our in our pipeline right now saying: “You guys are a giant leap and the industry takes baby steps.”

There’s three revenue streams for EXRO’s technology today. The first one is our propulsion system. Which is part of our merger with SEA Electric in April was that ability to accelerate our position in the market through our OEM partnerships by integrating into that propulsion system. With our Hino and Mack systems outback, you’ll be able to see that integration today. And you’ll be able to drive the vehicles with the coil driver in it today. Then, we have what’s called our traction inverter, which is what we’re calling our drive line today. [clipped] is every inverter needs to control a motor. So with our driveline, we have our partner Nidec here today and that is what is in our Class 4 and uh 4 to 8 is actually what we have right now. So that’s what we’d know as our core technology.

Think of it, like a gearbox, electronic gearbox, and a turbo charger all in one. The brain of the system. And then finally, our energy storage unit. A lot of people have said ‘oh, did I just shelf that, is it on the shelf”. No, we invested heavily into getting UL certification. It was a really, really tough road for us. It was almost two years to get us through that. That was because again, we were disrupting. We were challenging the certification and regulation themselves as we did cell level control. We talked a lot about fires and thermal runaway in energy storage and how do you manage that? But the innovation is how do you control it? How do you make it not happen versus manage it when it happens? That’s innovation. That’s where our patents sit. So those are the three streams of revenue that build our guidance for 2025. As you’re out back as you talk to Eric and Joe, back of the room there, back corner. Joe’s in the corner. Joe, maybe raise your hand. Eric is right beside, our CTO and our SVP of engineering. Really great for all our analysts. Have conversations there because that represents our merger. That’s our merger right there. That demonstrates the importance of how we came together and how quickly we changed our path forward by having two sets of engineering skills that could accelerate both of our paths.

03:51 [cut to later discussion]

whole partnership, the one I’m going to highlight today is the one that’s up in Brazil with our partnership with NIDEC, we were able to create a drive train that is tackling real world terrain. Unlike any of the incumbent drive lines in the market today. We are climbing 18% grade hills fully loaded trucks, full speed continuously. That is a really important piece of the electrification transition when our OEM’s can go into those dealers and say you’re not going to be limited to just your inter city routes. But you can take your big and bulky routes.

You can make a refuse truck pickup a little bit more. Go out to the countryside, and not just in the city. This changes the conversation of electrification. We are not just going in and saying, “hey, we have another truck” or “hey we have a battery storage unit”, where you’re opened up to this large amount of competition and that’s really differentiating. You do not need to put anything into our buildings. We use contract manufacturers. We do not need to resource up. We do not need to invest in certifications like ISO quality certifications that take 20 plus months to get through. These are all costs that have already been invested. We’re ready to scale.

As we think of the passenger vehicle, why are we burning in passenger vehicle if we’re just coming out of here? Well, we’re not actually burning. We have a very small team. The passenger vehicles pay into our programs to develop innovation because in general, passenger vehicle programs take greater than four years to get from when you start to when you get to revenue. And so there’s a longer path there. But we wanted to be able to show with EXRO that we are agnostic. If it’s electric, it needs an inverter. If it’s electric it needs a motor and inverter. And it needs that ability to control. And so we really wanted to make sure that we’re able to be in hybrids, maybe one day we go into hydrogen, we’re able to do battery electric, we’re able to do electric construction vehicles all the way down, depending on what customer has that volume and that path to profitable revenue.
As we look at passenger vehicles, I’m just going to say we have our program with Stellantis. I know everybody wants to know what is exactly going on. We have not publicly defined what the path of Stellantis is. But we entered that program to win a platform. We entered that program to be that volume production in the future where it’s more of a licensing model, but using kind of the guts of the Coil Driver and that’s progressing exactly as we thought it would and the partnership’s been great.
Our other two mid stage and late stage; There’s two other passenger vehicle programs, continue as we intended.
That means mid stage means we’re through all of the simulated work. We know that we’re going to be able to bring benefit that they can’t find in the market today and we’re into commercial terms and seeing what that looks like.
Late stage means we’re through those commercial terms, we’re kind of waiting for them to come back and put that piece on paper. There’s no guarantees but they’re moving exactly as we thought they would.

07:00 Darrell Bishop

..before we closed the acquisition with SEA Electric, there was 19 systems that were delivered at EQ1. And then we closed on April 5th. Get the [indecipherable; maybe ‘latent’] accounts payable. You had inventory that you know wasn’t on site so we spent a lot of time through Q2 really working through the supply chain, making sure that parts were arriving efficiently. We weren’t air freighting everything from China, which, you know, led to our direct per unit cost Of over $200,000/vehicle EQ2 and that was, you know, that was a bigger number than what anyone wants to absorb.
But, we were committed to delivering to our customers and so that’s really what it took.
We drove 5.3 million of revenue in Q2 on the delivery of 36 units. We more than doubled that into Q3 and importantly for a tech company, usually when you’ve got growth of this kind of a nature, you’re spending your way to growth on a per unit basis. And what we were able to successfully do was drive down those unit costs by over 20%. And so that came from not just a hope and a prayer that came from a lot of work from a lot of people that you see in the room, but a real focus on our supply chain and our logistics. And it comes back to our focus on that path to profitability.

08:20 EXRO Coil Driver – Integrated Charging Feature

• Editors Note: There are many statements that are hard to hear or words that are not obvious. We have done our best to fill them in from context, but make to warranties about accuracy.

Eric Huestedt

[garbled] for what it does at the end of the day right, is eliminates this box (indicating the on-board charger)
Does the direct charging it to the architecture of the drive.
Essentially, I want to do this. Right. I. Good. (plugs charger into the truck)
That’s the voltage (indicating the monitor showing the electrical wave)
And now it comes in (electrical wave shows additional wave indicating charging)
And heh (shrugs)
Audience: laughter

09:04 Joe[?]:
And you can plug in a three phase connector. Use the coil driver and charge your battery. But now we can crank up the power. J3480, You can go up to 60, 80 kilowatts; You’re able to do with that. Now you’re competing with a DC fast charger at the end of the day. DC fast charger and I’m going to use some cowboy math my rule of thumb is $1000 per kWh. And so you want a 25 kilowatt DC fast charge on the wall, that’s 25,000. And now that the 3480 standard that we’re talking about that’s $1000 charger that I can put on the wall and be able to charge the vehicle with the EXRO coil driver. So very exciting if you kinda look into the next tech trends of what we’re working towards to be able to do something along those lines, because one thing I do hear in the market and we watch it very closely is the DC infrastructure for charging. It’s a problem that we can solve with EXRO technology. At the end of the day, being able to do that.

11:08 – Unnamed speaker (indicating various electric drive system components):
And the opportunity here is that the coil driver allows you to delete this cost; delete this cost; this cost; delete this cost. And to provide that functionality much more cost effectively here.