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Revenue Recognition
 12 Months Ended
Dec. 31, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Disaggregated revenues by major source for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Years Ended December 31,
20242023
Product and service revenue
Stepvans & vehicle incentives(1)
$42,808 $39,911 
Powertrains & hubs(1)
8,740 1,170 
Sales-type lease revenue708 1,528 
Other product revenue
1,778 831 
Total product and service revenue
54,034 43,440 
Ancillary revenue1,927 1,083 
Total revenues$55,961 $44,523 
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(1) Amounts are net of returns and allowances. Stepvans & vehicle incentives and powertrains & hubs include revenue generated from operating leases.
The Company leases stepvans and hubs to customers under operating leases with terms ranging from 24 to 36 months. At the end of the lease term, customers are required to return the vehicles to Xos. During the years ended December 31, 2024 and December 31, 2023, the Company recorded operating lease revenue of $35,000 and $37,000, respectively, on a straight-line basis over the contractual terms of the respective leases as part of Stepvans & vehicle incentives, above. During the years ended December 31, 2024 and December 31, 2023, the Company recorded operating lease revenue of $29,000 and $0, respectively, on a straight-line basis over the contractual terms of the respective leases as part of Powertrains & hubs, above.

The Company also leases stepvans and Hubs to customers under sales-type leases, as stipulated by ASC 842. Arrangements under these leases have terms of 60 months for stepvans and 24 months for Hub units. Depending on the specific lease arrangement, customers may or may not have a right to return the unit to Xos at the end of the lease term. If the customer does not have a right to return, the customer will take title to the unit at the end of the lease term after making all contractual payments. Under the programs for which there is a right to return, the purchase option is reasonably certain to be exercised by the lessee and the Company therefore expects the customer to take title to the unit at the end of the lease term after making all contractual payments. The Company recognizes all revenue and costs associated with the sales-type lease within “Sales-type lease revenue”, above, and cost of goods sold, respectively, upon delivery of the vehicle to the customer. Interest income based on the implicit rate in the lease is recorded over time as customers are invoiced on a monthly basis. For the year ended December 31, 2024, the Company recognized $0.7 million of sales-type leasing revenue and $0.2 million of sales-type leasing costs. For the year ended December 31, 2023, the company recognized $1.5 million of sales-type leasing revenue and $1.3 million of sales-type leasing costs. Sales-type leasing costs are recorded in cost of goods sold within the accompanying consolidated statements of operations and comprehensive loss.