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XL Hybrids, a company specializing in converting gas- and diesel-powered company vehicles to electric-hybrids, has raised $22 million in a series D round of funding. The round included participation from IKEA Group (IKEA) and Constellation Technology Ventures (CTV) — the VC arm of U.S. energy giant Exelon — in addition to a number of “large family office” investors.

Founded in 2008, Massachusetts-based XL Hybrids targets company fleets specifically, as it promises companies vast savings over the cost of completely replacing all their vehicles with electric or hybrid versions. Its electrification works on top of existing powertrains across a range of vehicles, including transit vans, shuttle buses, box vans, and pickup trucks, and the transformation takes as little as six hours to complete.

Aside from cutting harmful emissions, converting existing vehicles to plug-in hybrids improves fuel economy and reduces operating costs — this will be particularly pronounced in large organizations that may have hundreds of vehicles in their fleets.

Prior to now, XL Hybrids had raised around $28 million in outside funding, and with its latest cash injection the company said that it plans to double down on its development and sales efforts across North America.

Electric avenue

With car manufacturers increasingly committing to electric vehicles, including Volvo, which recently announced plans to make only electric or hybrids from 2019, it’s fairly clear which direction the auto industry is heading. But with millions of gasoline and diesel vehicles out there already, XL Hybrids is filling a sizable void, targeting companies that might otherwise struggle with the initial cost of pursuing electrified fleets.

While energy company Exelon’s involvement makes sense, why would a furniture retailer such as IKEA invest in this technology? Well, IKEA has actually been a proponent of electric vehicles for some time already. Back in 2007, it announced it was switching its U.K. company car fleet to hybrids, and a few years back it installed electric vehicle (EV) rapid chargers at all of its U.K. retail locations.

It also goes without saying that IKEA itself relies on massive fleets of vehicles to transport furniture and other goods between warehouses and to customers’ houses. Last month, it announced a major EV initiative that could see it switch its entire transport infrastructure, including its own vehicles and partner companies that carry out home deliveries, to electric or hybrid. Indeed, the company joined a global coalition of corporations called the EV100, which includes HP, DHL, Baidu, and Unilever, to support EV technology.

“At IKEA Group, we want to support innovative companies that are developing new technologies, solutions, and business models, and one of our priority investment areas is to help accelerate the transition toward electric transport,” noted Krister Mattsson, head of financial asset management at IKEA. “Through the investment in XL Hybrids, we want to enable the company to become a leading provider of electrification solutions for commercial vehicle fleets.”

Today’s news comes just a few weeks after IKEA threw something of a curveball with the announcement of plans to acquire gig-economy startup TaskRabbit.

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