Thank you everyone for joining us. Joining the call with me today are Xos Chairman and Chief Executive Officer, Dakota Semler, and ElectraMeccanica CEO, Susan Docherty. Earlier this month, Xos and ElectraMeccanica each issued a press release with details of the proposed transaction, and both companies have filed third quarter 2023 financials. Information in those and other filings may be referenced during this call. These documents and additional information can be found on the investor relations section of both companies' websites. On this call, both management teams will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of factors discussed in our January 11 news release, during this conference call, or in our latest reports and filings with the Securities and Exchange Commission. These documents can be found on our website at investors.xostrucks.com and on the transaction microsite at xosandemv.com. We do not undertake any duty to update any forward-looking statement. Today's discussion may also include certain references to non-GAAP financial measures and performance metrics. Please reference the information contained in the company's third quarter 2023 earnings press release for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. Participants should be cautioned not to put undue reliance on any forward-looking statements. With that, I'll turn it over to Dakota.
Thanks, Christen, and what an exciting day for both ElectraMeccanica and Xos. I'm Dakota Semler, Co-founder, Chairman, and CEO of Xos. I'm with Susan Docherty, the CEO of ElectraMeccanica. We are here today to talk a little bit more about why we're both genuinely excited about combining our two companies. As I'm certain all of you have seen, we recently announced a proposed combination that will bring our two companies together, and I believe will result in a business that has many years of durable, long-term growth ahead. This is a combination that makes sense. First, and very simply, it will serve to create a business with a stronger balance sheet and provide sufficient working capital for Xos to continue to scale. We believe that upon completion of the transaction, the working capital provided by ElectraMeccanica will give Xos the runway we need to execute against our current business plan.
Second, we will be able to accelerate our growth from this position of strength and continue to extend our position as a leader in the commercial EV truck space. As an OEM, right now, we are in the enviable position of having an order book deep enough that we have customers waiting to take delivery of every new vehicle we make. This includes our fourth quarter, where we recently announced delivery of a record 110 units to our fleet customers, which represents 90% year-over-year growth. Third, we are selling into a market that itself is growing. The demand drivers for Xos benefit from two distinct but favorable tailwinds. The first is a regulatory environment that on both a state-by-state and federal basis, broadly seeks to increase EV adoption rates by commercial fleets.
The second is the favorable underlying total cost of ownership economics our electric trucks offer our fleet customers, meaning regardless of the regulatory environment, over time, our EV trucks are the right choice for their bottom line. Stepping back, these three factors in combination create a significant opportunity for our combined company and its shareholders. Working capital, an opportunity to scale into a robust order book, and a set of long-term secular forces that will sustain demand for years, suggest the potential for significant value creation. I believe our investors understand the potential for significant value creation and positive market momentum in our share price, and reactions from Xos shareholders since the deal announcement reflect this. All of this coming together at a time where Xos has never been in a better position operationally.
Xos investors will recall from our most recent earnings call, that we marked an important and rare milestone for an electric vehicle OEM. We are now manufacturing at a scale where our vehicle business is now gross margin positive. I have every confidence that we will continue to expand those margins. Now, I'm sure we have a good number of ElectraMeccanica shareholders dialing in, who may not yet be fully familiar with Xos. Let me take a step back and offer a quick overview of the company I co-founded, what we do, and our ambitions. Like many ElectraMeccanica shareholders, years ago, I saw a real opportunity in the electrification of vehicles. I knew from my own experience as a commercial vehicle fleet operator, that while there was an obvious electric application for specific commercial use cases, such an opportunity existed, particularly in Class 5 and Class 6 step vans.
These are the medium-duty trucks you see every day making last mile pickups and deliveries in fleets like UPS, Penske, or FedEx Ground, to name just a few of our customers. In order to capture this market and build a successful business, we first had to overcome a set of sequential barriers to customer adoption. The first barrier was the truck itself. I knew that it was important that each stakeholder in the truck experience had to value it. This means the drivers who are in them all day long, fleet managers who oversee fleet operations, and fleet purchasing departments who finance and purchase the vehicle. Starting from a blank slate doesn't mean it makes sense to reinvent the wheel. We premised our electric step vans on time-proven and highly optimized bodywork designs from existing suppliers. Such designs are more efficient to build and maintain.
Importantly, they're also familiar to fleet operators. Basics such as serviceability and parts procurement are much easier to address as a result. Of course, we also employ some of the most sophisticated electrification technology in the market to ensure that Xos trucks are among the most efficient, most reliable vehicles in their category. The second barrier we overcame was selling beyond the vehicle. Winning business with commercial fleets is as much about providing services as it is about selling vehicles. That's why you'll hear us at Xos talk about having a vehicle business and an energy services business. Our services business means Xos customers can rely on us to help smooth the adoption barriers faced by fleet operators, whether that's understanding and capturing all the available regulatory incentives, managing charger installations, or building specialized mobile charging stations to ensure rapid vehicle charging is available.
We founded Xos seven years ago on these two foundational principles, that a successful company must be built on a top-tier commercial truck design and unparalleled customer service. Since our first production vehicle rolled off the assembly line in 2020, we have delivered over 600 units to fleet customers that include companies I'm sure you'll recognize, such as FedEx Ground, UPS, Penske, Cintas, and Loomis. Beyond sales successes, we've continued to operate our business with discipline, continually seeking to manage our burn rate and improve our margins. Xos reported approximately 12% GAAP gross margins in the third quarter of 2023. In doing so, Xos has exhibited its ability to profitably scale manufacturing of commercial electric vehicles in our Tennessee factory, which at full capacity, is capable of producing up to 5,000 vehicles per year.
I'll turn to Susan shortly so she can provide her perspective. But for those of you who are just becoming familiar with Xos, I hope you will recognize both the magnitude of the opportunity in front of us, as well as the opportune timing. Xos is making and selling electric trucks to a number of the best-known, most demanding fleet operators in the country. We've earned their business in light of our world-class product and comprehensive service capabilities. We're growing, increasing both the number of vehicles we make and deliver, while simultaneously expanding our margins as we capture efficiencies of scale and improve key processes. We're benefiting from a set of regulatory tailwinds designed to spur increased adoption, and we're benefiting from having what we believe is the best electric step van in the market and incredible service capabilities.
Combined with the capital resources ElectraMeccanica brings to the table, and given our current order book, this is a perfect, if not pivotal, time to launch our business into its next phase of growth. It's why I'm certain I speak for all of our shareholders when I say I couldn't be more excited about the proposed transaction. With that said, let me turn to Susan so she can provide you with her thinking and insights. Susan?
Thank you, Dakota, and thanks everyone for dialing in. I want to take the opportunity to do two things today. First, I want to take a moment to speak to how ElectraMeccanica got to where we are right now. Second, I want to tell you about why I believe a combination with Xos represents a significant long-term opportunity for our shareholders. Dakota and I and our extended teams have been working together for months now to ensure the combination of our two companies would result in a business that was not only highly compatible with ElectraMeccanica's core values and mission, but specifically gives our shareholders an opportunity to participate in that business at a key inflection point in its own evolution. But first, let's quickly go back to the process that got us here.
About a month ago, in early December, I provided our shareholders with an update on our plans following the difficult but correct decision to walk away from a merger, as it became clear that it was not the right fit for us and did not offer the right value potential to our shareholders. In that update, I made it clear that my leadership team and our board all shared a keen sense of urgency to continue to look forward and do the hard work necessary to identify the right opportunity and the right partner for ElectraMeccanica. In my career, I've come to learn that while difficult circumstances may not be welcome, they are excellent opportunities to learn.... The process by which we evaluated new opportunities was deeply informed by everything we had previously learned.
In particular, we wanted to make sure we were engaged with a business that was already in market with a great vehicle. We wanted to talk to their customers to get a clear sense of how the vehicle was meeting or exceeding expectations. We wanted a company helmed by actual operators, people who understood not only the products they were building, but their own customers' needs and how to meet them. We wanted clear evidence that there was a path to profitability and that operationally, the business was capable of scaling into demand. Finally, we wanted to find a company that had a legitimate competitive advantage, not only with its product, but in its ability to serve customers in end markets that were themselves on a long-term growth trajectories.
That's a lot to have on our wish list, certainly, and it ruled out a lot of candidates, but it did leave one. What makes me so excited today is that following months of meetings, diligence, and negotiations, I can tell you that I believe we found the right partner in Xos. This leads me to the second point I wanted to make, which is to talk a little bit more about what we see when we look at Xos, its market, and its future potential. Dakota has already established himself as an excellent spokesman for Xos. But if you think about the high bar ElectraMeccanica had established for ourselves when it came to looking at other businesses, I'll make the following observations. One, Xos is in market today selling a great vehicle.
Xos has already delivered hundreds of their Class 5 and 6 fully electric step vans to commercial vehicle operators that include names you'll immediately recognize, including FedEx Ground, Penske, and Loomis. These are not only household names, but they are large, stable companies with extremely high expectations for their equipment, especially the vehicles that are their lifeblood. Xos has established strong sales momentum. Dakota said earlier that the company had delivered over 600 electric trucks in the last four years, but 215 of those have been delivered in the last two quarters alone, and they have seen sequential increases in deliveries each and every quarter of 2023. Two, even though the customer list speaks for itself, we wanted to hear directly from Xos customers.
I can tell you that Xos customers, including everyone from the folks in finance to the drivers themselves, are enthusiastic about the Xos Stepvan. Whether we're talking about bottom-line results through offering fleet operators a lower total cost of ownership versus various diesel options, maintenance crews appreciating an existing cabin frame they are familiar with, or drivers who appreciate the comfort, quiet, and the performance of an electric Stepvan, everyone loves it. Three, the team that founded and operates Xos know their market and understand their customers. Both Dakota and his co-founder are former fleet owners and operators. They built Xos from the ground up to address the specific issues facing EV adopters. They themselves had firsthand knowledge as operators.
They knew that building a great electric step van was only part of the equation, and why Xos offers fleet customers not just an incredibly well-designed truck, but has built an entire energy solutions business to remove roadblocks, including mobile charging solutions, fixed charging hardware, and turnkey infrastructure solutions. Fourth, as Xos scales its business in response to customer demand, it is scaling with profitability in mind. Xos is not only building and delivering more vehicles than ever before, the company achieved a significant milestone in the third quarter of 2023. It has delivered positive gross margins. We expect that the company's gross margins will continue to expand and over time, see a clear path to profitability. The company is at an inflection point where it can comfortably grow into its existing cost structure and distribute its expenses across an expanding revenue base.
Fifth, and finally, Xos is currently the leading U.S. electric truck OEM, capable of providing fleet operators with a Class 5 and 6 step van in the kinds of volume that will be created by a combination of not just regulatory tailwinds, but standalone economics, because they're simply a better, lower cost option for fleets. A lot of companies have test models and prototypes that propose to allow fleet operators to meet increased regulatory requirements to switch to zero-emission delivery vehicles. For example, as of this month, the state of California is mandating any new delivery trucks purchased by fleet operators that deliver in the state buy only electric, or that by 2025, 10% of its total fleet must be electrified.
Xos is in a market-leading position as one of the few scale manufacturers capable of helping customers meet these regulations by offering an in-production electric step van, a single point of contact for charging infrastructure support and an in-house team that liaises with the state and federal governments to secure rebates. But even without that kind of regulatory support, Xos makes a vehicle that, over time, is simply economically more efficient for fleet to adopt and put into service. Taken together, we saw Xos a clear competitive advantage. As we entered into initial, then more detailed conversations with Dakota and his team, it became clear that Xos was itself at a unique inflection point.
Our shared belief is that the addition of EMV's cash resources would create the conditions necessary to help the combined company meet any short-term liquidity needs, provide essential working capital, and set the business firmly on the next stage of its journey. Before I turn the call back over to Dakota, I want to emphasize to our shareholders that I strongly believe that combining these two companies creates a whole that is much stronger than the sum of its parts. Xos is a solid company with a great product in a strong and growing segment of the market, and they have a crystal clear vision that resonates deeply with EMV's historic mission to close the last gas station. Xos aims to decarbonize commercial transportation with reliable electric trucks and the tools to adopt them, making zero-emission last mile delivery a reality.
With the addition of our capital, which I believe represents the most effective way to put our balance sheet to work for the benefit of our shareholders, Xos will be in a position to create more value more quickly for all of its stakeholders. For more information, I encourage shareholders to visit our microsite at xosandemv.com for the most updated information regarding this proposed combination. For complete information about the transaction, shareholders should refer to the definitive Proxy Statement, which we expect to be filed with the SEC and publicly available in early February. Also, don't hesitate to reach out to our investor relations team at ir@emvauto.com. With that said, I want to thank shareholders for your continued support, and now turn it back to Dakota.
Thanks, Susan. In summary, we are at a positive inflection point. Xos is at the forefront of the industry with proven economics and established customer relationships. We are confident our combination with ElectraMeccanica will provide Xos the capital needed to continue accelerating the growth we achieved in 2023. As new Xos shareholders, you will get to participate in this exciting time, and I look forward to sharing that success with you in the coming quarters. I'll now turn it over to Xos's General Counsel, Christen Romero, who will provide certain information related to the Proxy Statement and where such information should be able to be found. Thank you, everyone, and have a great day.
Additional information and where to find it. In connection with the proposed transaction, Xos and ElectraMeccanica intend to file with the U.S. Securities and Exchange Commission, i.e., the SEC, joint preliminary and definitive proxy statements, including management information circulars and other relevant documents relating to the proposed transaction. Probably after filing the joint definitive proxy statement with the SEC, Xos and ElectraMeccanica will mail the joint definitive proxy statement, including management information circulars and a proxy card, to Xos stockholders and ElectraMeccanica stockholders as of a record date to be established for voting on the matters related to the proposed transaction and any other matters to be voted on at the special meetings of Xos's stockholders and ElectraMeccanica shareholders, respectively.
Before making any voting decision, investors and security holders are urged to read the joint proxy statements and the management information circulars, including any amendments or supplements thereto, as applicable, and any other documents that Xos and ElectraMeccanica will file with the SEC in connection with the proposed transaction or incorporate by reference in the joint proxy statements and management information circulars, as applicable, when they become available, because they will contain important information.
Security holders may obtain free copies of the joint preliminary and definitive proxy statements and management information circulars, including any amendments or supplements thereto, and any other relevant documents filed by Xos and ElectraMeccanica with the SEC in connection with the proposed transaction when they become available on the SEC's website at www.sec.gov, on the Canadian System for Electronic Document Analysis and Retrieval Plus website at https://www.sedarplus.ca/, on Xos's website at www.xostrucks.com, by contacting Xos's investor relations via email at investors@xostrucks.com, on ElectraMeccanica's website at https://ir.emvauto.com, or by contacting ElectraMeccanica's investor relations via email at ir@emvauto.com, as applicable.