This article takes a closer look at the European startups advancing the decarbonisation of vehicles and their implications for the electrification of global fleet.
The European Union (EU) aims to be climate neutral by 2050. Twelve percent of total CO2 emissions are emitted by 250 million cars in Europe every year. Therefore, the European Parliament has banned the sale of new passenger cars with an internal combustion engine (ICE) from 2035. This ambitious goal has had a massive impact on the automobile industry. Big corporations such as Amazon or DHL Express are placing significant orders to electrify their fleet of delivery vehicles. For example, Amazon plans to invest more than 1€ billion over the next five years to further electrify and decarbonize its transportation network in Europe to deliver to customers in a more environmentally responsible way, including more than 250€ million in France.
Cities are looking to electrify public buses, garbage trucks and public transport. In France, fines for the purchase of a fossil-fuel car can reach 40 000€. Over 2 billion vehicles worldwide must be converted to clean-air powertrains. Government regulations and global market trends are restructuring the automotive industry. However, these intensive measures point to two main issues:
Consumers must make a significant investment to purchase an electric vehicle (EV)
Automobile waste and embedded CO2: why should we dispose of perfectly functioning fossil cars that cost tons of CO2 to produce?
A new market has emerged addressing these issues- the electrification of fossil-fuel vehicles. From an ecological perspective, retrofitting is a viable solution as 80% of embedded carbon over the total lifetime is saved when upcycling rather than replacing a vehicle with a new EV equivalent. Many actors have tackled this market, such as Lunaz, Retrofleet and Transition-one. Each company has its specific business strategy, but all remove the diesel engine and replace it with a turnkey electric engine. Electrifying an electric car is a time-saving solution that offers greater cost-effectiveness than new EVs’ current cost. Furthermore, this innovation promotes a circular economy and safeguards industrial jobs.
Retrofleet is a start-up based in France that focuses on retrofitting ICE trucks. They put forth an innovative model based on supplying the in-vehicle energy system – i.e. the engine, battery, control and monitoring software – and intelligent charging systems featuring a solar power component. Retrofleet is pursuing a B2B strategy with a primary focus on commercial fleet managers (businesses, local governments, leasing companies) in charge of light-duty vehicles, coaches, heavy goods vehicles, and work machinery.
Innovacom, a VC fund specialising in DeepTech, who participated in RetroFleet’s early-stage investment, explained that targeting the truck sector was very strategic. First, the cost of an electric truck is around 600k, whereas the electrification of an existing fossil-fuel truck is around 100k. Second, when a transport company, government or city council conclude a contract with Retrofleet, this can lead to the electrification of many trucks. Hence, their CAC ratio becomes much more interesting than for the electrification of conventional cars.
Lunaz, one of the fastest-growing companies in the UK, delivers an entirely upcycled, re-engineered refuse truck built to a near zero-mile standard to Councils and Waste Management companies. The price is the same as a new diesel equivalent and considerably less expensive than a new electric-powered refuse truck. Lunaz products are built on the Mercedes-Benz Econic platform, one of the world’s most popular vehicles for specialist industrial uses, including airport services, construction site logistics, waste management, and fire and rescue. The company has already signed fleet electrification agreements with central councils and private entities in the UK and US and will be moving ahead to full market entry in 2023. The company also retrofits high-end luxury old cars such as Aston Martins, Bentleys, and Rolls Royce. On top of electrifying the ICE car, Lunaz does a complete bare-metal restoration, meaning the vehicle is in a new condition. End-users are presented with a car equipped with the latest safety and control equipment.
Contrary to the first two startups, Transition-one targets the mass-consumer market. They have developed an electric motor combined with a battery pack designed in-house that can be retrofitted on eight models, from the Twingo 2 to the Polo and, most recently, the Fiat 500. Transition-one ensures that their vehicle technology conforms to national or European regulations and is certified. Their objective is to offer a conversion to consumers for 7 000€ without extras (which could bring the actual price down to 5 000€).
These companies are snowballing with many competitors as they offer a cost-effective and ecologically viable alternative to buying a new EV. However, the limits of this technology remain the ones of an EV – CO2 emissions to produce a battery and an EV’s autonomy, to name a few. The opportunities of this sector are in alignment with the ones of the EV business. They count on innovations in battery efficiency (charging, storage and power) improved by start-ups like I-ten and the extraction of rare materials for batteries with a lower environmental footprint, improved by start-ups like Adionics. Hence, the retrofit business shows many innovations and competitors but has one weakness in common – this is only a transitional solution to the electrification of global fleet.
Comments