Q&A with Wrightspeed founder Ian Wright, on electric trucks, raising funds and the problem with going green
Twelve years is a long time however, and now the Kiwi entrepreneur’s focus has shifted from electric cars to electric trucks – not the vehicles in their entirety, just the powertrains (that’s the engine, transmission, drive shafts, differentials and the final drive, for the mechanically-disinclined).
And there’s money to be made, too. According to the US Department of Energy, the U.S. medium-duty truck fleet burns $22 billion in fuel annually, with the US refuse truck fleet burning about another $6 billion in fuel (about $35k per truck per year). That’s a lot of gas, and with notoriously high emissions, truck fleet operators are increasingly looking to electric solutions to combat their rising costs.
That’s a market Wrightspeed plans on exploiting. Wrightspeed’s powertrains surpass even California’s emissions standards (the most stringent in the country) by a factor of 10. The company is now the leading manufacturer of range-extended electric powertrains for medium-duty and heavy-duty trucks, improving commercial truck efficiency and dramatically reducing fuel costs.
The company has also recently announced the release of a turbine generator that re-charges battery systems 30% more efficiently while tripling their usable power. There’s even rumour of a big New Zealand deal on the horizon.
Not bad for a lad from Dargaville, so Idealog tracked down the man himself to Wrightspeed HQ in San Jose, to find out why there’s money in trucks but not cars, why green-tech can work against you when it comes to fund raising, and how taking over the world is considerably harder than it looks.
Idealog: Hi Ian. You’ve said that then you left Tesla, you planned to make high-performance electric sports cars. Why did you switch gears, so to speak?
Ian Wright: Well the problem with high performance sports cars is that it isn’t a big enough market, so you can’t attract serious investment. That was a problem, so I had to look for something much more scalable than that.
Tesla was building vehicles, and I’d learnt a lot from that experience, so the thought was ‘can we just make the powertrain and sell that?’, and you can’t really do that with cars. Its trucks that burn all the fuel – a full-sized garbage truck burns 14,000 gallons a year and a small car only burns 250 gallons a year – so the potential for saving money on fuel [by repowering trucks] is enormous.
Ultimately, how far do you think the market for replacing electric powertrains can be taken? Do you see a time when the gas-powered vehicles are completely obsolete?
Um, no. I can’t see any tech, now or on the horizon, that can replace burning kerosene for a 747 crossing the pacific.
There are applications that are compelling, however. What we’re doing for example, you are going to see a very fast transition for electricity-powered garbage trucks. It’s just a case of ‘when is the price of fuel going increase enough and the price of batteries decrease enough to make it viable?’
It all comes down to dollars and cents in the end.
Image: 3D view of The Route plug and play repower kit.
How are tougher laws around emissions helping the cause? Can you see a one-to-one relationship between tougher emissions restrictions and demand for Wrightspeed’s products? Do businesses welcome you with open arms in places where emissions standards are tighter?
That’s a complicated question. If you talk about cars, then yes. The best of the modern cars, they are so incredibly clean now, it’s difficult to even measure the emissions from them. They’re amazingly good. But if you look at trucks, they burn a lot more fuel. They’re much dirtier engines as well. When it comes to the environmental factors, tightening standards on [trucks] has made a huge difference, for sure. That, and getting older vehicles off the road.
So we certainly are seeing business from places like California with tougher emissions laws, but for us, [the deal] is always based on the cost savings. We’re basically making a sale to the CFO. So even though we’re expensive, we can show them how they will make that investment back in a few years.
What are the obstacles for a business like Wrightspeed when it comes to getting the industry to repower its legacy fleets? What’s stopping widespread adoption of Wrightspeed technology tomorrow?
There’s a tendency for people to think that the hard part is building the technology, as if you’ll build it and then some miracle will happen. But a huge amount of work has to go into building the capacity. You need engineering, research & development, supply chain, manufacturing, engineering, inventory control – the whole process of growing up and becoming a company. We’re coming out of that engineering and research and development phase and now were growing that capability, but that takes a lot of work.
What is the funding situation like for makers of alternative fuel technology? Do investors want to support green solutions just for the feel-good factor? Or is ROI the only thing that actually matters at the end of the day?
There was a stage a few years ago when they did. But a lot of them [investors] lost their shirt on so many of those things, so I think that works against us now.
There’s a general sense that everybody wants to be clean and green, which I suppose is true to an extent, but when you’re dealing with B2B deals like this, people make economically rational decisions. When they can do that [feel good about green investment] at the same time, then people love that. But we don’t sell the environmental benefits of it at all. We sell the cost benefits of it.
Look at it this way: People have had [electric] cars they can buy for well over half a decade, and penetration is still under a half a percent. No one buys a Tesla to save money.
Given that’s the case, where does Wrightspeed get its funding rom?
It comes from individuals, professional investors, venture capital firms and strategic investors. Our first garbage [fleet operator] customer became an investor. You find dealing with these fleet operators that they’re pretty smart and they’re pretty well informed. They know what will work – so when they say “wow, this works; we’ll get behind it”, that’s great.
Looking back on the history of the company was there a moment when you said ‘hey this is actually going to work’? Or were you always confident? Or are you still waiting for that moment?
Once we had the business model, it pretty much panned out the way it was planned. Some of the things that have happened to us – what competitors do, the price of fuel – that’s out of our control, but all in all, things haven’t been too surprising.
But that saying, that being an entrepreneur is an emotional roller-coaster? That’s still absolutely true.