Rethinking The Economics Of EVs For Fleet Owners
For many years, serial entrepreneur and venture capitalist Sunil Paul had mulled over approaches to encouraging sales of electric vehicles by reducing their high price and, as a result, reducing carbon emissions. Then, in the summer of 2020, as he watched with increasing alarm the orange sky over his Bay Area home, caused by ranging wildfires, he decided it was time to act.
So the next year, he launched Spring Free EV, focusing on fleet managers who need a lot of cars. As a pioneer of the ride-sharing concept, Paul had an in-depth understanding of the problems and opportunities facing such companies.
“We’re making EVs more affordable by rethinking the economics,” he says.
A Financing Solution
The basic idea is that, for EVs to be adopted en masse, the price has to come down. To that end, his company owns its own fleet of EVs. Then it basically leases them to small and medium-sized ride-sharing and delivery businesses, typically with anywhere from five to a couple hundred gas-powered cars, that want to expand their fleet with EVs. Initially, the company charged a monthly fee and per mile fee. “Think of us as a financing solution for small businesses,” he says.
To make a sizeable difference in carbon emissions, focusing on high mileage drivers and, especially, fleet operators, was essential. That’s partly because, according to Paul, the people for whom an EV makes economic sense are those who rack up a lot of miles, like delivery and ride-sharing companies. In addition, one out of 10 U. S. drivers account for one-third of emissions coming from transportation. As a result, if you’re after cutting emissions from transportation, it makes sense to focus on those high-mileage drivers contributing so heavily to emissions.
While the first offering charged customers a monthly fee and mileage fee, the company just announced what it calls “Free EV”, a program that eliminates the monthly fee, keeping just the mileage fee. That could encourage customers to invest in a lot more EVs, Paul says. “If you get rid of your gas-powered clunkers and adopt a Free EV, you end up saving a tremendous amount of money,” he says.
Scrounging for EVs
As you might expect, the company faced formidable supply problems. Late last year, “we could barely get enough cars,” he says. “We had to scrounge around to find them.” His partnership with Cox Automotive, a large servicer and auctioneer of cars, helped the company find and buy used EVs. Paul can’t disclose how many EVs the business has at the moment, but says. “We’re currently on a path to deploying hundreds of cars and gearing up to deploy thousands.”
In the fall, the plan is to offer an option for delivery and ride-share businesses, but one car at a time, instead of a whole fleet. Eventually, there will be an offering for consumers.
Financing has come from a mix of high-profile individual investors, including such luminaries as Reid Hoffman, founder of LinkedIn, Ev Williams, co-founder of Twitter, and Mark Pincus, founder of Zynga, and a variety of others. Paul isn’t disclosing the amount, but says, “It’s been adequate for our purposes.” He’s also raising more money now. Most funding has come from asset financing.
Spring Free EV’s co-founders include Martin Lagod, Tenni Theurer and Visrin Vichit-Vadakanin