🛬 Boeing's Nosedive is Our Climate Problem to Fix
Vol 76
This newsletter aims to separate the signal from the noise for investment in all things sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
Big news! Enduring Planet (where I serve as a venture scout) has launched Enduring Planet CFO, a trusted startup partner for bookkeeping, accounting, financial planning and analysis, and fundraising. Enduring Planet CFO builds on the team’s deep financial expertise, proprietary accounting and prediction platform, and monster co-investor network. Fractional CFO services include monthly bookkeeping, reconciliation, and reporting, live pro-formas, monthly tracking of performance to plan, advisory support, and access to the Enduring Planet investor network.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
And Battery Aero (California, USA): Battery systems designed for aviation
Avium (Massachusetts, USA): Software to manage shared airspace for eVTOL operations in urban areas
Fractal EV (Canada): Manufacturer of L2 EVSEs with embedded operations & maintenance software
FTEX (Canada): Manufacturer of software-enabled controllers for micromobility
GreenIRR (Connecticut, USA): Carbon accounting software for heavy-duty truck fleets
Inner (Netherlands): Automated scan and X-ray imaging for EV battery state of health
Mazlite (Canada): Industrial IoT platform to reduce paint waste in auto manufacturing and other spray environments
Sparqle (Netherlands): Logistics network for sustainable last-mile delivery via micromobility
Voyager Logistics (California, USA): Autonomous maritime logistics
Wright Electric (New York, USA): Motors, generators, and batteries for aviation & maritime
💰FUNDING: Capital raises from startups previously featured in Startup Watch
Buupass (Vol 25) secured an investment from Tim Draper (amount undisclosed)
Electric Era (Vol 30) secured a $1M grant from the Washington State Dept of Commerce
Beacon AI (Vol 52) secured a $1.25M contract from the US Air Force
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📰QUICK HITS: Notable news from the last two weeks
👩🏽⚖️Government, Policies & Cities
🚲 Denver launched its new e-bike rebate rules. This time around, there’s a provision around battery safety certification.
🤖 The California Public Utilities Commission (CPUC) gave Waymo permission to operate its robotaxis on the SF Peninsula and in Los Angeles. Expect continued tussles between city authorities and the state regulator on the rollout.
🚨US President Biden called Chinese EVs a security threat. An alignment of interests between protectionist instincts and raising geopolitical concern about China’s data reach.
🇪🇸 Spain is banning most domestic flights under 2.5 hours that have a rail alternative. While mostly symbolic, the move underscores the climate benefits of high-speed rail over short-haul aviation.
🔬Markets & Research
🚲 A new study looks at the effectiveness of e-bike rebate programs. One of the bigger insights is that climate benefits may be overblown, but that other benefits like health and quality of life may be underappreciated.
🇩🇪 Researchers looked into the impact of Germany’s 9 Euro Ticket on the mobility and social participation of low-income families. The short-term benefits appear quite notable, but mostly disappear once the subsidy is removed.
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🏭 Corporates & Later Stage
🏴☠️ Apple finally axed its EV program. Apple struggled to build the partnerships necessary for success as a car manufacturer, but it will continue to be a major force in mobility via iPhone and CarPlay, among others.
🔌 IONNA, the EV charging network from 7 legacy car companies, officially launched and will start opening its first charging stations later this year. The OEMs may be falling for the temptation to put more chargers in the ground first. A more effective initial effort would be to purchase one of the existing network operators and focus on the software integration. Putting new infrastructure in the ground really only makes sense once you’ve solved the broken user experience.
⬇️ GM halved the value of its Cruise subsidiary. There was once a time when Cruise was the presumptive runner-up to Waymo. No longer.
😤 Tesla continues to struggle to serve fleet customers. Hertz is far from the only fleet player who feels like Tesla doesn’t care about them.
🧌Honda has launched a plug-in fuel cell hybrid. This is the answer to a question nobody asked.
🆓 Toyota is coming close to giving away its Mirai fuel-cell car for free. 60% off the purchase price and $15K in free hydrogen fuel is a good deal in theory, but the network for refueling hydrogen cars is shrinking, not growing.
💧Sustainable Aviation Fuel (SAF) had a banner week, with IAG inking the first purchase commitment from a European airline and Southwest investing in LanzaJet. While the announcements are splashy, aviation operators will be some of the first to admit (off the record) they have doubts about SAF’s viability.
🐣 Startups & Early Stage
🥀 EV maker Fisker may be on its last legs. While rumors swirl around a potential rescue from a player like Nissan, it seems more likely that legacy car companies might be wondering what the right strike price on Rivian stock is.
🚣♂️ Delivery Mates is piloting maritime-to-cargo bike delivery along the Thames in London, bypassing any need for delivery vans. A good complimentary data point to NYC’s maritime highway efforts.
🤝Shared mobility provider Cityscoot, who entered insolvency in November 2023, may be purchased by Spanish competitor Cooltra for €400k. Given approximately 300K Cityscoot customers in Paris, that’s about 1.33 euros per customer acquired, a screaming deal.
🚍 Premium bus provider Landline entered the Canadian market, allowing Air Canada to offer “connecting flights” from their Toronto hub to other regional airports in Ontario. If you can make the user experience seamless, this is a great approach.
☣️ Boring Company employees claim the company’s safety approach is a ticking time bomb. Las Vegas Mayor Carolyn Goodman continues to critique the Vegas project.
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DEEP DIVE: Boeing’s Nosedive is Our Climate Problem to Fix
If you’re skittish about taking a flight in a Boeing 737 Max, you’re not alone. Boeing’s fourth-generation 737 took its maiden flight in 2016 and has been a disaster ever since. Fatal crashes in 2018 and 2019 that killed almost 350 were attributed to Boeing software decisions. Earlier this year, the door plug on a 737 Max flew off midflight due to Boeing’s shoddy manufacturing processes.
Boeing shareholders are rightfully up in arms about the company’s problems, which effectively started when it merged with McDonnell Douglass in 1997. Alas, Boeing’s problems are so severe that it will pose a structural challenge to certain decarbonization pathways for long-haul aviation. Resolution may require a degree of market intervention by either corporations or governments in a manner not seen since the late 1960s, when the governments of France, West Germany, and the UK started creating Airbus.
The large airplane market is effectively a duopoly, with 99% of the market split between Boeing and Airbus. Porter’s Five Forces illustrate why: the barriers to entry are frighteningly high, exceeding those in shipbuilding or car manufacturing.
Airlines historically have had limited bargaining power vis-a-vis airplane manufacturers, but weren’t completely powerless. After all, if Airbus wasn’t responsive to repeated requests from Lufthansa for, say, more fuel-efficient plane designs, Lufthansa always had the option of threatening to take some future orders to Boeing. This threat of customer defection is what motivates Airbus to continue innovating.
This competitive dynamic works only when both manufacturers are credible market players. In a recent FT article, Michael O’Leary, chief executive of Ryanair, noted: “It is absolutely critical that we have a strong Boeing and that we have a strong Airbus and that the two of them at least compete with each other, not just for orders, but also . . . in terms of technological developments.” With Boeing limping along, airlines have lost bargaining leverage with Airbus to demand fuel-efficiency breakthroughs. It’s hard to negotiate when you have no real alternatives.
Things are likely to get worse before they get better: Boeing is underinvesting on R&D compared to Airbus.
So what happens next?
COMAC, the fledgling plane maker launched by the Chinese government, now has a slightly better chance of actually succeeding. Similarly, Brazilian airplane manufacturer Embraer, who has generally avoided stepping into the Airbus-Boeing large plane market, may make a run for some of Boeing’s market share.
Sustainable aviation fuel (SAF) stands a better chance of scaling more quickly, as the transition can be undertaken by airlines without any involvement from Boeing. Conversely, the path for hydrogen becomes more difficult, as both new planes and new airport infrastructure are needed. Boeing has been more pessimistic than Airbus about hydrogen’s potential, making hydrogen infrastructure bets harder to justify.
Cargo airlines like Amazon are now more likely to become venture investors in clean-sheet airplane makers like JetZero and Natilus. Cargo airlines have been treated as an afterthought by the Boeing-Airbus duopoly, so this may be the jolt to the system that gets cargo airlines to make big bets on startups.
Boeing is unlikely to fail, but it could take a decade or even two before the company rights itself. That’s a giant business opportunity for new entrants with bigger decarbonization ambitions.
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