Motiv Poised to Profit as Demand Grows for Electric Trucks, Buses

May 30, 2018 by John O'Dell

For a first-grade project on solving community issues, Motiv Power Systems founder Jim Castelaz chose pollution as his topic. He sketched his prophetic solution onto a poster board. It read, “make electric cars.”

Castelaz did make an electric car, using scrap lumber and 12-volt batteries. But that was when he was still in elementary school. Nowadays he’s tackling bigger projects.

Motiv, headquartered in a modest light industrial and commercial park in Foster City, Calif., a few miles south of San Francisco, develops and builds electric powertrains and supplies complete zero-emissions electric chassis for medium-duty trucks and buses.

Electric trucks are increasingly in demand as governments in the U.S. and abroad impose air quality regulations aimed at reducing exposure to harmful diesel exhaust, said Bill Van Amburg, executive vice president of Calstart, the Pasadena, Calif., clean transportation technologies booster.

“Electric medium-duty commercial vehicles make as much if not more sense than EVs in any other market segment,” Michael Held, a director in AlixPartners’ automotive and industrial practice, told Trucks.com

That’s because most medium-duty trucks and buses are used in repeatable, localized, stop-start duty cycles that don’t demand unlimited range. They often are part of a centrally based fleet that can be charged overnight in a single location, minimizing the fleet operator’s investment in battery charging infrastructure.

“Also, in major metropolitan areas they’re likely to get preferential routing and parking, and possibly receive incentives,” Held said.

Motiv is poised to reap the benefits.

It is one of a handful of companies that are “becoming a critical asset to a traditional vehicle industry that has had little experience with the new components and needs new suppliers and a new supply chain,” Van Amburg said.

Motiv components being assembled at the company’s Hayward, Calif. headquarters.

Motiv components being assembled at the company’s Hayward, Calif. manufacturing facility. (Photo: Summer Wilson/Trucks.com)

Electrification of medium-duty trucks “is a field that will probably take off very soon and very fast,” Antti Lindstrom, a trucking industry analyst for IHS Markit, told Trucks.com.

Several other companies compete in various segments of the low- and zero-emissions medium-duty market. BYD, Daimler’s Fuso unit and Chanje build their own branded electric trucks.

Efficient Drivetrains Inc. develops and markets electric and plug-in hybrid control systems for a variety of commercial truck and bus classes. Wrightspeed adds its range-extended electric powertrains to existing fleets.

Motiv stands alone, though, as a developer and supplier of completed electric chassis for use by truck makers and custom truck body builders.

The company also was the first to receive a blanket zero-emissions certification from the California Air Resources Board, or CARB, for a family of electric chassis. The designation frees customers from the costly and time-consuming chore of independently certifying each Class 4-7 truck and bus model they build.

Motiv had been doing a series of one-off demonstration projects funded by various California clean air programs when it landed its first big contract in 2016 supplying electric trucks for AmeriPride, a Southern California-based national supplier of uniforms, linens, towels and cleaning supplies.

AmeriPride so far has taken delivery of 30 trucks built on Motiv chassis. Castelaz said he expects to deliver more as the linen supplier strives to cut its use of diesel powertrains in its nearly 2,000-vehicle fleet.

There’s also new business coming in from the Utilimaster division of truck builder Spartan Motors, Champion Bus, Collins Bus, Starcraft Bus and Trans Tech Bus. The specialty vehicles unit of RV maker Winnebago Industries also is a client.

Motiv also has agreements to supply chassis on an as-needed basis to California Truck Equipment Co., Morgan Olson, Rockport Commercial Vehicles and the Green Alternative Systems unit of Creative Bus Sales.

Castelaz won’t talk about future prospects, but Motiv reportedly has its eye on delivery giant UPS, a leader in the use of alternative energy vehicles. Another package delivery opportunity: it could work with Spartan on a vehicle for the U.S. Postal Service., which is looking to add more electric trucks and vans to its fleet.

A lecture at Stanford University by Martin Eberhard, a Tesla co-founder who left the company in 2008 and is now reportedly working on an EV powertrain startup, helped Castelaz identify trucks and buses as a good opportunity for electrification.

Motiv’s small crew —55 employees now and growing to about 80 by year end — develops and builds the electronic control systems that make electric powertrains work and that link battery packs to electric motors and control battery conditions.

The company purchases EV battery packs and electric motors from outside vendors and integrates them with its control systems into a complete package that’s then fitted into medium-duty commercial chassis by various assembly contractors.

Most of the engineering and testing is done at the company’s Foster City complex. Final assembly of the control systems happens at a facility across San Francisco Bay in the city of Hayward.

While now limited to Ford E- and F-series medium-duty underpinnings, Motiv plans to expand its offerings with electric powertrains that can be fitted into other manufacturers’ medium-duty chassis.

Electrifying commercial vehicles isn’t cheap, Castelaz said. The Motiv chassis can raise the acquisition cost by 30 percent over the comparable diesel version.

Motiv's all-electric chassis are powered through a variety of components such as (from left to right) the adaptive power controller, battery charger, sodium nickel battery, and a charge receptacle box

Motiv’s all-electric chassis are powered through a variety of components such as (from left to right) the adaptive power controller, battery charger, sodium nickel battery, and a charge receptacle box. (Photo: Summer Wilson/Trucks.com)

Motiv claims an 85 percent fuel savings and 66 percent reduction in maintenance costs. The company also uses a cost-cutting Adaptive Battery Controller. Those savings, coupled with green incentives available in California and several other states, make the pay-back period for a Motiv-powered electric truck or bus — compared with diesels — just slightly more than two years, according to the company.

Motiv’s first product was used in an electric shuttle bus demonstration in 2012. There now are 20 Motiv-powered electric school buses in use in several California districts. Twenty more school buses are on order. An additional 37 electric shuttle buses and trucks powered by Motiv also are in operation in various locations around California.

The company’s done several other demonstration projects, including four shuttle buses for Google and transit buses for a number of agencies. There’s even a Class 8 electric garbage truck in Chicago that’s Motiv powered — with more slated for delivery this year. The city of Sacramento, Calif., also has ordered one, and Los Angeles has two on order.

Castelaz founded Motiv in 2009 as a 25-year-old post-grad student. He was on a break from completing a doctorate in electrical engineering at Stanford University — a degree he still hasn’t finished.

“I got the entrepreneurial bug at Stanford, it’s rampant there,” he said.

He wanted to combine electric engineering, “something I loved and was good at,” with something that would “do good for the world,” Castelaz said.

Castelaz, who drives a 2015 Nissan Leaf EV and is waiting to take delivery of a Tesla Model 3, also loves the challenge of building his own company, he said.

So much so that his 4-year old recently asked him why he had to go to work every day, even weekends sometimes.

“I said it was because I was helping clean up transportation, and he asked me if I worked at a carwash,” Castelaz said.

Much of Motiv’s recent growth has been fueled by the CARB certification it received.

Individual certification in the state can cost manufacturers $100,000 per model, and the certification isn’t just an advantage to California-based commercial vehicle manufacturers.

Twenty other states have adopted, in whole or at least partially, California’s tougher-than-federal emissions standards. Truck and bus builders — and up-fitters that place custom bodies on pre-fab chassis — can skip those states’ zero-emissions certifying process for their medium-duty electric models if they use a CARB-certified chassis.

The certification of Motiv’s complete chassis family could give a big boost to the electric truck market, Lindström said.

The real question is, how long will it take for the established truck and bus manufacturers to get moving in the same direction, he said.

Motiv’s EPIC electric chassis at the Work Truck Show in March.

Motiv’s EPIC electric chassis at the Work Truck Show in March. (Photo: Motiv)

Large corporations have more resources that they can use and spread globally, but the smaller players usually have more flexibility and creativity, Lindström said.

“It would seem that in the long run, the market will probably shape much like the high-tech sector always does, with smaller ventures becoming part of the larger systems,” Lindström said. “For Motiv, that’s definitely a good place to be.”

Motiv’s plan is to become “the leading electric vehicle chassis provider,” Castelaz said. Goals include increasing the number of system-compatible operating platforms and growing sales to 100,000 units by 2030.

Early financing for Motiv came from Castelaz’s private consulting. Since 2012, the company has publicly acknowledged raising $13.4 million in California Energy Commission grants and $7.3 million in a private placement led by Colorado-based Magness Investment Group.

Castelaz won’t disclose much else about finances. He says only that the privately held company expects revenue to double in the coming year.

As to growth in market segments, Castelaz said that while Motiv has done powertrains for Class 8 trucks, the medium-duty market is the company’s bread and utter.

“It’s a little $46-billion market niche in the U.S. that gets passed over” as potential competitors focus on big rigs, he said. “Even Tesla went straight from cars to a Class 8 semi.”

“It’s a little less crowded in the [medium-duty] electrification area, so there’s less competition,” Castelaz said.

Read Next: Navistar Brings an Electric School Bus to the Streets

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