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EXRO Technologies (EXRO.TO)
Canadian Technology Company Aims to Make EV’s Perform Better & Cost Less
EXRO Technologies is a publicly traded Canadian company with a disruptive but complementary technology to electric motors and batteries that, in its simplest terms, aims to make electric vehicles perform better and cost less. The company trades on the Toronto Stock Exchange under the symbol EXRO and over the counter in the United States with the ticker EXROF. As of the time of writing, the current share price is $1.33, and with 154.3m fully diluted shares issued, this implied a market cap of $205m. The company currently has no debt and ~$15m of cash on hand.
EXRO’s headquarters are in Calgary, Alberta, Canada, and the city will also be the site of the company’s net-zero manufacturing facility (currently under construction). The company also has innovation headquarters in Mesa, Arizona and corporate office in Ann Arbour, Michigan.
A Quick Overview Electric Vehicle Operation
We will delve into far greater detail into EXRO’s technology in future posts, but today want to provide a 20,000 ft view of EXRO’s business. Electric Vehicles (EV’s) are typically comprised of a few key components; specifically, a battery, inverters, 2 to 4 electric motors, a vehicle control unit (VCU), and in some applications a mechanical gearbox. Electric motors were originally developed for industrial applications and tend to be application specific, some are used for high-torque, low-speed applications, while others are designed for low-torque, high-speed operation. This is what necessitates multiple motors in traditional EV designs, no one motor can perform over the typical power-speed range provided by internal combustion engines (ICE’s) and gearboxes. Placing electric motors in series configuration delivers the high-torque end of the spectrum (analogous to low gears in ICE’s) for ‘off the line’ performance, while switching to parallel configuration provides the high speed, low-torque at cruising speeds (high gears in ICE’s). The inverter is the device in an EV that communicates between the battery and motors to switch between configurations in attempt to replicate the drive of an ICE vehicle, constantly switching between the different motors to deliver the desired response (low end torque and torque at speed).
EV Original Equipment Manufacturers (OEMs) need to install multiple motors to provide the necessary power-speed performance that end users require. Consequently, EV’s tend to be relatively high in weight to achieve the same range of performance as the traditional ICE / gearbox combination.
Thus, the Coil Driver leads to multiple benefits:
It reduces the number of electric motors required in an EV. This reduces the overall cost of the vehicle, as well as the overall weight.
Potential to reduce multiple gearbox requirements
Lower cost due to reduced requirements for specialized components
In summary, you can have your cake and eat it too. Customers no longer have to trade performance for cost as Exro’s technology serves to bridge the cost-performance trade-off.
EXRO has a great video showing how their coil driver works on their YouTube Channel here:
Multiple Coil Driver Sizes for Different Application
EXRO provides coil drivers over a range of voltages from 100V thru 800V applications. Lower Voltage are typically pairs with electric motors for motorbikes, quads, boats and similar recreational vehicles, while the 800V Coil Drivers are for cars, busses and heavier equipment.
Customer Activity Ramping Up
To reiterate, EXRO’s Coil Driver is not a replacement for electric motors, but rather a specialized component that replaces a standard 3 phase inverter while adding many other benefits: improved performance, and lower total system cost. While this technology may sound ‘too good to be true’, it’s been several years in development and we are entering the period where the technology has been de-risked through several demonstration vehicles, and development projects with notable industry partners.
EXRO’s primary customers are the OEM’s and OEM suppliers for EVs. In North America, EXRO has established relationships with Linamar, Sea Electric, and Vicinity Motor Company, to name a few. In future posts, we will dig into recent events on the customer front, but recently EXRO announced a couple key agreements this past May:
Exro will supply up to 2,500 high-voltage Coil Drive systems to Vicinity Motor Corp for use in the company’s electric buses. This agreement has an initial purchase order of 100 units and commenced with a pilot beginning in 2Q22
Exro will supply an initial 1,000 units of its 100V Coil Drive system to evTS (ev Transportation Systems), a Boston-based EV manufacturer for use in its FireFly vehicles. The agreement commences in 2023.
Exro indicates it is in discussions with several other potential customers, so we expect future news to be coming on this front.
Made in Calgary
Calgary (and Alberta as a Province) has historically been dominated by oil and gas companies. The City of Calgary has been actively trying to diversify into other sectors, particularly high tech. Exro has quietly become a local success story on this front. The company is nearing completion of its world class net-zero manufacturing facility, with class 10,000 clean room which will be capable of producing 100,000 Coil Driver units per year per 8-hour shift. This implies up to 300,000 units per year full operating potential assuming 24-hour operation. The team from 4Front has visited the facility on several occasions in recent months as part of our due diligence. The facility is impressive in its design, exceptionally clean on the manufacturing line, while the building itself is net-zero, utilizing solar panels on the roof with a focus on water conservation and no waste production. Exro believes it is the only facility of its kind in North America, and perhaps only two similar in the world. As companies look to re-shore supply chains in the wake of Covid-19, we believe this opens up a significant competitive advantage for Exro.
The company recently held a live-stream highlighting the facility. You can see more here (tour begins at the 44m50s mark, but the entire video is informative).
R&D Pushing Other Initiatives
In addition to enhancing electric vehicle performance, EXRO has a number of other R&D initiatives underway which we will discuss in future posts.
AC Fast Charging Solutions for EV’s
Battery Control Systems to repurpose used EV batteries into a second life
As we mentioned previously, we will save the detail for future posts on Exro. But the key takeaway we want to leave potential investors in EXRO is this: The company’s Coil Driver provides electric vehicles greater performance while reducing complexity and cost.
A key differentiator we see for Exro is the company is not just a tech idea, it is very near significant revenue and high growth, supported by visibility from recent agreements for purchase orders from key international electric vehicle manufacturers.
Global car manufacturers have almost unilaterally indicated their plans to transition from ICE vehicle development to EVs. While there is debate on the pace and timing of this ultimate transition and what can be achieved in terms of infrastructure build-out for charging stations, vehicle maintenance shops and consumer acceptance, we believe the transition is real. Governments globally are pushing for a move to electrification for all form of road transportation. We see EXRO’s technology as being a unique solution in a sector with a positive macro environment.
Future 4Thoughts Topics
This summary is merely an overview of EXRO’s business and strategy. In future posts, we intend to dig into the following (non-exhaustive) items:
Recent Events and Future Catalysts
Purchase Agreements / Customers
Calgary fabrication facility and other corporate officers
Financial Overview and Capital Requirements