Xos And ElectraMeccanica Announce Proposed Combination To Accelerate Xos' Leadership Position In Manufacturing Commercial Electric Vehicles For Major U.S. Fleet Customers; ElectraMeccanica's Shareholders Will Own ~21% Of Xos

Proposed Transaction Anticipated to Significantly Strengthen Xos' Balance Sheet and Provide Growth Capital to Further Expand Xos' Gross Margin Positive Vehicle Business

Positions Combined Company for Sustainable Long-Term Value Creation with a Strengthened Financial Profile, a Substantial Backlog, and Strong Growth Potential

Prospective Combined Company Expected to Benefit from Favorable Regulatory Tailwinds, Including California's Mandate Requiring Xos Customers to Buy Thousands of New Electric Vehicles by 2025

Xos Delivered a Record 110 Units to Fleet Customers in the Fourth Quarter of 2023, Including FedEx Ground, UPS, and Loomis, Achieving 90% Year-Over-Year Growth

Xos, Inc. (NASDAQ:XOS) ("Xos"), a leading electric truck manufacturer and fleet electrification services provider, and ElectraMeccanica, (NASDAQ:SOLO) ("ElectraMeccanica"), a designer and assembler of electric vehicles, today announced that they have entered into a definitive arrangement agreement, pursuant to which Xos will acquire all of the issued and outstanding common shares of ElectraMeccanica (the "ElectraMeccanica Shares") in an all-stock transaction. The members of the boards of directors of both companies unanimously approved the proposed transaction.

The proposed transaction represents a unique opportunity for Xos to meet the growing demand for zero-emission medium-duty electric trucks by providing Xos with access to ElectraMeccanica's cash balance which is expected to be approximately $48.5 million at the time of the closing of the transaction. Xos is a leading manufacturer of medium-duty commercial electric vehicles for parcel delivery, uniform rental, food and beverage, and cash-in-transit fleets across the United States and Canada. Xos vehicles meet the duty cycles of traditional diesel vehicles while saving fleet operators money on their total cost of ownership, prompting many of the largest customers in the industry to adopt Xos vehicles, including: FedEx Ground, UPS, Penske, Cintas and Loomis.

With over 600 units delivered to fleet customers since 2020, and approximately 12% GAAP gross margin in the third quarter of 2023, Xos has demonstrated its ability to profitably scale manufacturing of commercial electric vehicles in its Tennessee factory, capable of producing up to 5,000 vehicles per year at peak capacity.

Xos' strong growth has been supported by regulations requiring the adoption of zero-emission electric vehicles beginning in 2024. Stackable U.S. federal and state incentives can provide customers with incentives equal to over 75% of the purchase price of a new Xos vehicle. Such incentives, combined with up to 80% reduction in energy costs and up to 40% reduction in scheduled maintenance costs versus diesel, mean that Xos' vehicles can accelerate total cost of ownership (TCO) savings compared with diesel alternatives to within 12 months of purchase. Xos' commitment to operational excellence, customer-focused vehicles, and efficient capital deployment is expected to be strengthened by ElectraMeccanica's strong cash position.

Dakota Semler, Chief Executive Officer and Chairman of Xos, said: "For seven years, Xos has designed and manufactured commercial electric vehicles that are relied upon by several of the world's largest and most recognizable commercial fleets. We are a leader in producing robust electric commercial vehicles and are delivering positive gross margins today. We believe leveraging ElectraMeccanica's assets will strengthen Xos' leadership position in the robust commercial truck market and allow Xos to scale profitable vehicle sales."

Liana Pogosyan, Chief Financial Officer of Xos, said: "We believe Xos' combination with ElectraMeccanica will significantly strengthen our cash position and provide significant growth funding and runway to execute our business plan. We believe that the cash provided in the transaction, combined with the reduced cash burn we have achieved as we have improved our margins, will provide runway to achieve our goals."

Susan Docherty, Chief Executive Officer of ElectraMeccanica, added, "In my last shareholder update, I stated that nothing was a higher priority than finding the right partner for us to create and re-accelerate shareholder value. We believe the proposed combination with Xos would achieve our management team's objective to generate revenues, achieve credible long-term profitability and improve shareholder value. Today, we couldn't be more pleased with the proposed combination with Xos, given its clear track record as an EV OEM with industry-leading gross margins; its proven ability to service demanding, large-fleet customers like FedEx Ground, UPS and Loomis; and its talented, disciplined management team. I encourage shareholders who are interested in learning more about Xos and this exciting opportunity ahead to visit our microsite at: www.xosandemv.com."

Proposed Transaction Details

The proposed transaction between Xos and ElectraMeccanica is the culmination of a formal process initiated by ElectraMeccanica's Board of Directors ("ElectraMeccanica Board") to explore a range of possible strategic alternatives for optimizing ElectraMeccanica's assets and generating sustained shareholder value while still managing potential risks. Since October 2023, the Strategic Committee of the ElectraMeccanica Board, with the assistance of its advisors and management, evaluated many former potential merger and acquisition candidates as well as new ones, including Xos. ElectraMeccanica's Strategic Committee, comprising Steven Sanders (Chairman), Mike Richardson (Vice Chairman), Dietmar Ostermann (Chair of the Strategic Committee), and Luisa Ingargiola (Independent Director) made a unanimous, formal recommendation to the ElectraMeccanica Board to pursue a combination with Xos and to proceed with the proposed transaction.

Dietmar Ostermann, the Chairman of ElectraMeccanica's Strategic Committee commented, "The Strategic Committee together with ElectraMeccanica's senior management team has performed extensive due diligence on Xos and we have been tremendously impressed with their business, management team, their substantial growth prospects and their focus on profitability. Based on our diligence, which included discussions with key customers, we believe that Xos is well-positioned in the rapidly growing commercial electric vehicle market, and that, by leveraging ElectraMeccanica's balance sheet to accelerate Xos' growth and leadership position, the proposed transaction provides ElectraMeccanica's shareholders with the opportunity to participate in Xos' exciting future prospects."

Following the close of the transaction, ElectraMeccanica's shareholders will own approximately 21.0% of Xos, subject to certain adjustments as set forth in the definitive arrangement agreement. The transaction is intended to be completed, subject to the definitive arrangement agreement, by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), whereby Xos will acquire all of the issued and outstanding ElectraMeccanica Shares in an all-stock transaction.

The board of directors of the combined company will consist of nine directors, comprising six directors designated by Xos, including Xos co-founders Dakota Semler and Giordano Sordoni (who also serves as Xos' Chief Operating Officer), and three directors designated by ElectraMeccanica. The management team of Xos will continue to manage the business of the combined company following the completion of the transaction.

The board of directors of each company approved the proposed transaction, which is expected to close in the first half of 2024, subject to the satisfaction or waiver of closing conditions, including, among others, required approvals of Xos' stockholders and ElectraMeccanica's shareholders, court approval of the transaction, certain third-party approvals and other customary closing conditions.

The proposed transaction requires approval by at least 66 2/3% of the votes cast by the holders of ElectraMeccanica Shares present in person or represented by proxy at a special meeting of ElectraMeccanica's shareholders to be called to consider the proposed transaction, as well as approval by Xos' shareholders.

All directors of each company have entered into support and voting agreements (subject to certain rights of withdrawal) for all of their shares which will also subject them to a 120-day restricted period. This cumulatively represents approximately 2.74 million ElectraMeccanica Shares (inclusive of restricted share units and deferred shares units), or approximately 2.2% of ElectraMeccanica's fully diluted outstanding shares, and approximately 3.23 million Xos Shares (inclusive of restricted stock units), or approximately 49.5% of Xos' fully diluted outstanding shares.

ElectraMeccanica has retained CBRE, Inc., to sub-lease its state-of-the-art 235,000-square-foot facility in Mesa, AZ.