08 Mar Commercial Vehicles Group Seeks to Electrify Its Future through Deal with XOS
Commercial Vehicle Group, Inc. (NASDAQ: CVGI), a leading developer of electric systems has announced a partnership with Xos, Inc, a leading commercial electric vehicle manufacturer, to offer comprehensive design and manufacturing services that encompass prototype design, product sampling, testing and validation of an electric system, to be incorporated into a fleet of medium to heavy-duty zero-emissions, electric vehicles.
Commercial Vehicle Group, Inc. (NASDAQ: CVGI)
Market Cap: $294.79M; Current Share Price: 9.56 USD
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Harold Bevis, President and CEO of CVG, commented,
“We are very happy to be partnering with Xos, Inc. to design and launch leading technology with the X-Platform 1 within the electric vehicle industry. The electric vehicle industry is exploding with new platforms across many vehicle types, and with CVG’s storied expertise, we see our many strengths and natural advantages as a prime benefit to our partnership. With over 40 years of experience in helping vehicle makers launch outstanding vehicles quickly, CVG provides assistance from concept, to prototype, showing our commitment to our diverse customer base.”
The Company offers a range of products and systems for commercial medium-duty (MD) and heavy duty (HD) truck market, besides construction vehicles, military, agriculture and specialty transportation among others, in markets across North America, Europe, and the Asia-Pacific regions. However, 2020 marked its commitment to diversify into the burgeoning e-commerce, last-mile delivery and electric vehicles market.
XOS, Inc, creates cutting-edge electric commercial vehicles such as box trucks and vocational vehicles such as the X-Platform 1, besides providing industry-leading X-Pack battery solutions. The Company has already established robust partnerships with Loomis, UPS, Lonestar and Wiggins and is now planning to merge with NextGen Acquisition Corporation and become public. The Company offers Fleet-as-a-Service packages in partnership with DLL Group (financing services) and Dickinson Fleet Services (vehicle maintenance).
Giordano Sordoni, co-founder and COO of Xos, Inc, opined,
“We’re thrilled to partner with such a long-standing, experienced leader in the commercial vehicle space. CVG has been innovating for more than two decades, so we look forward to supporting them as they increase their focus on electrification and continue leading the path of innovation within the commercial vehicle space for years to come.”
The International Energy Agency predicts that the Electronic Vehicles which stand at 3 million today will grow to 125 million by 2030. The Global Electric Vehicle market is all set to compete with the internal combustion engine (ICE) vehicles in the next five year, accounting for one out of every five cars sold by 2030, according to Seth Goldstein, an analyst and chair of Morningstar’s electric vehicle committee. The growth of this industry is a result of the initiatives by governments around the world, in the form of tax rebates, grants, and subsidies for adoption of renewable and more environmentally friendly options for transportation. Unlike conventional vehicles which can only replenish their fuel at specific public locations, Electric vehicles can be charged at home or commercial charging stations.
However, the limitation of sufficient charging capacity to cover long distances discourages the use of these vehicles. There is an increased focus on research and development activities, especially in the passenger car sector, to improve infrastructure and supply equipment and establish EV chargers at easily accessible public places, to allow long distance travel as well. Range anxiety which acts as the biggest impediment for the market at present, will soon be a thing of the past, with Companies racing to develop connectivity modules.
The demand for electric vehicles will also bolster the demand for ancillary industries such as engine components, electronics for propulsion systems, battery optimization and torque transfer devices. In fact, the demand for lithium, which is a crucial component of energy storage in transportation batteries, is likely to quadruple over the next decade according to Seth Goldstein.
A report by McKinsey estimates that by 2025, there will be more than 350 EV models introduced into the market, with ranges of 200 miles. However, a lack of charging infrastructure could hamper the growth in the market. The report also highlights the fact that besides price and driving range, lack of access to charging stations is the third most serious barrier to EV. However there has been a gradual decline in prices and improvement in driving range and companies are making a concerted effort to provide the requisite charging infrastructure. Furthermore, the total energy demand for electric vehicles in China, the United States and European Union alone will reach 280 billion kilowatt-hours by 2030.
There has been an increasing interest in EV’s owing to environmental concerns, which has prompted leading automobile makers such as BMW, Daimler, Ford, and Volkswagen to announce an investment plan for deployment of 400 charging sites across Europe, in addition to investing approximately $90 billion in electric vehicles, according to a report by Reuters.
A Company driven by innovation, Commercial Vehicle Group has established itself as a leading supplier of warehouse automation, electric vehicle assemblies, electric wire harnesses and seating systems among others. While the Company is a known player in the commercial trucks segment, it believes in adapting to the changing times and is now focused on emerging industries such as ecommerce, electric vehicles and last mile delivery.
CVG’s product line includes Electrical system design, harnesses and control, seating and suspension systems, mechanical system design, panel assemblies, vehicle accessories and hydrographics. The Company owns and operates multiple brands such as Bostrom Seating, a range of seating options; Kab Seating, industrial work seats; Motto Mirror, vision solutions for trucks and Roadwatch, a warning system to name a few.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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