🎭 The EV’s Emotional Appeal to the Consumer
Vol 69
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.
You may already know that one of my go-to podcasts in the space is Clean Techies because they offer lessons from some of the best founders and investors in the climate space. I’m happy to share that they’ve now launched an Insights newsletter that bundles all the amazing lessons from the podcast into readable content. Check it out here.
This week’s Deep Dive is by guest author Shetil Rastogi on The EV’s Emotional Appeal to the Consumer.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
Bloom (Michigan, USA): Vertical integration solution for micromobility manufacturing, distribution and servicing
Fleet (California, USA): Employee benefits management software for mobility
Gaea (United Kingdom): Process automation software for the battery recycling industry
GreenGo (France): Travel booking platform for low-carbon travel
PiggyBack Network (Illinois, USA): Sharing economy approach to youth carpooling
Plug (California, USA): Dealer B2B digital marketplace for used EVs*
LTA Research (California, USA): Sergey Brin-backed electric airship manufacturer
Valar Atomics (California, USA): Moonshot of carbon-neutral oil and gas via nuclear fission
Universe Energy (California, USA): Battery disassembly via robotics
Zero Carbon Charge (South Africa): Off-grid EV charging network for South Africa
💰FUNDING: Capital raises from startups previously featured in Startup Watch
Clip (Vol 23) raised a $2.8M seed round from Motovolt Mobility and others
Princeton NuEnergy (Vol 24) raised a $16M Series A from GS Futures, Shell Ventures, Honda, and others
Davinci Micro Fulfillment (Vol 28) raised a $3M seed round from Las Olas Venture Capital, Venture 53 Fund, and Silicon Road Ventures
Beev (Vol 30) raised a 3M EUR seed round from Founders Future, Karista, SIDE angels, and others
Revolv (Vol 32) raised a $25M equity project financing from Greenbacker Capital Management
B2U Storage Solutions (Vol 50) won a $1.8M grant through the USDA’s Rural Energy for America Program (REAP)
Evenergi (Vol 50) raised $5M of a $10M Series A from Aligned Climate Capital
Amber Technologies (Vol 60) raised a seed round (amount undisclosed) from Global Millennial Capital and Virta Ventures
As a reminder, the startup data set is open, for free to subscribers. If you’re a subscriber interested in accessing the Airtable with how these startups raised $1.2 billion in follow-on funding, please let me know.
📰QUICK HITS: Notable news from the last two weeks
👩🏽⚖️Government, Policies & Cities
🇮🇳 New Delhi continues to use vehicle restrictions to manage air quality. It’s not just European cities that will restrict the car access over climate concerns.
🇫🇷 In Paris (article in French), bike lane use doubled in one year. Whether you love it or hate it, the Paris transition to “bike city” happened in a relative blink of an eye.
🚲 West Hollywood became the first city in Los Angeles County to commit to building only protected bike lanes in the future. If you protect it, they will ride.
🍎 New York City wants a “blue highway” where goods in Manhattan moves from pier to e-cargo bike for last-mile delivery, bypassing the congested Port of NY/NJ. Startups would be well served to respond to the city’s related RFI.
🔥New York City’s fire commissioner implored giants of the e-bike ecosystem like Amazon, Walmart, and Grubhub to play their part in reducing fires from e-bikes. Time for the e-bike manufacturing industry to act like grownups on product quality.
⛴️ Washington State Ferries, the largest U.S. system by ridership, has shared how it will go all-electric by 2050. It’s becoming clearer that the ferry segment of maritime goes electric instead of to carbon-free molecules.
🔬Markets & Research
👨🏾💻 The Oxford University Climate Tech Collective unveiled its Climate Tech Opportunity report. Jump to page 29 for their assessment of the most promising sub-sectors for investing in sustainable mobility.
🛴 Consultancy Oliver Wyman unveiled a new study on micromobility. They estimate that micromobility more than doubles its modal share in cities by 2030, from today’s 3% to 7%.
🚞 The return of “night trains” in Europe is moving slowly. Nothing moves quickly in the world of adapting rail networks.
🏭 Corporates & Later Stage
🚲Domino’s unveiled a delivery e-bike with a built-in “pizza oven.” While not really an oven, the effort underscores how seriously Domino’s takes delivery innovations.
🇨🇳 Chinese telco and electronics giant Huawei has launched its Tesla fighter. Yet another reason why BMW, Audi, and Mercedes have such big headaches in China.
🍑 Rivian will issue $15 billion of debt to finance its Georgia factory. After several months of bad news, Rivian appears to be in a good news cycle with better-than-expected Q3 financials and the addition of John Krafcik to the board.
🥊 After a contentious vote, the Detroit 3 rank-and-file union members approved of the tentative new UAW contract ; President Biden vocally supported Toyota and Tesla workers joining the UAW; and multiple non-union automakers in the US (Honda, Hyundai, and Toyota) already announced pay raises in response to the UAW deal. The saga of this UAW agreement is far from over.
🐣 Startups & Early Stage
🔌 Electric aviation pioneers Archer and Beta are pushing for an electric plane charging standard. It’s definitely a sign of industry maturation that there’s a push for a charging standard.
👉The Humane AI Pin was unveiled, hoping to be the next big thing after the cell phone. While there will be hundreds of applications for technology like this, keep an eye on how this can help micromobility users on directions, alerts, etc.
☠️ Lots of earlier-stage companies are struggling: Micromobility operator Bird announced its Q3 financials and it’s not looking good. Ontario-based battery recycler Li-Cycle announced this week it's retaining Moelis & Co. to advise on a potential sale. Electric van maker Arrival secured an emergency investment so that it can find a buyer. And hydrogen pioneer Plug Power issued a going concern notice. There’s more struggles coming….
🇲🇦 Neo, Morocco’s first carmaker, announced its intent to IPO to fund an electrification strategy. Look for other emerging carmakers to partner with the likes of Foxconn.
🚌 Truck maker Volvo Group will acquire the battery assets of bankrupt Proterra and Phoenix will acquire the bus manufacturing businesses. Good to see Proterra’s efforts will continue in some form.
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DEEP DIVE: The EV’s Emotional Appeal to the Consumer
A Path Carved and Only Growing
By guest contributor Shetil Rastogi
Recently, I was in a conversation with some car buffs who have, for years, invested in top accessories, maintenance, and upgrades. Some were classic car owners, others premium owners and others still, those that view their cars as valuable appliances. They simply loved their cars, as long as they were ICE vehicles (ICE = Internal Combustion Engine or gas-powered vehicles).
So when I asked if they had looked at EVs, they generally rebuked the question and said that while they had the financial means to afford one, the EV industry hadn’t done enough to emotionally entice them to do so.
So, I got to thinking – is that really the case? After all, having recently just launched several of Kia’s electrified vehicles, I remember admiring greatly the emotional escalation Kia employed in its consumer communications to support its new Movement that Inspires positioning. I then answered my own question. I didn’t agree with their assessment. Simply put, the auto industry is one of the most emotionally invested consumer industries out there. And the EV sector is doing its part to continue to make it so.
I’ll use Maslow’s Hierarchy of Needs as a lens to support this assertion. Maslow argues that human needs can be encapsulated in his hierarchy. This tools is very useful in helping marketers determine (1) which needs to target and (2) which emotions to appeal to in targeting these needs. Here’s a quick refresher:
More functional categories tend to play in the lower tier of Physiology and Safety. For example, I don’t care what brand of paper towel I use as long as it picks up spills. As long as these products meet basic performance criteria, any brand will do and maybe even the lowest price point is preferred. While there are exceptions, these categories tend not to have the same level of emotional investment and consumer loyalty than those categories that position themselves higher up in the scale of emotional needs.
To that point, some categories speak to consumer needs of Belonging, Esteem and Self-Actualization. The teams we support help us feel connection and belonging to others (I’m reminded of my Sundays watching the Green Bay Packers). The clothes we wear and the cars we buy help us define our self-esteem (Adidas reminds me of my days playing soccer; my Honda Odyssey reminds me of love of being a father). And the NGOs we support (e.g. my support for UNICEF) reinforce the values that make us who we are as self-actualized people. These categories and brands tend to drive higher emotional investment and stronger loyalty. Again, auto by the stakes involved in the life of the consumer, is one of those categories.
So, the question isn’t really if the EV industry has been effective in emotionally appealing to our human needs, but really how effective it has been in doing so. And it HAS been very effective because many brands are well-entrenched for years. Traditional premium OEMs have borrowed from the quality, elitism and credibility of their longstanding history to promote their electrified line (e.g. BMW i5, Audi’s e-tron line). Despite recent problems in production and quality, Tesla’s brand is a rich emotional concoction of a pioneer and proliferator of EVs and self-driving EVs, a technology visionary and through its mass availability, a beacon of trust for the EV-weary consumer. Even up-and-coming Rivian is focusing on the self-actualization and esteem that comes from being adventurers and lovers of nature.
Digging deeper, let me apply Maslow’s Hierarchy starting with Safety. I’ll touch briefly on this given safety in auto is a tablestake for the most part (unless you’re Volvo that has differentiated itself around safety for decades). Safety concerns have permeated auto since its inception and the onset of EVs doesn’t make them immune to it. However, that these concerns exist is hardly a reason to say that the EV industry has not done its part to improve both the perception and reality of safety. For example, anecdotally, I’ve heard concerns about fires from EV batteries during collisions. However, as Liz Najman of Recurrent rightly describes, ICE vehicle fires can be frequent because of high flammability of gasoline. However, EV OEMs have automatic battery disconnects upon impact and also manual disconnects post-impact for first responders. Through the past 70 years, the industry has consistently worked to improve safety (e.g. seat belts, air bags, Lane Change Assist, Rear-Cross-Traffic alert, etc.). Battery disconnects is but one example of how the EV sector is doing its part too.
What about Belonging? I think that, with belonging, Maslow partially alludes to strength in numbers. Again, the industry has responded. Look no further than the EV clubs throughout the US led by the Electric Vehicle Association with 100 chapters and thousands of members. The EVA provides blogs, education and connection with local chapters to foster this sense of belonging. And even outside of the EVA, if you Google search for EV car clubs, you are likely to find one in your local region anywhere in the US. These clubs provide a critical function at this juncture of the EV industry in that they facilitate strength in numbers and are important to the proliferation of EV ownership, especially as the industry turns to target the masses.
Esteem is the fun one so I’ll spend a little more time on it. This is how our vehicles appeal to our bravado, confidence and self-regard. And it’s not at all different from the feeling that ICE vehicles have provided to us since the Model T - after all, we all want cars to confer a status and an esteem to us that set us apart and make us feel alive. And how do EVs do that?
Let’s start with body design. EVs are things of beauty (for the most part). So much so, in fact, that one could argue that the proportion of stunning design with the EV introduction is greater than that of any new category in the history of the industry. It almost has to be because it’s a way to make EVs more appealing and less daunting. Among others, the Pinninfarina Battista, the Rolls Royce Spectre and even the much more accessible (but game-changing), Kia EV9 and Mustang Mach E elicit that appeal in the same way that longstanding ICE vehicles have done. And this appeal will continue to grow with the burgeoning EV accessory industry, which incudes innovative products like Borla’s for the Mach E – a simulation of the sound experience for Mach E owners (via their Smartphone) - and will soon include other performance EVs.
Secondly, on esteem, let’s look at the interior design, and particularly the instrumentation and navigation panels. Here, I think EVs are setting a new standard for the entire industry. The spaceship-like interior of the Tesla Cybertruck (the same can be said of its exterior by the way), the cleanliness and efficiency of the Tesla Model 3/Y, and the cockpit-like view of the Rivian L1T are living examples of the versatile tech experience that EVs add to our daily drives. For those who derive esteem from being technology afficionados or from driving vehicles that feel futuristic and ahead of the curve, EVs meet the mark here too.
Finally, we reach the top of Maslow’s emotional needs and that is Self-Actualization. In my opinion, far more than ICE vehicles ever have, EVs speak very deeply to the sense of morality, responsibility and inner purpose of Maslow’s Self-Actualization. When we drive our EVs, somewhere in our subconscious, we feel a sense of moral contribution to our community via cleaner air and a more environmentally secure future for our children. And maybe we even feel patriotism via a reduced reliance on fossil fuels and the national security concerns this reliance can carry. There is deep purpose underlying these values and it is this purpose that is among the foundations on which the EV industry was created and has grown.
Yes, the EV industry is not without issue to consumers. As the industry more fully exhausts our Innovators and Early Adopter consumers, penetrating the Early Majority is highlighting many of these. Range anxiety creates safety concerns of being stranded. We hesitate to let go of the esteem of the classic look of our ICE vehicles and even the virility of the noise that they make (though products like Borla’s above will change that perception too). And we are turned off by the financial and even moral superiority Innovators and Early Adopters directly or indirectly communicate in EV ownership. There is a way to go in overcoming these perceptions and allowing the Early Majority to feel emotionally connected to EVs. However, the industry deserves credit for being well on its way.
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* Disclosure: I am an investor in Plug
Thanks so much for the share Alex!