This California startup wants to be the Pony Express of electric trucking

Salim Youssefzadeh, CEO of Los Angeles-area startup WattEV, has a plan to bring electric trucking to Southern California, one that merges novel technologies with much older logistics models — including the Pony Express.

Here’s the pitch: First, build enormous electric truck-charging hubs in three major freight transport centers in Southern California. Procure electric trucks from major manufacturers such as Volvo and Tesla, and establish partnerships with companies that want to move their freight on those trucks.

Then, make the battery-powered vehicles available to smaller trucking contractors and owner-operators who want to switch to electric but can’t, either because of the higher upfront costs compared to diesel rigs or the challenge of finding reliable and available heavy-duty charging stations, or both.

Allow those drivers to hop into a fully charged truck at one location, drive it and its load to the next hub, drop off the load, park the truck for a full recharge — and hop into another fully charged truck that’s ready to move the next shipment to the next hub.

This ​“slip-seating” arrangement, as the industry refers to rotating drivers among vehicles as they become available, keeps truckers and trucks on the road and earning money, rather than waiting around for charging to finish. The goal is to use that ramped-up utilization — along with WattEV’s management of the maintenance, insurance and other costs associated with electric truck ownership — to drive down costs to within the same range as that of diesel-fueled vehicles.

Youssefzadeh calls it an ​“electric-truck-as-a-service” model, and he thinks it could break open midrange-distance electric trucking. Recent on-the-road tests have shown that today’s electric trucks can handle daily routes of about 100 miles or less to and from a ​“home base” charging site. Long-haul trucking is a bigger challenge being tackled by public-private sector partnerships and billions of dollars in funding at the state and federal levels.

But WattEV’s plan to make freshly charged trucks available ​“in a Pony Express manner,” as Youssefzadeh puts it, could allow electric trucks to reliably serve the ​“middle-mile” routes of roughly 200 miles, which happens to be the distance between WattEV’s planned charging-hub sites. Its first site in Bakersfield, California is sited next to distribution centers for Amazon, Target, Ross and other major retailers that are eager to find ways to reduce their transport emissions, he said.

Reducing the upfront cost and charging barriers for trucking companies and their customers, meanwhile, could ​“create the demand for our charging stations,” he said. That will help solve the chicken-or-egg problem that EV charging developers and EV owners have long grappled with, neither of whose needs can be met without the other being available to support them.

Lots of companies and partnerships are working on ​“as-a-service” business models to help overcome these transportation electrification challenges. But WattEV’s plan to add trucks to its list of services goes beyond the EV-charging-as-a-service business models from companies such as TeraWatt Infrastructure, Nuvve and recent BP acquisition Amply.

Similarly, WattEV’s plan to work with multiple trucking companies extends beyond the corporate-EV-fleet-as-a-service concepts of companies such as Inspiration Mobility, or the efforts of companies including Amazon, Anheuser-Busch, DHL and Walmart to convert their medium-duty van and truck fleets to electric models.

“We haven’t come across anyone who’s doing everything we’re doing,” Youssefzadeh said. He thinks WattEV’s innovative approach can help it grow from a largely grant-funded startup today to a provider of thousands of trucks and gigawatts’ worth of charging capacity over the next decade.

Bearing costs, building partnerships 

This ambition comes with a potentially massive price tag, one that WattEV has only begun to gather the capital resources to cover. The startup has raised $6 million in private equity seed funding led by Canon Equity, and it has access to about $15 million in grants from various California agencies and programs, Youssefzadeh said.

Construction of its first charging hub in Bakersfield, a city in California’s Central Valley that’s home to large logistics and agricultural industries, will cost about $11 million, supported by $5 million in California Energy Commission grants and $2.5 million in state tax credits. The project broke ground in December and is expected to be operational in late 2022, with solar PV and batteries on-site to bolster grid-supplied power from utility Pacific Gas & Electric.

That’s about the same time that WattEV expects to see delivery of its initial fleet of 30 Volvo VNR Electric trucks, financed partially via grants from the California Air Resources Board. Being able to charge those trucks largely from self-generated solar power will also boost the value of low-carbon fuel standard credits offered by the state for electric vehicles, according to Youssefzadeh.

WattEV is still working on developing two more charging hubs: one in San Bernardino, a city on the eastern end of Southern California’s Inland Empire urban sprawl, and another near the ports of Long Beach and Los Angeles, the West Coast’s biggest shipping nexus. Each site will require about 4 megawatts of grid power, and WattEV is seeking out opportunities to tap into the EV charging incentives available from utility Southern California Edison, he said.

As for customers, WattEV in July signed a fleet-electrification agreement with Total Transportation Services Inc., a large-scale trucking company serving Southern California’s ports. Cleaning up the ports is a major focus of state policies seeking to reduce air pollution in disadvantaged communities.

The transport corridors that WattEV is targeting represent trucking pollution ​“hot spots,” said Michael Colvin, director of regulatory and legislative affairs at the Environmental Defense Fund, a nonprofit that’s done a lot of work on identifying and eliminating the challenges of electrifying fleets. ​“Most of the truck miles [in California] are driven between these hot spots,” tend to be in communities that are home to vulnerable populations, he said.

California has the country’s most aggressive targets for zero-emissions trucks, as well as some of the country’s most lucrative incentives for companies that purchase them. These factors have made the state the leading adopter of electric medium- and heavy-duty trucks to date, with more than half of the country’s total deliveries so far, according to a January report from the clean-transportation nonprofit Calstart.

WattEV plans to work directly with companies that need to move freight and with brokers that connect those companies with trucking firms and independent contractors, Youssefzadeh said. The startup will then use its software to match available drivers with contracted loads and routes.

Electric trucks driving new business models

The ​“truck-as-a-service” model is something of a departure from the way the U.S. trucking industry works today, said Mike Roeth, executive director of the North American Council for Freight Efficiency. His group worked with a host of companies to conduct last year’s road tests that showed that many shorter daily routes can be handled by today’s electric truck models. (NACFE is supported by RMI, the nonprofit research organization. Canary Media is an independent affiliate of RMI.)

Most truck drivers start out as ​“company drivers,” he said, operating vehicles owned by a larger freight company. But many seeking better pay and more control over their working schedules will eventually buy their own trucks.

“That’s not the easiest thing,” Roeth said. ​“You have to find a used truck to buy; you have to maintain it. The younger generation is into leasing and renting, and a little less into owning.”

At the same time, many drivers are paid by the mile, not by the hour, making any delays in moving freight from one point to another a money-losing proposition, he said. In that light, WattEV’s promise to have freshly charged trucks ready for drivers as soon as they arrive at a hub is a bonus.

On the other hand, today’s diesel trucks can typically drive for several days without needing to be refueled, he noted. Companies seeking to replace them with electric trucks that need frequent recharging or business models that force drivers and companies to develop new work processes will need to ensure as few disruptions as possible to the steady flow of goods in order to gain traction.

“It’s all a bit complex,” Roeth said. ​“But if WattEV has smart people, it could do something.” 

Many other large-scale freight companies are starting to invest in electric trucks and the charging to support them. ​“This is a transformative technology,” he said. 

Youssefzadeh emphasized that WattEV doesn’t intend to take on the most capital-intensive aspects of its business model itself, including owning the land and the trucks. It’s securing its charging hub sites under long-term leases and working on leasing deals with the makers of electric trucks.

WattEV’s software is at the core of that capital-light business model, he said. It’s designed to coordinate the freight-moving needs and sustainability goals of its shipping clients with the availability and pricing needs of its trucking partners, all while tracking the mileage and charging costs of its trucks to keep costs in check.

“The software platform is the true IP [intellectual property]: how to manage the fleet and make it more efficient, how to match loads and how to tie the whole infrastructure together,” WattEV’s CEO said. ​“At the end of the day, we’re a tech company.”