EPISODE 282

Lightning eMotors CEO Tim Reeser is Supercharging Our Electric Future

54 minutes · January 31, 2022

From ambulances to Winnebagos (NYSE: WGO), Tim Reeser, CEO & Co-Founder of Lightning eMotors (NYSE: ZEV), is helping commercial fleets embrace sustainability through all-electric vans, trucks, and busses. Tim drives us through the work he does to transform conventional vehicles into zero-emission machines. He also shares the origin story of Lightning eMotors and the impact of the company’s recent listing on its future.

Speaker 1:

From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE and at ICE's Exchanges and clearing houses around the world. And now welcome, Inside the ICE House. Here's your host, Josh king of Intercontinental Exchange.

Josh king:

What is it about the pandemic era that gave rise to all these dystopian visions of an alternative America? I'm currently in the middle of Station Eleven from HBO that imagines a theatrical troop, making their way around the Great Lakes on horse drawn Ford Broncos with the engines torn out to lighten the load. Transportation was imagined to be just marginally better on Apple TV's Finch where Tom Hanks' character Finch Weinberg makes the trek from St. Louis to San Francisco with his dog, Goodyear and robot Dewey aboard a modified motor home covered with solar panels to power all the accessories.

Josh king:

It didn't end too well, but the vision got significantly brighter today when I read about Winnebago's first, all-electric concept motor home with a zero emission power train from Colorado based Lightning eMotors. That's NYSA ticket symbol, ZEV. Tom Hanks would've been a lot more comfortable in the Winnebago that can fast charge at public charging stations or get a full battery charge at camp grounds across America.

Josh king:

The concept version unveiled this week of Winnebago's ERV is the first all-electric motor home designed by a major RV manufacturer. It's made possible by having Lightning eMotors under the hood. Far from those dystopian visions, this is a vision of mobility shared by Americans ever since Henry Ford rolled out the model T which cost of whopping $825 in 1908, but dropped to just 260 bucks just a few years later. Better roads and infrastructure followed. And with them came a network that connected towns as far west, as Santa Monica, California.

Josh king:

And the internal combustion engine that all that progress seemed to be sufficient until we began getting serious about battery powered vehicles. Our guest today is a pioneer of our electric future. Tim Reeser, CEO of Lightning eMotors has been helping commercial fleets become sustainable by offering zero emission vans, trucks, and buses since he co-founded the firm in 2008. The company secured its niche by focusing on elegantly integrated all electric power trains across various vehicles, including some of Ford's very own models.

Josh king:

Now, Tim may not have stood outside in a storm with a key in a kite, but he did find a way to capture Lightning in a bottle by working with commercial fleet owners to embrace an electric future. Capitalizing on transitioning conventional vehicles into lean, mean, green fighting machines. Our conversation with Tim Reeser is coming up right after this.

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Josh king:

Our guest today. Tim Reeser is CEO and co-founder of Lightning eMotors. That's NYSE ticker symbol ZEV. A leading provider of specialized and sustainable fleet solutions since 2008 and a producer of completely zero emission vehicle solutions. Earlier, Tim served as Vice President of Colorado State University Ventures, where he spun out a series of clean tech companies. He also founded and helped run several software and IT infrastructure companies. Welcome, Tim Inside the ICE House.

Tim Reeser:

Thank you. Glad to be here. Honored and excited to have the opportunity to chat.

Josh king:

Are you on the waiting list for one of those first Winnebago ERVs to roll off the assembly line?

Tim Reeser:

I am. I like the product a lot and I tell everybody I wouldn't be interested in being in this business if it was just about sustainability. I love a smooth product, a fast product, a well run product. What you've seen from Winnebago, I've had a chance to ride and drive in that product. It is truly a revolutionary product in terms of not just the fact that it's electric, but the fact that it is much quieter than any motor home that they've had out before much smoother.

Tim Reeser:

And we even together worked on what does a human machine interface look like for that product? Everything from the dash to the control system that make that product really an extraordinary experience for the people in that space.

Josh king:

What's been the immediate feedback that you've gathered from the Florida RV super show in Tampa, where the Winnebago ERV concept RV was rolled out?

Tim Reeser:

You have a mixed review with anything. The first mixture with people that were excited to see it because it is very unique. It shows well, first of it's kind and it's exciting to see it, but we also had a lot of people asking, "Hey, what use is an RV that might have less than 200 miles range before it needs to stop at a charger?" That one I've enjoyed asking because as you can imagine, both Winnebago and us did a significant amount of market research before embarking and saying, "Hey, is this more than a novelty? Will people use this?"

Tim Reeser:

And in fact, we discovered there's quite a market of people who take day trips to the beach, or here in Colorado, a day trip to the mountain, or even a night trip to the mountain. There's actually quite a few people who enjoy an RV experience where they don't need hundreds of miles, or aren't planning on doing a cross country road trip in a day. So the opportunity to explain to people that, yes, there really is a market for this and there's people who really think about it and imagine an opportunity where, Hey, maybe they're going to their kid's soccer tournament. Taking an RV for that day can significantly enhance that experience.

Tim Reeser:

Same thing if you're going to tailgate or something like that. So I've enjoyed the opportunity to answer those questions and really point out to people that there is a market for this. And as people see that, and as they understand it, it's been fun to watch them really catch hold of why this is working and why it's an exciting place to be.

Josh king:

What was it like to do a deal with Winnebago? It's not as old and hallowed a name as Ford Motor, but it does go back to its founding 63 years ago, 1958, Eden Prairie, Minnesota.

Tim Reeser:

Yeah. In fact, many of our OEM customers, we break our business into two pieces. One of them is where we sell directly to commercial fleets. But another one is it's really taken off for us where we sell power trains to specialty vehicle manufacturers and commercial vehicle manufacturers. And most of them are in that space. The commercial vehicle and specialty vehicle space in the United States, much of it is quite historical in that sense.

Tim Reeser:

Their history is important to us because we don't see ourselves replacing them, but rather leveraging their great brand names. The legacy of their great brand names, their customer base that trust them and plugging into that with a great product from our side that rejuvenates and brings fresh life into those customers and into those products. So we're very proud to partner with Winnebago and believe absolutely that their brand name is an exciting brand name, and we're excited to be partnered with that.

Josh king:

But Lightning eMotors is beginning a history in and of itself based in Loveland, Colorado, the heart of Larimer County, just north of Denver prime RV country. Tim, is your family outdoor types?

Tim Reeser:

Absolutely. I think most of our employees are, as you can imagine, it's part of being in Colorado. 300 days of sunshine a year, and the mountains that are literally 15 minutes out the door here. So a lot of outdoor types where RVs make sense, but also where people generally are thinking about sustainability, thinking about air quality. And so all of that coming together certainly has people excited about the vision and excited about the future.

Josh king:

What brought the research to the Centennial State original?

Tim Reeser:

So we've been here a long time. So my grandfather was Denver police chief in the 1960s. So long history from a family standpoint, fifth generation, Colorado, but many people ask me why build an electric vehicle factory and company in Colorado? There's a perception sometimes that we're way out of the way, but as you point out, we're not. We're just little north of Denver, but close to skiing. One of the great parts is we're very close to universities where like Colorado State University and University of Colorado who produce people who come right out of their mechanical engineering schools with interest in, or even having participated in the GM EcoCAR program, for example.

Tim Reeser:

So we've got great in this area. When we recruit folks, engineers and others, it's easy to get them to come to an area where you've got 300 days of sunshine a year, a great climate and lots of outdoor activities to participate in. So we like being here beyond the fact that I have a lot of personal history here. It's turned out to be an extraordinary place to have a high tech software focus company like Lightning.

Josh king:

It seems clear now, Tim, that electric vehicles, EVs as we call them are here to stay. I can tell that here in the city, in New York, where I am, that the decibels of street noise has certainly declined. As an expert in this space, retrace for us, what you think the turning point was in their popularity and acceptance.

Tim Reeser:

I think, and this is something I'm passionate about and I kind of mentioned it earlier, and that is a product has to be a great product regardless of the climate impact, regardless of the sustainability. One of the challenges when we looked back at early stage transportation innovation, as we looked at sustainable transportation, whether it was in the commercial vehicle markets or the passenger vehicle markets, the early products weren't all that good. They were interesting, but they weren't all that good.

Tim Reeser:

So if we look at early commercial vehicles, whether it was a natural gas vehicle, for example, that was certainly cleaner, but there were trade offs in terms of performance and power and the drivers didn't really like them and all of the complexities and challenges that came with a new niche technology like that. So as you started to see passenger transportation, whether we're talking about Tesla or Chevrolet with their Bolt product or Nissan with their Leaf product.

Tim Reeser:

As those products became better and better, and in fact, in many cases became better than their gasoline counterparts in terms of as you point out their sound quality, the impact both to the external people on the street, as well as the person inside the car. Things like how good the human machine interface was that Tesla really set the mark on in terms of having a great way to communicate with the car for the drivers and the passengers or whether you think about the power and performance of these vehicles that certainly got to a point where in many cases, it was better than a gasoline product and we've continued to see those evolve.

Tim Reeser:

Now, the same thing's happening in the commercial vehicle space, where many of the drivers, who of our vehicle you'll see quotes from DHL, for example, from the drivers on those DHL trucks in Manhattan, touting how they prefer to drive in our electric vehicle, because it's quieter, it's more comfortable, it's easier to drive. They can keep the air conditioning or the heating on during the day without idling, the vehicle. All these true benefits. And so as those benefit started to outweigh the risks of a new technology, the risks of hey, maybe the reliability of early stage is a little suspect because the quality and the benefits started outweighing those risks. We saw that turning point.

Tim Reeser:

And in passenger vehicles, I think we saw a couple years ago, and now we really see an acceleration and many people who are driving or who have driven electric vehicles will admit, "Hey, we'd much rather have that product and I fall into that." But in commercial vehicles, I think it really just happened 12 months ago because there's an extra variable. That extra variable is total cost of ownership. Whereas in a passenger vehicle, many people are willing to say, I bought that because it's attractive to me and it wasn't simply about it was the cheapest or the least cost ownership or it was the cheapest of all my choices.

Tim Reeser:

In many cases, they bought it because it was attractive to them. It was prettier. They liked the body style. They liked the color, those sort of features. In commercial vehicles, that's rarely the case. It is all about functionality first and total cost of ownership second. So over the last year, as battery prices have come down, as our volumes have gone up, not only has the product become very compelling from a features and benefits and from a utilization, but just as importantly, the total cost of ownership has crossed over from being negative versus a gasoline or diesel vehicle to being positive versus a gasoline or diesel vehicle.

Tim Reeser:

And that's really just happened in the last 12 months. That's what's really driving a surge now, an interest in demand is this combination of, yeah, I love the product and yes, it's sustainable, but hey, it makes sense from a financial standpoint to these fleets now.

Josh king:

So Tim, you are a co-founder of Lightning eMotors, and as I've talked to so many founders and entrepreneur led CEOs of companies connected to the New York Stock Exchange, you have this deep connection to the both the mission and the problem that the original team was trying to solve. When you get around the whiteboard and come up with this idea for a company. Can you bring us back to that moment and share with us what led to the creation of Lightning E motors?

Tim Reeser:

One of my passions is, and has been listening to the customers. And so when we first created Lightning back in 2008, like many companies, we started with what isn't today, which is we started with a car, we started with a hybrid car and we were going to go win the XPRIZE competition. And the XPRIZE competition was about building a very efficient, 100 mile per gallon plus car. That's where we started, but we put that car in the Denver Auto Show and one of the key customer driven aspects was the head of fleets for the state of Colorado was walking through the Denver Auto Show in 2009.

Tim Reeser:

He walked by the booth and he said, "Hey, I've read a lot about what you're doing." He said, "I don't have any interest in a car, but if you put that power train in a commercial vehicle, in a truck or a bus, I'd be your first customer." And he, he did in fact follow through on that, and we followed through on that. I had been a business to business focused person in most of my career. And so I jumped at the opportunity to think about trucks and buses rather than about passenger cars. That's where we've been ever since, and really driven by these fleets and what they're looking for and how they think about business and total cost of ownership and the utilitarian nature of their businesses.

Josh king:

What's the comparative prize for the environment about whether every consumer passenger vehicle ultimately becomes electrified or fleets become electrified?

Tim Reeser:

Obviously, I'm tainted in that sense. I'm prejudiced. I love fleets, but when you look at the leverage of a fleeting and again, some of this is opportunity, like one of our key products is a class four shuttle. One of the things about that typical class four airport shuttle drives about three times or four times a day what a typical passenger vehicle, an average passenger vehicle drives. So it's not unusual for these airport shuttles to put on 50,000 miles a year.

Tim Reeser:

So they're putting a lot of miles, but not only that they're very, very dirty in terms of their emissions, air quality impact and output from a CO2 standpoint. So typically, these airport shuttles get about five or six miles per gallon driving these 50,000 miles a year. So they're a very high impact vehicle, but they're also if done right, take a lot of other cars off the road. So they have the opportunity to create leverage. They're taking passenger cars off the road, but in today's world, in the gasoline and diesel world, they've typically done it in a very inefficient way.

Tim Reeser:

We take that airport shuttle that was getting five miles per gallon in an equivalent way as a zero emission vehicle to put the energy in equivalent, it's now getting about 25 miles per gallon, rather than five miles per gallon. So it's five times more efficient in energy use. And from an emissions, it is zero emission at the tail pipe. In many cases, our fleets are looking for ways to charge these from solar power, from large solar rays. So it truly is zero emission from beginning to end.

Tim Reeser:

So the impact opportunity is quite leveraged versus a typical passenger car. It's used every day. It's driven a lot of miles and the comparative, what we're comparing to is a very dirty, highly inefficient vehicle. So going to electric is really a large impact play. So my prejudice is certainly, "Hey, the commercial vehicles have an opportunity to make more impact." And certainly there's a lot of studies out and people look at it in different ways, but there's no question that the commercial vehicle is an important part of how we solve the CO2, the sustainability, certainly global warming solution, as well as air quality solutions in urban America.

Josh king:

You and Tesla, Rivian, you aren't alone in this space. You've got all the major automakers in the US and abroad with models of on the drawing board and soon to come off the assembly line, not to mention other potential players like Sony and Apple that have been talked about as future makers of electric vehicles. How does Lightning eMotors differ when comparing yourselves to other EV manufacturers?

Tim Reeser:

So almost all the other EV manufacturers have focused on to your earlier question, what appears to be the low hanging fruit, which is the mass produced passenger cars, or the mass produced pick up trucks. In some cases, they've looked at the mass produced over the road semi trucks. Lightning's done everything except that. So we've done the non-mass produced. We see a big opportunity in these, what I call the eclectic commercial vehicles you see on the road. As I drove to work today, I passed a street sweeper, I passed a little school bus, I passed a large school bus, I passed a shuttle bus, I passed a transit bus and an ambulance.

Tim Reeser:

All of those have very different, they're not mass produced for good reason because they're highly customized. And as an electric vehicle to are even more customized. The opportunity to leverage the electric infrastructure that's on an electric ambulance to run in a very efficient way, additional equipment that you couldn't run when it was a gasoline based ambulance is an exciting feature benefit to this electric ambulance, but it has to be designed differently. It's not a mass pretty vehicle, but there's still thousands of them produced a year.

Tim Reeser:

So we've gone after this unique market that is lower volume, not mass produced, very different manufacturing thought. And in fact, people like Ford and GM don't today make, and they haven't for hundreds of years made ambulances or shuttle buses. They focused on mass production. That's their business. They're really good at it. We focused on the business they aren't in, the business we're really good at, which is all these specialty vehicles and commercial vehicles that are highly customized and where we can really make an impact from an electrification standpoint.

Tim Reeser:

So it is very different. A lot of people say, "Hey, you've got a lot of competitors." And in fact, when one of our customers came to us and said, "We need an electric ambulance." I said, "Who else have you explored?" And they said, "We can't find anybody else in the United States who makes an electric ambulance." So, we're all alone in many cases.

Josh king:

An ambulance is a perfect use case. It goes out on its number of calls a day, but when it's waiting for that next call, it's in its garage, perfectly plugged in like a fire truck.

Tim Reeser:

Exactly, and like I said, we also have the opportunity to do high voltage, very efficient HVAC air conditioning and heating systems, do high voltage medical equipment inside that may not have been able to be used before. So we can support more specialty equipment. We can put it in different places than we might have been able to before. So we're able to make it fundamentally a better vehicle, but it remains a very customized vehicle, but it's a great use case. And same thing with school buses, in many cases, same thing with transit buses. So these markets are great use cases. They're very large impact in terms of CO2, sustainability and air quality in urban environments.

Josh king:

So Tim, last May Lightning eMotors announces that it's closed its back merger with GigCapital3 . Why was that the right time to go public? What opportunities did you see for the company in the public space that didn't exist while you were privately held?

Tim Reeser:

As we looked back in 2020, our major investors and partners, folks like BP Ventures, who had been very good to us as a partner and continues to support us in many ways, told us that they saw and that they were on my board and we'd talk regularly. And they said, "Hey, we see the tremendous growth in front of you. We see, as we talked earlier, this inflection point that happened when our total cost of ownership became very compelling and when large customers started saying, 'Hey, this isn't just niche. It's not something we're just going to play in. We're going to buy thousands of these vehicles."

Tim Reeser:

Our partners, our investors looked at it at the private side and said, "This is going to take a lot more capital to scale and take advantage of this very, a large scale opportunity in front of us, the very large growth opportunity in front of us." From my standpoint, I wanted a chance to have had a lot of public interested parties say, "Hey, we'd like to invest." And so I wanted a chance to have more stakeholders and more people who were interested in the business and could ride along with us as we saw this extraordinary success of in front of us.

Tim Reeser:

So going public allowed us to bring a lot more money in, in a sustainable way, have a lot more people involved and ongoing, also have a lot more access to investors and the markets in order to continue what we see as a very significant growth opportunity in front of us.

Josh king:

Specs have remained a compelling way to help efficiently get private companies into the public space. According to the Wall Street Journal, Tim, at the end of 2021, just a couple weeks ago, there's still nearly 160 billion in spec capital seeking private companies to take public. Why was the spec route so attractive to you and the leadership team when you looked at the various options that you had in front of you?

Tim Reeser:

For us at that time, it was all about speed. We knew we needed to move very quickly because our customer backlog and our orders were moving so quickly. And the investments we knew we needed to make to scale up our factory and scale up our team. And so when we looked at traditional IPO, certainly it's typically well known to be in the one year to 18 month. We felt we could get us back done in effectively six to nine months and in fact did. So the speed was a very key part of it.

Tim Reeser:

There was also a lot more ecosystem that came along with it. Many of the specs, obviously that are out there and that we talk to certainly bring some of their own expertise to the table and helping a company become public. And that was part two that we said, "Hey, we've got a big lift, become a public company." Leveraging a lot more of the ecosystem and environment that's in place to make that happen was important to us. So both of those, one the speed at which it could happen and two, the opportunity to partner with a variety of people who had a stake and an interest in the game was important to us.

Josh king:

A few weeks after that deal was done, we welcomed you and your team here at the NYSE to ring our opening bell. Curious from your perspective, what that opportunity was like, and why was it important to celebrate before you said, and I'm going to quote you here, "It's back to engineering, designing and delivering great zero emission vehicles for our growing base of customers." Really, just a brief pause for you guys.

Tim Reeser:

Yeah. We saw a lot of work ahead of us, and again, it was all about really going with a market that we saw had an opening and had an opportunity to take off. But we knew we had customers waiting for product. We customers anxious for us to get product on the road with them, anxious for us to finish validations with them. And so we didn't see a lot of time for celebration. Obviously, we were very honored and it was an exciting time. The New York Stock Exchange treated us very, very well. It was certainly a very memorable time to spend, but we knew we had to get to work. We knew we had customers, we had a market, we had an opportunity to make impact right now.

Tim Reeser:

And we see a lot of urgency and it's part of who we are as Lightning. Part of the name was about being Lightning fast and part of our culture is about understanding the urgency and the timing and the opportunity we have in front of us, that the opening we have that isn't going to be there forever to make this kind of impact and change the world as we see it and change the way transportation is for the future moving forward.

Josh king:

The journey to the podium at the New York Stock Exchange is often, Tim, long and full of potholes. And as much as it was back to work for you guys really quickly, as you stood on that podium, share if you could, some of the lessons you learned getting to that moment.

Tim Reeser:

I think one of them is to have a big vision. Don't be afraid to dream big. Obviously, when I had a chance to sign the wall at the staircase in the New York Stock Exchange, you're standing amongst giants there. There's Henry Ford's signature on the wall and Michael Dell's signature on the wall. Some people who also had big dreams and big visions and made them happen. Obviously, if you don't start with a big dream and a big vision, there isn't any ability to go execute on a big dream or big vision.

Tim Reeser:

So standing there on the day we rang the bell was a lot of thought about, hey, we have to think big. We have to continue to work to solve very big problems and we have to continue to execute every day and every hour on how we solve big problems and dream big and how we're going to succeed at that. So that was something I look back on a lot was... And I think the history, when you look at the New York Stock Exchange and the kind of companies who've gone through there, and the CEOs that have rung the bell or stood in the stood in the stairwell signing the wall, that kind of thought about all of us have said, let's go solve a big problem and in fact, gone out and executed on that.

Tim Reeser:

I think the second thing is persistence. I think everybody's read all the stories about Henry Ford and the number of times he went bankrupt or nearly failed or did fail. And certainly that's true with nearly everyone who's been successful. It's often to your point, not a straight path. And so often we think about the failures. We think about the people who said, "You'll never make it. You won't make it happen." And the persistence to stay with it. The persistence to believe in the vision. The persistence to stick with it and keep going even when you fall down. I think those are two things you think a lot about in that journey and both to success and recognizing the journey will continue in that way. It won't be roses all the way. It won't be a straight line. It'll continue to take persistence and continue to take patience as we move it forward.

Josh king:

Part of the story on the journey, since that as we've been looking at all the announcements that Lightning eMotors has put out is using some of the funds from the listing and scaling up and growing. Much of the news over the last several months is focused on some of the big hires you've made and expanding your resources to help meet the increasing demands that you're facing from your growing customer base. Tell us a little bit about the recent growth and the investments that you've been making over the last six to 12 months.

Tim Reeser:

It all starts with team. I think everybody who's run companies or grown companies recognizes as much as the external aspect is all about product and customers. The internal aspect is about building an extraordinary team. And certainly since go in public, we've announced bringing on a chief manufacturing officer and a chief people officer and a chief revenue officer. And just prior to going public had brought in a CFO and the impact those people have made on me personally, obviously their day-to-day, hour-to-hour relationships were all fighting together in the trenches together. But it's also the relationships for life, many of these people, because you're in the trenches together and remember these things day-to-day.

Tim Reeser:

But I can tell you the reward too, of working with really high quality people. One of the advantages obviously of being public is a lot more access to being able to get great people and attract great people and we've been able to do that. And so building management team of highly experienced people, people who've been in other public companies, people who've seen success, people who know what it tastes like, and people who are ready and willing and able to work very hard to go achieve it is highly rewarding from my standpoint. So we've really built an extraordinary team and now that team's really finding their wheels, as I like to say, and getting up to speed and that makes it very exciting.

Tim Reeser:

And the other part of course, is finding some great customers and partners. So we've announced a great partners like Forest River, Berkshire Hathaway Company, Collins School Bus, Winnebago, many of these great partners that also are run by certainly very, very capable, competent visionary leaders who are out there really driving their businesses and what they're doing. It's very rewarding to work with those types of people and that quality of people and people who share the vision in terms of what we're all trying to do, and building a more sustainable world, building great businesses, having great employees and a great environment for people to work in and having those kind of shared visions, even with in some cases, competitors and in many cases, partners has been very rewarding and a rewarding part of the building process today.

Josh king:

Finding the wheels and finding the partners. We're going to get into both of those things after the break with Tim Reeser, CEO and co-founder of Lightning eMotors when we dive deeper into some of the opportunities the company's pursuing, the partnerships it's established and how it's navigating the supply chain. That's all coming up right after this.

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Josh king:

So welcome back. Before the break, Tim Reeser the CEO and co-founder of Lightning eMotors and I were discussing his career journey, the team he's built and the company's first year as a public company. So we touched a little bit on this when we were talking about Winnebago and the idea that people might really want a day trip rather than go 3,000 miles from coast to coast. But when considering an electric vehicle, consumers and businesses, despite that they still tend to pay a lot of attention to range or the distance that a vehicle can travel in a single charge. Why is so much emphasis placed on range? Why do you think some of that focus might be misguided?

Tim Reeser:

I think initially with a lot of vehicles, and this was true, even by the way, in the early days of gasoline if we all put ourselves back to a model T day where there wasn't a gasoline station on every corner. Any of us who've watched some of the old historical shows, well, we can recognize and certainly extrapolate that the range was a difficult problem even back then for gasoline and diesel vehicles in the early days. And then as things evolved into things like natural gas, natural gas was a range decrease.

Tim Reeser:

So people have always thought about range, both in terms of their time. How often do you have to stop at a gas station? And also, can you find a gas because ultimately it is very, very stressful to run out of gas. It's very stressful to run out of electricity, very stressful to be caught on the side of the road and not make it where you wanted. So we understand the stress and that stress, like I said, has been going on for 100 years. So it's not a new stress, but when electric vehicles first came out and many of the first electric vehicles I'll tell, for example, the early Nissan Leaf had a 40 mile range.

Tim Reeser:

Well, in fact, that does create... There's a lot of places you may not be able to get round trip on a 40 mile range and the stress of thinking about, "Oh, what happens if I don't make it home. I'm going to have to tow this vehicle. That's expensive." Those are all things that do matter. So we certainly understand stress, but important to understand in the context of a commercial vehicle, there's a lot less stress in terms of we know, in most cases, what the vehicle application is.

Tim Reeser:

For example, if you are a school bus, most school buses run the same route that's identified and allocated to that particular vehicle. It runs the same route every day. We know how many miles it drives. The school knows how many miles it drives. It very rarely takes significant detours. It doesn't have to go across state tomorrow. It very rarely is used for a different purpose. So in the commercial vehicle space, limited range is much more useful because in many cases we know what the range is. It shocks people to understand most last mile deliveries, whether you're talking about the major people. We think about the Amazons, the UPSs, the FedExs, most of those on average are less than 40 miles a day.

Tim Reeser:

And again, they don't need on a weekend go see grandma three states away. They stay in their 40 mile radius, seven days a week. So commercial space, it is less of a concern. Obviously, RVs that today's was a little bit of an interesting. It's not a school bus. It could be used for longer, but again, there are many people who know that they're just taking it to their tailgate party every weekend, or they're just taking it to the mountains every weekend or their favorite spot, or they're just taking it to the beach every weekend. So they're certainly applications where as you get into 100 miles or 200 miles range, it's more than sufficient and there isn't much range anxiety with it.

Tim Reeser:

But we can also obviously all think about cases where we want more and need more. I think we'll continue to see different vehicles scoped differently. So we have options. For example, we do have a couple customers who say, "Hey, we need more range than the battery vehicle can do." And so we offer a hydrogen fuel cell option that does provide 200 to 300 mile range for those customers. Some of those customers already have hydrogen at each Depot and they need to go 200 between the Depot and they need to do it on a full payload and that simply can't be done from a physics statement with a battery electric, and they need a fuel cell electric. And we provide that as an option in our portfolio to those customers.

Tim Reeser:

So there are solutions, but again, in the commercial vehicle world and the specialty vehicle world, it does tend to be a little more prescriptive and saw than it is in a world where we're just trying to solve every last use case of where someone might want to take their car this week.

Josh king:

Let's dive into the bus use case with a little more granularity. Last August, Lightning eMotors announced an $850 million multiyear deal with Forest River, which is one of those Berkshire Hathaway companies. NYSE took symbol BARK.A if anyone doesn't know that. Leading manufacturer of recreational vehicles, pontoon boats, cargo trailers, and buses, and the deal was to deploy up to 7500 zero emission buses. Tell us a little bit about the background behind that deal, how you got yourself into it.

Tim Reeser:

Certainly. So we've been, even back I talked about our early days of making hybrids. We've always focused and worked on the bus space, partially because as I mentioned earlier, the bus space has a use case where it's urban. It benefits a lot from regenerative breaking. Most of the buses out there have very poor gasoline or diesel efficiency. So there really an opportunity to make big improvements in these buses. So I've always particularly liked the space, but they are unique. They're complex. Often there's multiple commercial people involved. So for example, with Forest River, when they make a bus, they also have partners who provide the seats and other partners who do because some interiors and other partners who build other special use cases.

Tim Reeser:

So some of these buses that Forest River sells, some of them might go to an airport shuttle or a hotel shuttle. Others of them go to transit agencies. Last I heard, I think more than half of the shuttle buses, they go to transit agencies and people see those. When you see the dial aide, the smaller dial aide buses that your local municipality might provide, or Access-A-Ride for the people who need handicapped access or wheelchair access. So those are all the kind of vehicles that Forest River provides. A lot of varieties of them. They have lots of different sizes and shapes and different options around air conditioning systems and heating systems because some of them, as you can imagine, might be going into San Diego. And some of them are going into Minneapolis or New York City.

Tim Reeser:

Lots of different wheelchair, handicap accessibility options for these kinds of vehicles. So when they came to us and said, "Hey, you guys have known these vehicles for a long time. You've worked on them for the last 10 years. We're looking for somebody who can scale with us." Because they believed the market was going to be largely electric and really prefer electric in the very near term. They were looking for a company who already had manufactured electric shuttle buses, already understood the market, already had happy customers with vehicles on the road and somebody who could scale, already had a factory in place and could scale very fast because they make 10,000 shuttle buses a year. So they are the Goliath in the space and they needed to partner with somebody who could scale at their pace.

Tim Reeser:

That put us in a great position. They obviously spent time here at our a factory. We spent time at their factory getting to know each other's capabilities. And it really came together in an exciting way and happy to say, it's a partnership I personally am involved in, I'm excited about and excited to see it scale and excited to see the impact we can make in the environment and all of those areas that these are beginning to roll out to.

Josh king:

Curious how an OEM relationship like that does scale. I mean, they're based in Indiana when the deal was done, they pledged more than 100,000 square feet of their factory to install your power trains on their class four, class five buses across the US and Canada within the next five years. So we are about six months after the announcement. And you say you're deeply involved in it, curious how you see things going and what you're learning through the process.

Tim Reeser:

Yeah. The first part was get these vehicles out into their dealers, into their demo platforms, into their trade shows. So we worked the trade show with them at the American Public Transportation Association Trade Show in Florida last November on the floor. Their trade show area was all electric buses exclusively. So you could see their commitment to it. And as they really look to how they get the word out that they have this product available and ready to go now. So most buses are sold through dealer networks. Those dealer provide service. Those dealers provide support. They provide demo drives for their customers.

Tim Reeser:

So we began last year, putting vehicles into those dealers fleets. So they had the demonstration vehicles they needed. So they had the trade show vehicles they needed, so they could show it to their customers and in fact, getting it to some of their early adopter customers. So that's already happened. It's always fun to see the face on the people the first time they drive one, the first time they see one, because it is an exciting and unique experience. The passengers like them better and the drivers like them better.

Tim Reeser:

So now we're in the stage as we're past the infancy and now into the starting to scale phase. Now it's about their customers are starting to make larger orders. It's also about how do we continue to customize together and make something that continues to be best of breed product. Listening to their customer feedback. Their early customers have them, their early dealers have them. Listening to their feedback on what would make it even better. And so that's something as you've heard in the podcast. So far, I'm passionate about, I like customer feedback. I really want to hear the voice of the customer. And so that's the phase we're at now is really beginning to elevate it to that level where there's more customers involved the next stage of scale up.

Tim Reeser:

This year we'll still be limited compared to what we see next year and the year after, simply because we all want to get it right. It does take a little bit for these large transit agencies and large airport shuttle agencies, as well as hotel agencies to... Obviously, many of them have year long cycles where they go through the buy or the bid cycle. So that's the the part we're in now, as it begins to scale.

Josh king:

So that's what's happening in The Hoosier State, a little closer to home for us here in the Empire State. You have partnered with DHL to bring electric vehicles to their New York City fleet. The Ford trucks equipped with a 4,300 kilowat hour battery located under of the vehicle, and doesn't compromise space within the band because they've got to make a lot of deliveries here in Manhattan. What made this pilot program so important for freight delivery going forward?

Tim Reeser:

Part of it was a unique opportunity to customize with DHL. So DHL actually has a lot of experience with first gen electric vehicles. As I said, many of them very publicly weren't necessarily the be all and the end all, but to DHL's credit, they stuck with it. They knew they had to be sustainable. They knew they wanted to lead in sustainability and so they continued to look. So when they found us like so many of our competitors, they said, "Hey, we like what you're doing. We'll give it a try." Obviously, out of the gate, they're skeptical because they'd already had some others that may not have worked very well.

Tim Reeser:

So when they spent a year with our vehicles and their drivers very publicly came back and said, "We love these vehicles. The reliability was up to par." They love the vehicles, but part of what they liked about the vehicle is we had together with them, customized it for the Manhattan experience. And what I mean by that is they came to us and said, "Hey, we don't drive these vehicles very many miles, but they drive a lot of time." So they spend a lot of time parked in front of a high-rise in Manhattan while the driver delivers packages up and down the elevator. And so they needed a unique application that actually didn't have a lot of batteries.

Tim Reeser:

You said this had a 43 kilowat hour battery, which is a very small battery for commercial vehicle, but they wanted to have a smaller battery because they wanted more payload than normal. They wanted to be able to have these very effective, cost effective solutions in Manhattan, where they didn't drive a lot of miles. This is a case where people thought we were crazy to put such a small battery in the vehicle, and it has worked splendidly. There hasn't been a range anxiety. They drive those vehicles typically less than 20 miles a day in Manhattan. The vehicles work very, very well and that led to them placing another large repeat order with us that we are actively producing now today.

Tim Reeser:

And very publicly DHL has been very complimentary of our product, which we're very appreciative of. And obviously, I return that in looking at both their commitment and what they've done to be an early adopter and get to this stage. But now we're actively looking at other markets. And as you can imagine, putting DHL express vehicles in Palo Alto, they need different range. They have different environmental requirements. And so again, we provide them the customization so that they get exactly what they need in each of those markets and they aren't having to overpay and they're not having to worry about range anxiety, because we deal with their markets and their needs in a custom agile way of each market gets what they need cost effectively.

Josh king:

DHL certainly on the leading edge of helping us all see the issues involved in the global supply chain crisis of 2021. No one's unaffected. Shipping bottlenecks and shortages have affected everything from technology at a chicken wing as to companies scouring their networks in order to ensure that their distribution channels remain as intact as possible. I'm curious how it's been navigated at Lightning eMotors.

Tim Reeser:

It has been publicly difficult. One of the great parts about being public is you can't hide behind it. You have to be straightforward about what we're seeing and so we had to announced last November that we couldn't see far enough ahead of us to keep giving long-term guidance because of many of these supply chain shortages ranging from, as you said, it could be about anything, but when you're building a electric power train that has 1,500 components in it, all it takes is one of those components to not show up on time and not you're late or not meeting your revenue guidance.

Tim Reeser:

So this has been certainly the bane of the existence of anybody in the manufacturing space today and anybody more complex products, even more so. So part of what it's done though, no question about it. It's made us better. I looked at the team and said, given the amount of chaos and the amount of unpredictability coming out of supply chain, where it's not unusual to get an email the day after something should have arrived saying, it's not going to arrive for 12 weeks or 16 weeks. And so it's not only that it's unpredictable, it's that you get no pre-warning. You don't get any communication in many cases.

Tim Reeser:

And so what it's come down to is people like us have had to get better at the things we could get better at. So you've implemented brand new MES systems, manufacturing systems, brand new ERP systems. And the idea of those is being in a position where we can now predict rather than having to be reactive. We have a much better flavor. We know when things haven't shipped. So even if the supplier didn't tell us, it's going to be late, we can realize, hey, it didn't get on the boat. Didn't get on the truck, didn't get on the plane. It's not going to arrive in time. Let's move to plan B.

Tim Reeser:

We've also done a lot of work to put plan Bs in place. So we've announced not only do we have a great partnership with Proterra, we've also announced partnerships with CATL. Again, very important and critical for our business to have optionality in tough times. And optionality across many different variables and legs of the stool ranging from logistics. How has it shipped? Where does it come from to core chemistry of the batteries and that sort of thing. We've worked hard now to do that across our entire product line.

Tim Reeser:

So have additional optionality from different products. In some cases, it's meant we've begun vertically integrated some of these things and done it ourselves. In other cases, it means we've outsourced things we used to do ourselves. But those are things that I tell everybody well, run companies and well executed companies that they aren't immune from challenges. The question is do they step up and build systems and processes in place so that they can put themselves back in control of those challenges. I feel our teams doing that. And again, not to pretend we're immune or we've solved all the problems, but I do think we going forward have put ourselves in a much better position to manage it better going forward and also to survive and thrive in spite of the fact that I think that the macro side of supply chain's going to be difficult for at least the next year to come.

Josh king:

You raised that in the context of disclosing it as part of being a public company that these are the things they grown up companies do and have got to do. The concerns and practices of being a public company CEO continue to evolve Tim, and the expectations of your institutional investors, your shareholders, other stakeholders, dynamic continuing to change boards of directors needing to be prepped to navigate various situations and govern appropriately. How does life Lightning eMotors approach corporate governance and the issues involved?

Tim Reeser:

What we've wanted to do is to allow our investors insight into us as a company. How we operate so that they can understand what we're doing and understand it in a very even way across all of our investors. We're committed to that, but certainly as you point out, the rules change regularly. There's been a lot of new Reg FD coming down and even some of the things we talk about like revenue recognition and the 606 rules around how revenue is recognized and making sure we're on top of it, making sure our team's on top of it.

Tim Reeser:

So a lot of that is about having great people who are committed to the truth, committed to a sustainable company. The second part is recognizing that we're in this for the long haul. We will be successful long term, but what it means is many of our investors are in it for the long haul. We've got to create an environment where us and our investors will be successful for the long-term and that's about creating an environment of honesty and truth around what has to happen and fairness around the whole thing. And then also being very much up to speed and up to date on what the regulations are, what the trends are, what we need to be doing.

Tim Reeser:

I read every single one of our competitors and industries guidance. I read all of their reports as they come out and really work to stay up on how all of us are communicating to investors in the market. What we're doing recognizing. Today, I last I looked, I think we have a little over 50,000 retail investors, and I have a passion for wanting them to feel they know what's going on and they're treated fairly and some of those even come by for tours and get a chance to see the factory. So I have a personal passion around keeping that group engaged and keeping all the investors engaged and interested and something I enjoy doing and will continue to do.

Josh king:

In it for the long haul even if the Winnebago ERV so far will have a somewhat limited range until we can upgrade those batteries. Tim, I understand as we wrap up that you and your team are reentering the world of podcasts after hiatus, where can our listeners find you after they hear our conversation today?

Tim Reeser:

So if users go to the news section of our website, they can see, get directly to our communications and podcasts. And it's also distributed where people would typically find their podcasts, Spotify, iTunes Google and others.

Josh king:

What kind of stuff is on the Lightning eMotors Podcast?

Tim Reeser:

So one of the things I'm passionate about is helping people understand the opportunities in commercial vehicles, how they're different, what used for what electrification of commercial vehicles looks like, as well as helping our commercial vehicle customers and prospective customers understand what we might be doing. Because one one of the complexities with commercial vehicles is it's not just a transportation. It often has a duty. It often has a vocation it's supposed to do. Some great examples, a trash truck or a tow truck in addition to some of the things we've talked about.

Tim Reeser:

And so the podcasts often address those kind of specific... What duties are we doing? New products we're offering. How should people look at range? And many of the questions you asked today, like how important is range and range anxiety, and where is charging go and energy and what's going to happen in terms of impact as you look at energy? Many people like to say, "Hey, an electric vehicle charging off the grid is just a coal burner." And so talking about what efficiency means and how we're helping people get energy from other sources to charge their vehicles.

Tim Reeser:

So a multitude of subjects. We tend to be the direct and straightforward in both competition and what other people are doing in the markets and in the space. And often have guests both from customers and from prospective partners on the podcast as well.

Josh king:

It's been a great conversation. I'm sure there's a million rocks we could continue to uncover. I can't wait to maybe pick up a Winnebago ERV and take a ride and have a further conversation.

Tim Reeser:

Would love to do it. Thank you, Josh. Appreciate the time the great questions today. Would love to be back on anytime you find it interesting whether short or long, so keep in touch.

Josh king:

That's our conversation for this week. Our guest was Tim Reeser, co-founder and CEO of Lightning eMotors. If you like, what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question, you'd like one of our experts to tackle in our future show, email us at [email protected] or tweet at us @ICEHousePodcast. Our show is produced by Stephan Capriles with production assistance from Pete Asch and Ken Abel and Lynn Wolf. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. See you on the next episode.

Speaker 1:

Information contained in this podcast was obtained in part from publicly sources and not independently verified. Neither ICE nor its affiliates, make any representations or warranties, express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.

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Information contained in this podcast was obtained in part from publicly available sources, and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice.