Clean energy journalism for a cooler tomorrow

This startup aims to make it easy for corporate fleets to go electric

Inspiration Mobility secures $200 million to take on the financing and the risks of transitioning customers’ vehicle fleets to EVs.
By Jeff St. John

  • Link copied to clipboard
Newly unveiled startup Inspiration Mobility is targeting the fleet EV market, starting with the Tesla Model Y sedans it’s leasing to Revel’s New York City ride-share network. (Revel)

Josh Green, CEO of Inspiration Mobility, sees a massive opportunity in helping companies switch their light- and medium-duty fleets from fossil-fueled to electric vehicles. This means planning, financing and implementing the changeover, all the way up to having his company own the vehicles and charging infrastructure.

We’re a specialist infrastructure company, focused on developing, owning and operating the real assets that power the EV transition,” the longtime climate and clean energy investor and entrepreneur explained. That includes the vehicles, charging systems, energy systems that optimize the chargers to lower cost and increase reliability, and in some cases the real estate” to house it all.

That’s a much broader scope of work than most providers of fleet leasing and management services take on today, Green said. But it may be the holistic approach needed to ramp up EV fleet growth enough to make a dent in carbon emissions.

On Wednesday, Inspiration, a Washington, D.C.–based startup, unveiled its first major capital infusion to put its end-to-end fleet electrification proposition to the test, in the form of a $200 million capital commitment from private equity energy investor ArcLight Energy Partners Fund VII. That capital can be used both for investments in projects and assets and for general corporate purchases, Green said.

The company also unveiled its first customer, New York-based startup Revel, which is leasing Tesla Model Ys for its all-electric ride-hailing fleet. Inspiration’s target market stretches from EV-centric companies like Revel, to taxi services and other companies that currently operate fossil-fueled fleets, to firms seeking to shift work vehicles and employees’ personal cars to electric.

We don’t come to the market with a specific product or service,” said Green, a founding investor at Generate Capital and a board member of various clean energy, real estate and technology startups over the past 18 years. We respond to customer needs and can do as little or as much as the customer wants to accelerate the EV transition.”

But he anticipates that many fleet operators will be eager to outsource the complexity of optimizing an EV fleet transition, with the promise of far less risk and far higher profitability” than they’d face doing it on their own. The Inspiration team includes veterans of global vehicle leasing and service provider GE Capital Fleet Services, rental car giant Avis Budget Group, U.S. residential solar market leader Sunrun and renewable energy project developer Recurrent Energy.

The barriers to rapid and massive fleet electrification 

Electric vehicles must replace fossil-fueled vehicles at a breakneck pace to get us on track to a net-zero emission economy by 2050. An April study from GridLab, Energy Innovation and the University of California forecasts that annual sales of light-duty EVs in the U.S. will need to grow from 331,000 today to more than 15 million by decade’s end to have all new passenger vehicles be electric by 2030.

Vehicle fleets are a natural early target for making the switch. Today’s EV models come with enough range to meet most daily fleet driving needs and are much cheaper to fuel and maintain over their lifetimes. While they still cost more upfront than the traditional alternatives powered by internal combustion engines, analysts expect that price difference to balance out around the middle of this decade.

But these are just the first of the costs that concern fleet owners and operators considering a switch to EVs. Cost-effective deployments depend on negotiating a bevy of federal, state, local and utility incentive programs, both for the EVs themselves and for the charging stations needed to power them. Picking where to install those charging stations, as well as how to operate them to keep electricity costs in check, is another major complication.

Fleet leasing, financing and ownership structures add further complexity to the mix, Green said. Unlike fossil-fueled vehicles, EVs haven’t been around long enough for broad consensus to develop on their residual value or the residual value of the batteries that account for the majority of their costs, for example — and that variable plays a vital role in determining the cost and terms of vehicle leasing and financing structures.

All of these factors can increase or muddy the total cost of electrification” for fleets, as described in a report last year from the Environmental Defense Fund, MJ Bradley and Vivid Economics. Creating structures to lower cost and reduce uncertainty will be critical to spurring as rapid a transition to EVs as possible.

We can take that risk off the customer,” Green said. We can be innovative on structures that bundle in charging or real estate costs into what’s known as fleet-as-a-service [offerings].”

Some of the biggest companies moving to EV fleets may have the financial and strategic wherewithal to take on these risks and complexities for themselves. Amazon is investing $2 billion in EV truck and van maker Rivian, for example, and rental car company Hertz just announced it had placed an order for 100,000 Tesla Model 3 electric sedans.

But it’s unlikely that most of our customers have in-house, or want to build in-house, teams that span all these disciplines,” Green said. 

Dave Mullaney, a principal in nonprofit research group RMI’s carbon-free mobility program, agreed that the intricate details of managing a fleet transition are difficult for companies without deep pockets and expertise. (Canary Media is an independent subsidiary of RMI.) 

The economics work out” to engage an outside player to tackle those complexities, he said. You’ve got someone who’s willing to front the capital, and the problem with EVs has always been the upfront capital. There are a lot of players in the transportation space that want to electrify but also want to be asset-light.”

EV charging is best rolled out at large scale, and the variables that determine whether or not that charging infrastructure is cost-effective require a great deal of knowledge and insider savvy to plan out properly, he added. Why not have a third party come in and say, leave it to me, we’ll handle it [and] cost-optimize it?”

A competitive landscape for making the switch to EVs

To be sure, plenty of competitors are taking up similar business models. A host of charging-as-a-service offerings from companies including Amply and Highland Electric Fleets can take on the risks associated with siting and operating charging stations to avoid unexpected costs. Deep-pocketed infrastructure investors including Schneider Electric and Alphastruxure, a joint venture of Carlyle Group, are putting money into large-scale charging hubs that link solar panels, batteries and building energy controls.

On the vehicle side, many EV makers offer leasing and financing structures for large-scale buyers. The range of such offerings can be expected to expand as major automakers scale up to meet their targets of moving to all zero-emissions models over the next decade or two.

Inspiration CEO Green highlighted several distinctions between his startup and its competitors. Most of the integrated fleet-as-a-service offerings today are focused on heavy-duty vehicles such as buses and trucks, whereas in light duty, we don’t know of anyone offering both vehicle financing and turnkey charging infrastructure under one roof,” he said. Many companies offer financing and managed services for either EVs or charging infrastructure, but few handle both, he added.

Finally, he said, Inspiration is“100 percent product- and technology-agnostic,” he said, whereas many EV manufacturers and charging system providers are shaping their offering around selling more of their core product.” In a world where technology is changing rapidly, Inspiration wants to maintain flexibility and neutrality.”

That may open up opportunities for Inspiration to partner with traditional fleet management companies to help customers make a gradual transition to EVs. We can be the capital provider and partner for their EV product,” he said.

RMI’s Mullaney agreed that fleets that can pick and choose among multiple vehicle and charging vendors will have more opportunities to shave costs over the long run. Range and capability are differentiating factors,” he said. EVs are going to become pretty customizable, and one of the things you can customize is the battery,” giving fleets the option of picking shorter-range, and thus less expensive, battery options to meet their specific needs.

As for the appetite for financing structures similar to those Inspiration is pursuing, I think that model of asset ownership is going to become more popular,” Mullaney said. In China, by far the world leader in EV deployments, it was these types of leasing models that unlocked the light- and medium-duty freight market for electrification.”

According to Green, “$200 million is the starting point, not the ending point,” of Inspiration’s ambitions. We’re in active discussions with some large global energy and infrastructure players to add to that,” he said, though he wouldn’t provide any names.

Electrifying transportation is a massive opportunity to both deploy sustainable infrastructure capital and accelerate meaningful greenhouse gas emissions reductions,” Green said. We need to do more, and we need to do it fast. Time is running out.”

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.