Spruce Power Announces Actions to Exit Legacy XL Fleet Drivetrain Business

-- Completes Business Model Transformation into a Pure-play Clean Energy Provider--

--Stronger Financial Position with Substantially Reduced Cash Usage--

Spruce Power (NYSE: SPRU) (“Spruce” or the “Company”; formerly known as XL Fleet), a leading owner and operator of distributed solar energy assets across the United States, today announced completion of its strategic transformation to a pure play clean energy solutions business:

• Spruce Power will cease operations of its hybrid and drivetrain-related business lines, including all product development and commercial activities.
  
  

• The Company entered into a definitive agreement whereby The Shyft Group USA, Inc. (“Shyft”), a wholly owned subsidiary of The Shyft Group, Inc. (NASDAQ: SHYF), will assume completion of a pilot development agreement with the Department of Defense related to vehicle hybridization (“DOD program”). Spruce will retain rights to potential future royalties from the program.
  
  
  
  Related to the development opportunity, Shyft will acquire from XL Fleet certain technical equipment and assume a lease in Wixom, Michigan related to the initiative. Shyft is also expected to offer employment to engineers and others currently employed by XL Fleet.
  
  

• In a separate transaction, Spruce has sold certain battery inventory and its legacy hybrid technology to RMA Group, a leading automotive and equipment supplier in Southeast Asia.

The Company anticipates that these actions will be completed by January 1, 2023 and should significantly reduce future operating cash use. Additionally, Spruce believes that the previously disclosed warranty reserve is sufficient to meet probable claims covering those vehicles currently under warranty.

“These actions transform our business into a pure-play provider of clean energy solutions to residences and small businesses,” said Eric Tech, Chief Executive Officer of Spruce Power. “We are excited that our former colleagues will have a new opportunity with Shyft to bring EV solutions to specialty commercial vehicle manufacturing, assembly, and upfit. We wish them well in the transition.”

Tech continued, “With these steps, our business transformation is complete, and we enter 2023 in a strong position, able to unlock the value of Spruce Power as a streamlined and refocused company. As a pure play renewable energy provider, we can soon transition the Chief Executive Officer role from me to our President Christian Fong. We expect to announce that transition in the weeks ahead.”

About Spruce Power

Spruce Power is a leading owner and operator of distributed solar energy assets across the United States. We provide subscription-based services that make it easy for homeowners and small businesses to own and maintain rooftop solar and battery storage. Our as-a-service model allows consumers to access new technology without making a significant upfront investment or incurring maintenance costs. Our company has more than 51,000 subscribers across the United States. For additional information, please visit www.sprucepower.com.

Forward Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of management and are not predictions of actual performance. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including but not limited to: expectations regarding the growth of the solar industry, home electrification, electric vehicles and distributed energy resources; the ability to successfully integrate the Spruce Power acquisition; the highly competitive nature of the Company’s business and markets; the ability to execute on and consummate business plans in anticipated time frames; litigation, complaints, warranty claims, product liability claims and/or adverse publicity; results of operations, financial condition, regulatory compliance and customer experience; the potential loss of customers; privacy and data protection laws, privacy or data breaches, or the loss of data; general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; risks related to the rollout of the Company’s business and the timing of expected business milestones, including supply chain and labor shortage challenges in the solar panel markets; the effects of competition on the Company’s future business; the availability of capital; and the other risks discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed on March 31, 2022, subsequent Quarterly Reports on Form 10-Q and other documents that the Company files with the SEC in the future. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company specifically disclaims any obligation to update these forward-looking statements.

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