Exro Technologies (EXRO.TO): Hot off the mark YTD
Moving Towards Commercial Revenue in 2023
Following up on our review of Exro’s achievements in 2022 (here), today we delve into some recent news that sets the company up well to achieve first commercial revenue in 3Q2023. Investors have had a nice start to 2023, with the share price up 25% YTD. Notably, this is ahead of both the TSX Index and XEG Capped Energy Index. Notable relative to the XEG, Exro highlights opportunities for investors to make money in Alberta beyond the traditional oil and gas.
Exro management recently posted a letter to shareholders (here). We don’t intend to replicate all information here, but highlight some of the key factors investors should take away as highlights.
Another Commercial Agreement Signed with Italian OEM HB4. The companies have been under a non-disclosure agreement (NDA) for 2 years. Terms of the deal were not provided, though we note HB4 is a Tier-1 supplier to companies like Ducati, Ferrari and Lamborghini among others. We did a bit of digging at it appears that HB4 is a holding family company involved in multiple sectors, including automotive. Interestingly, the company is also involved in developing electric engines and lithium batteries. Exro and HB4 jointly piloted a HB4 motor and Coil Driver in a small passenger car with an Italian EV OEM. We view this as a positive step forward to penetrating the European electric vehicle market.
Source: HB4 Website
New Coil Driver Agreement with Brazil-based Retrofitter. This is agreement is still under NDA, however we find it interesting the deal includes a pilot program with a major non-alcoholic global beverage company. For fun, we posed the following question to ChatGPT (the artificial intelligence chat bot), and came up with the following.
Coil Driver Suite on track for first customer deliveries in 3Q2023. As noted in our prior posts, 2023 is a turning point for Exro as the company transitions from a pre-revenue tech company to initial commercial revenue. The build-out has been contingent on timing of the company’s fabrication facility in Calgary, Alberta. Exro’s A020 100V Coil Driver has reached full design-for-manufacture (DFM) and is ready for series production. We present the technical details for this Driver below, which is targeted for light vehicles such as bikes and small cars / vans.
Cell Driver ready for Summer 2023. On the heels of its Cell Driver agreement with Inferno Solar announced in 2022, Exro is in ongoing talks with solar distributors in the US for its Cell Driver technology (which we wrote about here). The company indicates the necessary UL certification is expected 2Q2023, with deliveries for customers commencing in July 2023. As a reminder, this technology provides an extended life for used EV batteries, reducing raw material demand.
Strategic Partner Discussions ongoing. Exro management admit they were hoping to have a second Tier-1 strategic partner by the end of 2022, though these discussions are continuing into 2023. We see this as a key catalyst for investors to watch, as it could potentially both secure additional growth funding while concurrently expand Exro’s market penetration.
We expect a busy year on the news front
Exro is advancing commercial deliveries for both its Coil Driver and Cell Drivers in 2023, in addition to securing additional customers for both. Layer on potential for strategic partners and commitments to deliver initial orders to customers for technical validation, this year looks to be one with a high volume of news flow. To keep investors on track with our expectations, and management’s stated objectives, we prepared a score card to allow readers to track progress over the course of the year.
We expect more institutional investors will begin to evaluate Exro the closer it reaches first revenue. This could substantially increase the trading volume, particularly as the objectives above are met.
4Front is compensated by Exro for the preparation of these materials. 4Front receives its compensation in cash. 4Front participated in Exro’s recent equity raise and is currently a shareholder of the company.
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