Why we invested in Nevoya, the 100% electric trucking company

So how do you accelerate adoption of EVs like semi trucks? 

Build a high speed charging network? 

Build new trucks? 

Maybe focus on incentives and financing? 

Or perhaps you build EV-focused transport management software?

When we first met Sami, Nevoya’s CEO and co-founder, he suggested that the best strategy was to build a trucking company. And the main reason was that current trucking companies are a little stuck - it’s much more complex than simply buying electric vehicles. 

Let’s say you’re bidding on a local trucking route from a port like Long Beach to another location 35 miles away in City of Industry, a popular warehousing spot near LA. Today you have a pretty good idea of your costs to enable you to bid - wait times to load and unload, diesel filling options, truck insurance, truck maintenance costs, traffic, finance costs, etc. 

What does this question look like if you’ve decided to invest in an electric Semi? There is a good amount of research on the lower total costs of ownership of EVs in general and semi trucks in particular. But how does that help to make this specific route decision? 

Where are you charging your semi trucks? 

How much time are you allocating to charging? Do you need to wait to access chargers? 

What is the new cost of insurance? Other types of EV insurance still run higher… 

What about financing costs? What if resale values drop and finance charges go up? 

Does your Truck Management Software support EVs? 

Who can help you figure out state and local incentives? 

Now also consider that 97% of trucking companies have 10 or fewer trucks. Who is going to invest in 1 or 2 trucks to “see how it goes”?

Build a 100% EV trucking company

This is where our conversations started with Sami and the Nevoya team. Interestingly they had been living some of the electrification challenges in trucking already. But they also had a  unique blend of PE/finance, startup building, software development, and complex operational and logistics expertise. 

One thing they revealed upfront: demand is not the problem. Again and again customer discovery pointed to a strong desire for EV trucking, especially if it could be offered at or near parity to diesel. 

As we got to know the team, we explored a few areas of concern - capital requirements, charging infrastructure and availability of drivers and electric trucks.

The feedback from truck drivers was very positive. There are some anecdotes already available from drivers using EVs from Tesla and Volvo semi trucks, to Rivian Amazon delivery vans. They like what other EV drivers like - less noise, smooth acceleration, etc.  But most interestingly drivers really want local, shorter routes so they can get back home to their families.  

There is certainly a question of charging infrastructure, but there are multiple factors moving this along and some lessons from passenger cars. There are existing charging infrastructure players who are now adding heavy and medium-duty truck charging. There are new entrants who see the link back to commercial real estate value too. Nevoya can track and follow deployments but also have a say in how some of the players prioritize their rollouts and guarantee certain levels of usage. 

And then there are capital requirements. And here it’s useful to look back at some of the superstars in climate, who managed to unlock early access to non-dilutive capital. Revenue helps but so does work with relatively mature assets and manufactures. In the case of Nevoya, the charging infra is being built by multiple parties and there are incentives and capital for these assets. And for semi trucks, it turns out there are multiple investors willing to provide terms, including some of the OEMs themselves. This is not to say that capital formation is without risk, but as we’ve discussed in our Design for Climate Finance materials, there is no reason for broken cap tables.  

Learning quickly and efficiently

One of our greatest challenges as seed stage investors is knowing how fast teams will adapt and learn. As if to underscore the unique challenges in building a new stack for trucking, the team almost immediately had some fun problems to solve like insane insurance quotes and then a sudden concern from asset finance folks about EV resale values. And then increasing EV charging costs. And then they methodically solved each issue, only losing a bit of time to get their first truck on the road, but now already on track to 2x their plan for 2024. 

As much as we love the thesis, the summer of rapid problem solving provided an excellent window into how this team will win. We’re excited to work with Sami Khan , Thomas Atwood , John Verdon and the Nevoya team.