A spindle assembly includes a main housing, a spindle mounted for rotation within the housing, a wheel hub attached to the spindle, a coupling located adjacent to an inner end of the spindle, and a disconnect shaft located within a bore of the coupling. The disconnect shaft is moveable in an axial direction between an engaged position in which a splined portion of the disconnect shaft mates with splined portions of both the spindle and the coupling to prevent the spindle from rotating independently of the coupling, and a disengaged position that allows the spindle to free-wheel relative to the coupling. A sprocket or gear is connected to an inner end of the coupling to connect the spindle assembly to a drive motor. An actuator is connected to an inner end of the disconnect shaft to move the shaft between its engaged and disengaged positions.