Gentlemen, thank you for standing by. Good afternoon, and welcome to the XL Fleet Corp third quarter 2021 earnings conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. For opening remarks and introductions, I would like to turn the call over to Jim Berklas, General Counsel and Vice President of Corporate Development for XL Fleet. Please go ahead, sir.
Thank you. Good afternoon, everyone, and welcome to XL Fleet's earnings conference call to discuss our results for the third quarter of 2021. With me today are Tod Hynes, our Founder and President, and Cielo Hernandez, our Chief Financial Officer. Our call this afternoon includes statements that speak to the company's expectations, outlook or predictions of the future, which are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, which may cause our actual results to differ materially from those expressed in or implied by these statements. We undertake no obligation to revise or update any forward-looking statements except as may be required by law. We refer you to XL Fleet's disclosures regarding risk factors and forward-looking statements in today's earnings release, our annual report on Form 10-K, and our other Securities and Exchange Commission filings.
With that, I'll turn the call over to Tod Hynes.
Thanks, Jim Berklas, and thanks to everyone for joining us on the call this afternoon. I'd like to begin with a review of third quarter and recent key highlights. We generated third quarter total company revenue of $3.2 million, down from $6.3 million last year and $3.7 million last quarter. The decline versus last year was primarily driven by ongoing industry-wide supply chain issues that continue to impact our drivetrain business, partially offset by growing contribution from our XL Grid business. Despite impacts at the revenue line, we generated gross margins of 22%, up from 12% in the prior year and compared to approximately 26% last quarter. This improvement in margins relative to last year was driven by contribution from our XL Grid business, which generally carries higher margins versus our drive system business.
We also continued to expand our offering platform. In August, we announced the availability of our hybrid electric system on popular versions of Ram pickups, including the 2,500 and 3,500 heavy-duty models. We were excited to unveil this new vehicle offering at this year's ACT Expo, where it was met with great interest and enthusiasm. In addition to exciting platform growth, this new addition to our lineup of offerings also represents the first electrification product to be available for Ram Commercial, which is the Stellantis line of commercial pickup trucks. Also during the quarter, we announced that our hybrid electric drive system is available on the Isuzu NPR-HD low-cab-forward vehicle. This vehicle is widely used in a range of industries, including last mile delivery, beverage distribution, utility work, and food service.
In our XL Grid business, we completed our first quarter with full period contribution from our World Energy business acquired in May. We believe our XL Grid business continues to represent a significant growth opportunity for our company and reflects a widening set of electrification solutions for our customers. From a demand perspective, we continue to see growing interest in fleet electrification. This includes pent-up demand from municipalities and other agencies whose budgets have been significantly impacted by COVID-19 related slowdowns. We've seen some positive momentum building in our order pipeline from customers who are beginning to receive vehicles from their manufacturer orders. We will continue to work with customers to help them unlock chassis inventories wherever possible. As the macro and economic environment continues to improve, interest from these parties continue to grow, particularly for deliveries in 2022.
We also expect to experience continued growth in demand on the back of the recently passed infrastructure bill. As part of the bill, Congress has committed to significant support for the continued growth and build-out of vehicle electrification, including up to $7.5 billion of grant funding for electric vehicle charging infrastructure. We applaud policymakers' support of this bill, including the Build Back Better legislation that contemplates even more funding support for the vehicle electrification industry. Overall, we believe XL Fleet is highly differentiated across three key attributes. Our flexible platform, our financial stability, and our comprehensive offering. First, our flexible platform. Since our founding over 10 years ago, we intentionally set up XL Fleet and its offering to be highly dynamic, and we've stayed true to this approach as we scale our business.
By developing technology and systems that work across a spectrum of commercial applications and vehicles, we positioned ourselves to assist a wide range of customer needs and applications. Today, this flexibility is more apparent and more important than ever as we continue to forge new partnerships and agreements to expand our technology on new vehicle platforms while also expanding the scope of services offered. Second, our financial stability. With our go public transaction completed at the end of last year, we believe we're armed with the financial flexibility and resources critical to navigating near-term supply chain challenges while positioning us to remain offensive in further scaling our business, reaching new development partnerships, and driving potential organic and inorganic growth. We exited the third quarter with cash and cash equivalents of $367 million. Third, our comprehensive offering.
Perhaps our most unique attribute is the wide and growing spectrum of offerings we provide to customers, from a wide array of drive system applications to our growing XL Grid business, and eventually our electrification as a service strategy. It's our focus to provide a one-stop shop for the electrification needs of our customers, helping them save money, reduce carbon emissions, and meet sustainability goals. With that, I'll turn it over to Cielo Hernandez for a more detailed review of our financial performance.
Thanks, Tod. Revenues for the third quarter of 2021 totaled $3.2 million compared to $6.3 million in the prior year period. Key drivers behind the annual decline included negative impacts from ongoing supply chain issues, including microchip shortage, which have led nearly all automakers to reduce or pause production of the new fleet chassis, impacting our drive system business, partially offset by contributions from our acquisition of World Energy in our XL Grid business. Revenue from the sale of drive systems in the third quarter of 2021 totaled approximately $600,000 compared with $6.3 million in the third quarter of 2020 due to negative impacts from ongoing supply chain issues, including microchip shortage leading to the lack of the new fleet chassis.
Revenue in our XL Grid division totaled $2.6 million, which was driven by the first full quarter contribution of the World Energy acquisition completed in May 2021. We generated gross profit for the quarter of approximately $700,000 compared to approximately $800,000 in Q3 of last year. Adjusted EBITDA totaled $-14.2 million compared to $-6 million in the prior year quarter. Research and development costs totaled $3.2 million. SG&A totaled $12.7 million, from $5.3 million in the prior year quarter and approximately $10.8 million in Q2.
The increase was primarily driven by the continued expansion of our team, technology, and facilities to support our growth strategy and meet new obligations as a publicly traded company, as well as added expenses associated with the addition of World Energy. As of September 30, we had cash and cash equivalents of $367 million compared to $384 million last quarter and $330 million at the end of 2020. Our balance sheet remains strong following the capital raise as part of our business combination completed in December 2020 and exercises of our public warrants earlier this year. We believe that our balance sheet strength positions us with flexibility and a competitive advantage as we continue to execute on our growth strategy over the next several years, including the potential for further strategic M&A.
I will now pass it back to Tod Hynes.
Thanks, Cielo Hernandez. Looking ahead, the unprecedented supply chain challenges impacting a number of global industries is expected to continue into the fourth quarter and extend into 2022. Despite these challenges, we remain well-positioned to further invest in our business to capture growth opportunities. Finally, I wanted to comment on the recent announcement that the board of directors has appointed Eric Tech as XL Fleet's new Chief Executive Officer, effective December 1. Eric Tech is an industry veteran who brings nearly 35 years of experience. I know I speak on behalf of the entire XL Fleet team that I'm excited to partner closely with Eric as he joins our company and helps us lead the next phase of electrification for our customers. I also want to thank Dimitri Kazarinoff for his hard work over the last two years to help grow the company. That concludes our comments for today.
Thank you very much for participating in today's call and for your interest in XL Fleet. Have a great day.
This concludes today's conference, everyone, y ou may disconnect your lines at this time. Thank you for your participation, and have a great day.