Fun fact: an electric vehicle (EV) has instant torque. When you floor an EV accelerator, there is no pause for fuel combustion nor a mechanical engine to shift into gear. Instantaneous power leads to ferocious acceleration off the line at your foot’s slightest flex into the pedal.
If you haven’t heard, sales of EVs in the US are experiencing the same kind of ferocious acceleration.
And as they do, BNEF estimates that between $1-1.4T (yes, trillion) in new charging hubs and associated electrical grid infrastructure will need to be developed globally. This week, TeraWatt Infrastructure announced having raised its next $1,000,000,000+ of that, led by Vision Ridge Partners.
Foot to the floor.
When we broke from stealth in early 2021 with the announcement of ex-Google global head of energy Neha Palmer as CEO, I wrote in detail about why John, Ethan, and I started TeraWatt. Or said otherwise, why the world needs TeraWatt.
Here are the basics if you don’t have the time:
Electric vehicles use electricity. A lot of it.
Fleets, who often park their vehicles together, at the same location, and generally have larger vehicles with larger batteries (i.e. delivery van, bus, etc.) use even more electricity as they simultaneously charge.
As fleet EV sales increase, a mountain of infrastructure needs to be built on an unfathomably short timeline.
TeraWatt, led by one of the most important energy leaders from the past decade, develops, owns, and operates charging centers for fleets.
For visual learners, here’s the same message in pictures:
While we’re excited to partner with Vision Ridge, one of the most sophisticated investors in the world when it comes to vehicle electrification, in support of Neha to leverage that capital to lead the industry, the capital raise itself is no milestone. Capital follows winners… it doesn’t create them. And that’s exactly what Neha and her team have been doing since TeraWatt exited stealth… winning. Follow along and they’ll be sharing details about how.
So, what’s taken TeraWatt from 0 to 60 so quickly?
1. Electric vehicle are selling
As more models are available and prices for EVs continue to decline, sales are increasing as expected relative to the above S-Curve. Despite the well documented supply chain struggles that have faced the automotive industry since the onset of COVID, EVs are taking share.
US EV Sales (Source: BNEF)
2. Commercial EV sales growth, of all vehicle types, is projected to outpace the supply of infrastructure
With each incremental commercial EV, customer needs are becoming more and more pressing. And fleets often order by the dozen, or hundred. TeraWatt has observed this across light, medium, and heavy duty vehicles. BNEF is already expecting light duty passenger vehicles, where vehicle availability is highest, to closely match the Keyframe S-Curve case. We anticipate the step change to happen even faster for medium and heavy duty when vehicle models come to market - so keep an eye out for revisions to these curves!
As each vehicle class electrifies, infrastructure companies like TeraWatt are scrambling to meet varied charging needs based upon unique transport requirements, re-defined EV-first operating models, availability of electrical interconnect**, and a variety of real estate constraints**. Each of these have direct tradeoffs with one another. As you might imagine, light, medium, and heavy duty vehicles' needs often vary greatly as well, even if the software and hardware components to deliver reliable, cost effective charging have similarities.
In urban areas, where electricity demand is already often pretty tight with limited excess grid capacity, site demand has rapidly outpaced supply – and vehicle deliveries have only begun in small volumes.
The scarcity is a bit scary, but it’s also exciting – and puts the pressure on TeraWatt’s acquisition and development team to delight customers on schedule and budget. As they do, we’ll come to better understand the capacity limitations of local grids beyond sites 1 or 2 for a given substation or distribution zone. It’s going to require strong partnership between fleet operators, infrastructure companies, utilities, and regulators to overcome this constraint.
3. Regulation accelerates market development
The federal government, as well as select states, have continued to catalyze market activity with grants, subsidies, and mandates for electric vehicles.
For a large part of the last 18 months, everyone thought a federal infrastructure bill subsequent to the Infrastructure Investment and Jobs Act was an unrealistic dream, until the Inflation Reduction Act passed surprisingly. Soon afterwards, California announced a ban on combustion engine vehicle sales starting in 2035.
There’s a lot to unpack about the current regulatory environment. At a high level, each incremental regulation has been an added catalyst to market growth in one way or another. We’ll post some more analysis about this soon.
On the one hand, $1,000,000,000+ is a healthy amount of equity capital to deploy, and it further solidifies TeraWatt’s leadership position. On the other hand, it’s merely 0.1% of what the world will need by 2040. 0.1%!!! Said otherwise, we’re at the very, very beginning. The game hasn’t even started yet.
The road for TeraWatt to reach $10B in assets (or $50b!) is clear, as they continue to build the team and technology to empower fleet operators as their vehicle charging needs grow in size and complexity. But success will only come in parallel with TeraWatt continuing to attract the best in market talent.
When TeraWatt exited stealth in 2021, it was a bit invisible to the world, spending the preceding three years prophesizing an uncertain future on an uncertain timeline, buying real estate all around the country (h/t TH) where charging hubs, should they exist, would have demand. When Neha joined TeraWatt she took a risk, as did many of the early team who held this shared vision of the future. This risk has paid off, as this vision has become reality. When you join TeraWatt today (open jobs), with that risk in the rearview mirror, it’s simply time to put your foot on the pedal and accelerate.
The race. is. on.
If any of that sounds interesting to you, me and my team would love to meet you! Send me a note any time at firstname.lastname@example.org