The people who stand to benefit the most from electric vehicles often aren’t the ones who’ve been able to get them. A Bay Area financing startup hopes to change that.
Zevvy wants to make electric cars accessible to the millions of Americans who commute many miles each day and tens of thousands of miles each year. These workers typically can’t afford the premium of a new electric vehicle, and they can’t lease one because they’d blast through the mileage cap. As such, they end up in the used car market and rack up steep annual bills for gas and maintenance.
The EV market hasn’t found a way to reach these customers effectively, contends Zevvy founder and CEO Andrew Krulewitz. But that needs to happen, both for drivers’ pocketbooks and for the planet’s health.
“If you think about maximizing an EV’s impact, financially and environmentally, you want it driven as much as possible,” Krulewitz told Canary Media.
Put another way, there’s a big difference in avoided carbon (and tailpipe) emissions from electrifying the personal vehicle of someone who taps on a keyboard at home every day versus someone who drives 60 miles to and from work every day. Similarly, the personal financial savings from reduced fuel and maintenance costs add up the more miles are driven on an electric vehicle.
The trick is getting your hands on one. Zevvy hopes to make this possible with a new type of financing product based on proprietary analytics. Drivers can sign up for a lease with a minimum commitment of six months. The monthly bill combines a fixed fee of several hundred dollars plus a variable fee of “only a few cents for every mile they drive,” and there’s no cap on mileage per month.
Zevvy calculates the fixed fee to be cheaper than a monthly loan payment, and the per-mile fee should result in drivers saving money compared to what they’d pay to keep burning gasoline, Krulewitz said. On Tuesday, the company raised $5.4 million in seed funding led by MaC Venture Capital. It’s a relatively small funding round at a time of massive investment in climatetech, but it’s enough to bring EVs to 1,000 California commuters in the coming year.
The tech and media sectors flipped to working from home during the pandemic and largely stayed that way. But many American workers operate outside the “keyboard economy.” They have to go to a workplace every day. And given the American proclivity to design communities around the automobile, along with an ongoing affordable housing crisis, many workers have to drive many miles, solo, to get to work and back.
Krulewitz inadvertently immersed himself in this customer experience when he became a supercommuter for a previous job. The role summoned him from San Francisco to Contra Costa County three to five days a week, more than 70 miles round trip. The fact that he was theoretically reverse-commuting from the city to an office deep in the East Bay didn’t help.
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“I was always astounded at how many people were sitting in bumper-to-bumper traffic on a secondary highway, day in, day out,” Krulewitz recalled. “Most of the cars were practical sedans or small SUVs, five to 10 years old.”
But he worked for AAA’s future-mobility division, and his employer provided an electric car. Instead of burning gas while sitting in motionless traffic, he mused about the expenses he was avoiding by driving electric. If there was a way around the steep upfront price, his fellow commuters could enjoy those savings too.
“The cost of transportation has just run away from the average person,” Krulewitz said. “If you can’t provide an easy way for somebody to make the switch [to electric], I think we’re going to hit a demand wall.”
Zevvy prices its financing to undercut loans in the conventional used car market. The idea is that the customer gets an electric car for a lower monthly payment than the available gas options, and the more they drive, the more they save.
At the end of the first six months, the driver has three options:
The model relies on proprietary underwriting techniques that the company developed. Instead of just assessing credit score and income, Zevvy scans for customers who will save money by commuting on battery power. In that sense, it’s like a vehicular version of PosiGen, which finances rooftop solar for people in low- and moderate-income categories by ensuring they’ll save money on their power bill.
Zevvy got its first customer via a $5 ad placed on Craigslist, Krulewitz said. Within a week, the first customer brought in the company’s third customer. Zevvy later rolled out a partnership with Uber to list the newfangled lease in the driver app’s vehicle marketplace, alongside options like renting Teslas from Hertz.
Currently, Zevvy only offers the Chevy Bolt and the Tesla Model 3, and its market is limited to the Bay Area. With the new equity investment and loan guarantees from multiple California state entities, the startup will expand to other cities in the Golden State that house concentrations of supercommuters.
Zevvy’s small pool of customers so far averages 25,000 miles driven in a year; collectively, they’re approaching 1 million miles driven since Zevvy launched last year. The company already has more applications received than it can meet with current resources.
“We are growing at a pretty good clip, but we need to make sure we do it in a way that’s sustainable,” Krulewitz said. If Zevvy shows that a variable-mileage lease performs well for customers and for lenders, there’s a massive pool of auto financiers that might want a piece of the action.
Julian Spector is senior reporter at Canary Media.
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