An axle assembly comprising: an electric motor having a rotor that is rotatable about an axis; a drive pinion that extends through the rotor and is rotatable about the axis; a gear reduction unit that includes: a first gear set that has a first sun gear that is operatively connected to the rotor and is rotatable about the axis, a first planetary ring gear that is fixedly positioned such that the first planetary ring gear is not rotatable about the axis, a first set of planet gears that meshes with the first sun gear and the first planetary ring gear, and a first planet gear carrier that rotatably supports the first set of planet gears; and a second gear set that has a second sun gear that is rotatable about the axis, a second set of planet gears that meshes with the second sun gear and that is rotatably supported on the first planet gear carrier, wherein members of the second set of planet gears have a smaller diameter than members of the first set of planet gears; and a shift collar that is rotatable about the axis with the drive pinion and that is moveable along the axis between a first position in which the shift collar couples the first planet gear carrier but not the first sun gear or the second sun gear to the drive pinion and a second position in which the shift collar couples the second sun gear but not the first sun gear or the first planet gear carrier to the drive pinion. an electric motor having a rotor that is rotatable about an axis; a drive pinion that extends through the rotor and is rotatable about the axis; a gear reduction unit that includes: a first gear set that has a first sun gear that is operatively connected to the rotor and is rotatable about the axis, a first planetary ring gear that is fixedly positioned such that the first planetary ring gear is not rotatable about the axis, a first set of planet gears that meshes with the first sun gear and the first planetary ring gear, and a first planet gear carrier that rotatably supports the first set of planet gears; and a second gear set that has a second sun gear that is rotatable about the axis, a second set of planet gears that meshes with the second sun gear and that is rotatably supported on the first planet gear carrier, wherein members of the second set of planet gears have a smaller diameter than members of the first set of planet gears; and a first gear set that has a first sun gear that is operatively connected to the rotor and is rotatable about the axis, a first planetary ring gear that is fixedly positioned such that the first planetary ring gear is not rotatable about the axis, a first set of planet gears that meshes with the first sun gear and the first planetary ring gear, and a first planet gear carrier that rotatably supports the first set of planet gears; and a second gear set that has a second sun gear that is rotatable about the axis, a second set of planet gears that meshes with the second sun gear and that is rotatably supported on the first planet gear carrier, wherein members of the second set of planet gears have a smaller diameter than members of the first set of planet gears; and a shift collar that is rotatable about the axis with the drive pinion and that is moveable along the axis between a first position in which the shift collar couples the first planet gear carrier but not the first sun gear or the second sun gear to the drive pinion and a second position in which the shift collar couples the second sun gear but not the first sun gear or the first planet gear carrier to the drive pinion.