XL Fleet rose 15% to $5.35 in early Tuesday trade after the Defense Innovation Unit and the United States Army's Project Manager Transportation Systems gave it a contract to develop a prototype fuel-saving technology for military vehicles.

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Following the launch of the project in early October, XL Fleet was one of two companies awarded the contract to create a pilot technology project over the next 12 months.

"We are honored by the opportunity to compete for this highly selective U.S. Government contract to develop fuel-saving solutions for a wide range of applications for tactical military vehicles," said Tod Hynes, founder, and president of XL Fleet.

If the vehicle electrification solutions company succeeds, the technology might be applied to tens of thousands of existing military vehicles in a variety of applications.

The contract is part of the Defense Department's efforts to reduce fuel consumption throughout its fleet of more than a quarter-million military tactical vehicles.

"We can help extend the operational range of their tactical vehicles while supporting our troops' safety and providing significant fuel and operating cost savings and reducing greenhouse gas emissions," added Hynes.