This year’s ACT Expo event in Long Beach, California, really opened my eyes to the future of fossil-fuel-free transportation. With more than 200 exhibitors in the hall and a few dozen more outside, it would be easy to believe the alt-energy industry is close to hitting critical mass. But even while surrounded by all that glitz and glitter, I couldn’t help wondering how many of those companies would be exhibiting a few years from now.
There’s no shortage of opportunity in the sector now. And no shortage of venture capital either. That begets an influx of entrepreneurs with twinkles in their eyes, hopeful of investor interest or maybe buyout offers from larger and more stable companies. Investment dollars are arriving by the diesel-powered truckload, and almost daily there’s word of a new start-up in the electric or self-driving vehicle space. That’s not a problem, but it sure muddies the water. The ensuing hype in the business and tech press usually drowns out the moans and groans from those in the trenches serious about finding a way forward.
How many battery-electric skateboards or charging machines do we need? Truth be told, we need a lot of them, but they have to be up to the standards this industry expects, and we are notoriously difficult to please.
Some of the charging vendors I spoke with at ACT Expo flipped on the hard-sell almost as soon as I crossed onto their carpet. "Buy now, the cost is going up." "Get in soon while we still have inventory." "Sign a long-term lease and get a better price." Some of them were like used-car sales people.
I trust that most fleets would see through the pitch, but I soon started wondering if these companies were actually selling product or just posturing for investors. If they came away from the show with an armful of orders — or even prospects — they’d be a step or two closer to a Series A round of financing.
Even if some of these startups can maintain the funding levels required to stay in the game for another five years, what fleet would go in deep on what’s basically unproven technology? How can some of these EV entrants design and build trucks that hope to compete with the established OEMs? Pesky things like durability, dealer support, warranty, and residual value weigh heavily in the purchasing decision. It’s about more than total cost of ownership, but I can’t see how a start-up could realistically compete there, either, unless they are giving the trucks away.
Getting the truck sold is not the finish line. That’s where the deeply invested OEMs have distinct advantages. They have the luxury of time to get it right because they have existing revenue streams. Without revenue streams, those start-ups are not businesses, really; they’re research organizations relying on investor largesse. God help them if something like a recession spooks the benefactors.
The Next Big Wave
ACT Expo this year had a somewhat carnival-like atmosphere, reminiscent of the World Fairs of the previous century. They introduced visions of the future, and some were pretty fanciful indeed. Like the turn of the 19th to the 20th centuries, the truck market today has a Wild West feel to it. New technologies that promise longer range, lighter weight, and faster charging times are on the horizon, but are frustratingly out of reach. But that won’t stop the Silicon Valley golden boys and their well-honed sales pitches.
Trucking has never experienced a wave of innovation like this one. It was simply too much of an investment to bring engines and axles and frame rails and cabs together and turn them into trucks. The only parties able to do that were established auto and truck makers and various spin-offs from other similar industries.
Today, you can literally build a truck in your garage and put it on the market. If investors, and more importantly, the industry, like what they see, you have a fighting chance today. Trucks aimed at niche markets stand a slightly better chance because of the limited competition, but as I said, getting a truck into production is just the tip of the iceberg.
Fleets have come to expect certain levels of dealer support and reliability — and all at a reasonable cost. One might be able to provide diagnostics and electronic repairs remotely, but what happens when the windshield wipers quit, or the cooling system springs a leak? Fleets can be pretty unforgiving of unscheduled downtime.
Some portion of the exhibitors at ACT Expo are just dipping their toes in the water and are probably worthy of consideration, but there will be a few spectacular failures still to come.
Chanje springs to mind. Remember that company? It burst onto the scene in 2016 promising to import partially assembled electric delivery vans and then finish the assembly at manufacturing facility in the U.S.
Chanje was, at the time, leaps and bounds ahead of domestic builders. It had a product based on proven technology and a good track record of service in China. It attracted the interest of Ryder, FedEx, and several other big-league players, but it quietly dissolved a year ago, leaving carriers to sue Chanje in hope of recovering some small portion of their investments and down payments.
TheVerge has published the whole sordid tale on the rise and fall of Chanje and its CEO Bryan Hansel. It’s a long read, but worth it if only as a harbinger of what might be still to come.
I ventured to Brooklyn in October 2017 to test drive the Chanje V8070. And while a two-hour drive is hardly sufficient to prove out the long-term prospects for such a truck, it had the makings of a winner. Chanje didn’t disappear because the product was no good. It died by its own hand, steered into the muck by its eccentric leader, says TheVerge.
We witnessed a similar near-self-destruct event when Trevor Milton was exposed as a fraud in hyping Nikola. I think Nikola’s current management is steering a straighter path, and I can see the electric or fuel-cell powered Tre or Nikola One as serious players in the EV space.
As for that other big-name disrupter of all that’s holy in truck build and buying ... there wasn’t a Tesla Semi anywhere near ACT Expo this year. Rather strange, I thought, to be absent from THE premiere trade show and expo for the emerging zero-emissions vehicle market.
Will it Play in Peoria?
It will take a lot more than diploma and credentials — or the glow of a Silicon Valley superstar — to succeed in this business. Certain problems require a deeper understanding of the fundamentals of truck building and marketing. And despite success achieved overseas, the North American market is unique in the world.
We’ve seen worthy technology fail to make the cut here time and time again. Whether it doesn’t look right or sound right, or the door hinges wear out after a couple of years, keeping North American truck buyers satisfied and coming back requires a bit more than glitzy launch.
It’s nice to see some new blood coming into that industry now, and as we read almost daily, the OEMs are gobbling up that cutting-edge technology almost as quickly as it comes out of stealth mode.
Good things come of innovation; just stay cautiously wary of the innovators.
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