An axle assembly comprising: an axle housing; a differential carrier that is mounted to the axle housing and rotatably supports a differential; a differential carrier cover that is mounted to an end of the differential carrier that is disposed opposite the axle housing; an electric motor module disposed in the differential carrier between the axle housing and the differential carrier cover; a gear reduction module that is disposed adjacent to the differential carrier cover, wherein the gear reduction module transmits torque from the electric motor module to the differential via a drive pinion and the gear reduction module includes: a sun gear that is operatively connected to the electric motor module and rotatable about an axis; a planetary ring gear that is disposed on the differential carrier cover; a planet gear (202, 202') that meshes with the sun gear and the planetary ring gear; and a planet gear carrier that rotatably supports the planet gear; and a shift mechanism that is moveable to selectively engage a low range gear ratio and a high range gear ratio of the gear reduction module, characterised in that the shift mechanism has a shift collar that transmits torque from the gear reduction module to the drive pinion, wherein the shift collar is received inside the sun gear and is movable between a first position in which the low range gear ratio is engaged, a second position in which a neutral gear ratio is selected, and a third position in which the high range gear ratio is engaged. an axle housing; a differential carrier that is mounted to the axle housing and rotatably supports a differential; a differential carrier cover that is mounted to an end of the differential carrier that is disposed opposite the axle housing; an electric motor module disposed in the differential carrier between the axle housing and the differential carrier cover; a gear reduction module that is disposed adjacent to the differential carrier cover, wherein the gear reduction module transmits torque from the electric motor module to the differential via a drive pinion and the gear reduction module includes: a sun gear that is operatively connected to the electric motor module and rotatable about an axis; a planetary ring gear that is disposed on the differential carrier cover; a planet gear (202, 202') that meshes with the sun gear and the planetary ring gear; and a planet gear carrier that rotatably supports the planet gear; and a shift mechanism that is moveable to selectively engage a low range gear ratio and a high range gear ratio of the gear reduction module, characterised in that the shift mechanism has a shift collar that transmits torque from the gear reduction module to the drive pinion, wherein the shift collar is received inside the sun gear and is movable between a first position in which the low range gear ratio is engaged, a second position in which a neutral gear ratio is selected, and a third position in which the high range gear ratio is engaged. a sun gear that is operatively connected to the electric motor module and rotatable about an axis; a planetary ring gear that is disposed on the differential carrier cover; a planet gear (202, 202') that meshes with the sun gear and the planetary ring gear; and a planet gear carrier that rotatably supports the planet gear; and a shift mechanism that is moveable to selectively engage a low range gear ratio and a high range gear ratio of the gear reduction module, characterised in that the shift mechanism has a shift collar that transmits torque from the gear reduction module to the drive pinion, wherein the shift collar is received inside the sun gear and is movable between a first position in which the low range gear ratio is engaged, a second position in which a neutral gear ratio is selected, and a third position in which the high range gear ratio is engaged.