Analysts are focused on Xos' improving truck margins and the influx of cash from the ElectraMeccanica acquisition. That's understandable. But hidden in plain sight within the Q1 2024 earnings call is a potential game-changer, one that even Xos themselves haven't fully grasped the magnitude of: the Xos Hub.

This mobile charging unit, initially designed to grease the wheels for Stepvan truck deliveries, is emerging as a star in its own right, attracting interest from a far broader range of customers than initially anticipated. Xos has casually mentioned orders from utilities (Xcel Energy, Duke Energy), logistics giants (FedEx Ground contractors), and even port operators (SSA Marine). These are not your typical last-mile delivery fleets.

What Makes the Xos Hub Special?

In a word: _flexibility_. It combines battery storage with DC fast charging, offering a unique solution in a market dominated by expensive, grid-intensive, and time-consuming permanent charger installations. Here's why this is such a big deal:

1. Speed

Fleets eager to electrify are constantly hitting the wall of utility upgrade timelines. Hubs sidestep this, allowing immediate EV deployment. That's a powerful sales pitch in a market hungry for solutions.

2. Cost

A comparable permanent setup with chargers and battery storage would be significantly more expensive. Xos hasn't explicitly stated Hub margins, but hints they could be even _higher_ than their already impressive truck margins. This is where the ElectraMeccanica cash becomes crucial, allowing Xos to scale Hub production without diluting shareholders.

3. Versatility

The trailer-mounted option opens up a world of possibilities beyond fixed depots. Think construction sites, emergency response, remote events...the applications are vast. Xos has stumbled onto a product that addresses pain points across numerous industries.

4. Incentives

The California Air Resources Board is sweetening the deal with up to $160,000 per Hub incentive. Xos' California-centric sales strategy is perfectly positioned to capitalize on this.

The Numbers Tell a Compelling Story

Xos states they can build up to 100 Hubs per year _in addition_ to projected Stepvan volumes. Let's assume they sell just 50 Hubs in 2024, at a conservative average selling price of $200,000 (remember, their comparable systems range up to $250,000). That's $10 million in revenue, potentially adding 15% to their top line.

Now, consider the margins. If Hubs achieve even 25% gross margin, that's $2.5 million in gross profit, nearly _doubling_ their Q1 2024 gross profit figure. Suddenly, that path to positive free cash flow looks a lot shorter.

Visualizing Xos' Potential Revenue Growth

The following chart illustrates the potential impact of Hub sales on Xos' total revenue. Data is based on hypothetical projections.

The Quiet Revolution is Gathering Momentum

Xos may not be shouting about it yet, but the Hub has the potential to eclipse their truck business in both scale and profitability. This quiet revolution in mobile charging could redefine the company, attracting a new class of investors and driving a significant re-rating of their stock.

Xos Financials at a Glance

Source:

"Fun Fact: Xos was founded by two childhood friends, Dakota Semler and Giordano Sordoni, who shared a passion for electric vehicles and a vision of a cleaner transportation future."