Why This Tesla Motors Co-founder Loves Electric Garbage Trucks

As reported by Xconomy: Ian Wright designed what may be one of the coolest street-legal cars of all time: the electric X1 looked like a Formula 1 racecar and went from zero to 60 in a breathtaking 2.9 seconds. Now, though, all Wright wants to talk about is trucks, especially the workaday delivery trucks and garbage trucks that ply city streets.

Why the excitement? Wright is the founder of Wrightspeed, a San Jose, CA-based startup that’s designed electric powertrains for medium- and heavy-duty trucks. “Garbage trucks are the perfect driving cycle for us: they get two or three miles per gallon, drive 130 miles a day with 1,000 hard stops that chew on the brakes. They’re just perfect,” he says.

Wright was among the founders of Tesla Motors. But despite his background in working on luxury performance cars, he’s come around to thinking that the biggest opportunity for electric vehicle disruption is where most of the fuel is burned—that is, big trucks. Cars may go through a few hundred gallons of gas a year but a commercial truck will burn through thousands of gallons or more. That means there’s a better financial incentive in terms of fuel savings to go electric.

The company sold two kits to retrofit FedEx delivery trucks to electric power and recently sold 25 more conversion kits, Wright says. It’s also in the process of putting electric powertrains on 17 garbage trucks in northern California, which will allow the fleet to comply with new air quality rules.

Within the month, Wright expects to raise a Series D round of growth capital, which will include a strategic supplier as an investor, to start building more of its electric powertrains. The company has already raised $16.5 million of venture capital in three rounds and received grants from the California Energy Commission to expand manufacturing. He hopes to take the company public in three years.

Befitting a man who designed the X1, the technology in Wrightspeed’s truck conversion kits is deep. There’s an electric motor on each of the truck’s drive wheels (it can be two or four depending on the vehicle) and an on-board generator to replenish batteries once their charge gets below about 20 percent. The generator can operate on natural gas or diesel.

Conversion costs under $100,000 for medium-duty trucks and under $200,000 for larger trucks, Wright says. For commercial customers, though, the return on investment is what drives buying decisions. By saving fuel and maintenance costs, converting to the extended-range electric powertrain can pay for itself in a reasonable time, Wright says. “At a three-year payback, everybody will do it,” he says.

Credit: Screen capture from Wrightspeed promotional video.

The transformation from glamorous, high-performance cars to the world of trucks came over time. Wright says he spent five years refining the business model after being shut down by investors on Sand Hill Road.

The key was homing in on a large market. A significant number of consumers are buying electric passenger cars, but because they’re more expensive than their gasoline counterparts, the market is limited to a few percent of the overall market, many analysts say.

By contrast, Wrightspeed is targeting fleet owners in metro areas where the regular stop-and-go traffic is an advantage: by braking or slowing down, the powertrain can recharge the battery, just as a hybrid car does.

“With my business model, it’s not a consumer decision—it’s a business-to-business decision. People don’t buy because it’s a fashion statement or because it’s cool. If the numbers line up, they’re going to do it,” he says.

In general, venture investors are skittish of investing in the auto industry over worries that large suppliers will crush smaller competitors or that margins are too small in heavy equipment, Wright says.

But the company does face some startup competition: Greenville, S.C-based Proterra, which is also headed by a former Tesla exec, in June raised another $30 million to manufacture its electric buses, which are aimed at municipalities. Boston-based XL Hybrids also sells a conversion kit to fleet owners, although it converts trucks and vans into more traditional hybrids.

Wright’s belief is that electric powertrain technology is fundamentally better—electric motors are very efficient and generally offer better driving performance. But it needs the right business model to truly become mainstream. “This is such cool stuff. It’s so much better than pistons and gears. But how do you make a difference in the auto industry? How do you get to disruption?” he says.