August 16th, 2022 — Commercial fleets are going electric: according to a 2020 survey by Wakefield Research, 90% of fleet managers believe electric vehicles “are the inevitable future of commercial fleets,” and leading delivery and logistics companies are making headlines with announcements of electric van purchases numbering in the hundreds of thousands.
From an emissions perspective, this transition is overdue. Emissions in the U.S. from medium- and heavy-duty trucks and vans grew 90% from 1990 to 2019, representing the largest percentage increase within transportation. And although fleet vehicles represent just 20% of Europe’s vehicles, they account for 50% of all emissions from road transportation on the continent.
Zeti is a fintech company built to accelerate the adoption of zero- and ultra-low-emission transport by using real-time data to enable pay-as-you drive (PAYD) financing. With their patent-pending platform, Zeti connects vehicle fleet operators with institutional asset and infrastructure funders, providing flexible risk-adjusted finance and value-added data services to both.
Fleet electrification is accelerating.
The growing number of electric fleet vehicle model options, regulatory tailwinds, aggressive corporate sustainability goals, and customer expectations are all accelerating the adoption of electric fleet vehicles, and, therefore, expanding the market for electric fleet vehicle financing.
For commercial vans in the U.K. alone, data from the Society for Motor Manufacturers and KPMG suggest that EV van financing will grow from $300M in 2022 to over $8B in 2030, a trend expected to apply to light- and medium-duty vehicles across Europe, the U.K., and the U.S.
Innovative financing arrangements can unlock value for fleet operators, financiers, and OEMs.
The business model of incumbent fleet management companies (FMCs), which today act as a broker between fleet operators, financiers, and vehicle original equipment manufacturers (OEMs), is built for internal combustion engine (ICE) vehicles. It relies on capital arbitrage, vehicle discounts, significant maintenance and service needs, and traditional asset depreciation.
EVs have higher upfront costs, lower maintenance and service needs, and different depreciation factors compared to ICE vehicles, opening the opportunity for new technologies to disintermediate the legacy model.
Given EVs lower emissions, they are also an attractive asset for a new set of investors looking to support decarbonization and diversify their portfolios.
Zeti’s platform and unique business model provides a creative solution for financing electric fleets.
Zeti’s patent-pending ZERO platform facilitates a PAYD model, in which fleets repay the financing based on the amount they use the vehicle. The model lets fleet operators better manage their cash flow by aligning payments with vehicle usage. A minimum take-or-pay feature protects financiers’ downside while providing them the upside of a rapid repayment if a vehicle is highly used.
The ZERO platform provides an up-to-date financial and environmental performance dashboard to both operators and financiers, leading to significant administrative savings.
In the future, Zeti is positioned to provide financing services that go beyond the vehicles themselves, such as financing electric vehicle charging equipment, providing retail energy, and facilitating maintenance services.
Powerhouse Ventures is proud to lead Zeti’s $2.5M seed round. We look forward to working with CEO and Co-Founder Dan Saunders, CTO and Co-Founder Daniel Bass, Co-Founder and Chairman Ernie Richardson, President Pete Malcolm and the entire Zeti team to transform and accelerate electric fleet vehicle financing.
Special thanks to Marie Thompson, Shaandiin Cedar, Gabriel VanLoozen, and Gabe Cuadra.
To read more about Powerhouse Ventures’ other publicly-announced investments, visit our Insights page.