🪄 Is Minimum Viable Car a Pipedream?
Vol 79
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.
In this week’s Deep Dive we’ll look at whether today’s overweight cars might be replaced by micro 4-wheeled EVs. And don’t worry, I will come back to 3 things I want to talk to you about shortly.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
Allye (United Kingdom): Mobile charging solutions
Alrik (Sweden): Logistics software enabling construction supervisors to monitor fleet activity and reduce emission
Clyde Hydrogen (United Kingdom): Electrolyser for the production of green hydrogen
The EV Button (Massachusetts, USA): Large-scale EV fleet services
EV Logic (California, USA): Software to optimize EV charging siting decisions
ex9 (France): Autonomous transport for movements of trailers on logistics yards
Kilowatts (California, USA): EV charging superapp for Tesla owners
Terra Watts (Massachusetts, USA): Long-distance wireless power transmission
Varamis Rail (United Kingdom): Electric rail operator for goods movement
💰FUNDING: Capital raises from startups previously featured in Startup Watch
EV Realty (Vol 49) raised a $200M JV for truck charging with GreenPoint
AutoNxt Automation (Vol 51) raised a $3M seed round from Bluehill Capital, Sama Capital, Keiretsu Forum, and others
Ammobia (Vol 63) raised a $4.2M seed round from Starlight Ventures, Collaborative Fund, and others
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📰QUICK HITS: Notable news from the last two weeks
👩🏽⚖️Government, Policies & Cities
〰️ Plans for Saudi Arabia’s NEOM project are in turmoil, as ambitions got scaled back from a linear city of 170km to just 2.4km. It’s still not clear why this project is a better use of capital than investing in infrastructure in Riyadh or Jeddah.
🌴 San Diego may lower spending on roads by making them narrower. For more, see this piece I did with My Climate Journey.
🐻 The D.C. Circuit Court has upheld California’s ability to set its own vehicle emissions policies. While this exemption has stood for 50 years, a historically conservative Supreme Court may have its own plans to strike down California exceptionalism.
🚄 Florida Governor Ron DeSantis nixed using state dollars to finance Brightline’s high-speed rail expansion from Orlando to Tampa. Brightline is a private operator, so public support should be a bonus, not a prerequisite for success.
🏰 The European Court of Human Rights has ruled in favor of 2,000 Swiss women who sued their government for climate inaction. Others will try to build on this precedent.
🚲 The European Declaration on Cycling is now official. While directional rather than deeply prescriptive, the declaration will cascade down into national and city policies.
🔬Markets & Research
🦍 Our voracious mining appetite for EV batteries may put Africa’s great apes at risk. The faster we scale battery recycling, the fewer new mines we need.
💨 A fantastic new study just proved that the Bay Area’s drop in CO2 emissions was driven by EV adoption. The study relied on 50 sensors throughout the Bay Area to measure emissions in real time.
⛴️ Ferries have become a growth market in the US. These vessels are primed for electrification.
🏭 Corporates & Later Stage
📉 Tesla’s annus horribilis continues amidst a large drop in volumes and reports that it’s canceling a much anticipated low-cost car. CEO Elon Musk is promising the reveal of a supposed robotaxi in August, but hasn’t begun any of the lengthy procedures with regulators.
🏭 Tesla showed off its prefab EV chargers and Wells Fargo started financing ChargePoint’s skid-mounted units. The charging winners are figuring out how to maximize factory efforts to minimize on-site buildout needs.
🛻 Rivian stock is at an all-time low as Q1 volumes dropped slightly and Ford cut prices on its electric pickups. The company is keeping hope alive by unveiling future lower-priced models like the R3.
🏭 What changed when VW converted its massive Zwickau factory to make only EVs? Short answer is not much except for rising anxiety levels over VW’s future competitiveness in EVs.
📱 Chinese smartphone giant Xiaomi unveiled its first EV. Don’t hold your breath for Motorola to do the same.
📲 Contract manufacturing giant Foxconn invested in American EV startup Indigo Technologies. For more on Foxconn’s all-important EV plans, see Vol 47.
🧟♂️ GM’s Cruise unit is inching back into operations. It’s back in Phoenix, but with safety drivers and without passengers.
🐭 Disney’s Tomorrowland ride is ditching gas-powered cars. Small, but symbolic.
🚊 California’s Caltrain has successfully tested running electric train service from San Francisco to San Jose. The electric trains enter revenue service this autumn, replacing diesel.
⚓️ The Port of San Diego is home to the nation’s first electric tugboat. See Vol 29 for more on how boats and ships go zero-emissions.
🐣 Startups & Early Stage
🦃 Bird micromobility has successfully exited Chapter 11. Rival Lime, purportedly profitable, is spending $55M to expand globally as it prepares for its IPO.
📽️ Lectric partnered with YouTube superstar Mr Beast to give away 600 e-bikes to those in transport deserts. Hopefully this builds enthusiasm for more subsidies for micromobility.
🦄 A French startup raised 200M EUR to expand its hydrogen car refueling network. Being successful in venture capital requires placing non-consensus bets and this one definitely qualifies as non-consensus.
🔏 Zevvy, the pay-per-mile EV lease company, has shut down. Kudos to founder Andrew Krulewitz for sharing the good, the bad, and the ugly.
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DEEP DIVE: Is Minimum Viable Car a Pipedream?
The Ford Model T was cheap (~$25K in today’s dollars) and light, weighing about 1,200 pounds. Over the last century, cars have gotten significantly heavier in response to safety regulations, as well as to satisfy consumers’ desires for a living room on wheels.
And with the EV transition, cars are likely to become even more expensive and heavier. That’s especially true given the obsession with promising an ever-larger range, which requires more batteries. We’re now up to a norm of a 250-mile range, about 5X the daily commute length.
Have cars in the US become too heavy, complex, and expensive for their own good? Yes.
Does that mean that we’re likely to see a return to a “minimum viable car” that’s significantly cheaper and smaller? Probably not.
There are equivalents to this situation across lots of industries, as noted by the godfather of disruptive innovation Clayton M. Christensen. He posited that “products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use…Small off-road motorcycles introduced in North America and Europe by Honda, Kawasaki, and Yamaha were disruptive technologies relative to the powerful, over-the-road cycles made by Harley-Davidson and BMW.”
And there’s no shortage of entities trying to build a 4-wheeled “micromobility” vehicle below 500kg (1,000 pounds), aimed at weaning Western car buyers off their addiction to city driving in giant SUVs.
While 4-wheeled micromobility has some appeal, it’s unlikely to reach significant scale in most Western markets until we solve for compatibility with the surrounding environment and build more sufficient options for access over ownership.
Many would-be buyers like the idea of a 4-wheeled micro EV, as shown by this McKinsey consumer survey. But that’s before they seriously consider the dynamics of sharing the city road with massive vehicles capable of highway speeds.
4-wheeled micromobility needs one or more potential tailwinds before it’s compatible with the surrounding urban environment:
Automatic speed limiting mechanisms for highway-speed vehicles as well as enhanced vehicle-to-vehicle communications for collision avoidance
Designating lanes for 4-wheeled micromobility (a true chicken-and-egg challenge) or allowing for bike-lane use
Cities or residential communities that prohibit highway-speed vehicles altogether
In addition to solving for compatibility with the surrounding environment, 4-wheeled micromobility suffers from a business model problem. These vehicles are often better suited to the trip economy, with consumers purchasing individual trips rather than purchasing a vehicle outright. And while Uber and Turo are great examples, we’re still far from trip economy nirvana where consumers feel ready to drop ownership of their large vehicles in favor of having permanent access to a deep pool of reasonably-priced, 4-wheeled micro EVs available at a moment’s notice.
So don’t hold your breath for a 4-wheeled micromobility startup to displace GM any time in the foreseeable future.
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