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Startup Motiv Gets $15M To Scale Electric Truck Component Production

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Startup Motiv Gets $15M To Scale Electric Truck Component Production

Motiv Power Systems can tap up to $15 million in cash from its largest shareholder as it catches up on pandemic-delayed orders for medium-duty electric truck software and power electronics.

GMAG Holdings Corp. is swapping cash for convertible notes that will grow its stake in the Foster City, California-based startup.

"Technically, it's a loan. But it does convert into equity in the Series C round we just kicked off and plan to close by year-end," Motiv CEO Matt O'Leary told FreightWaves.

Cash-For-Equity Plays Popular Among Startups

Cash-for-equity plays are taking varying forms at other electric truck startups where bank lending is hard to get. Cincinnati-based Workhorse Group Inc. (NASDAQ: WKHS) and Xos Inc., a Los Angeles-based developer of electric chassis for medium-duty trucks, signed deals to help them scale production.

Motiv raised $60 million in equity in October 2019. It used some of those proceeds to pay off debt. Some converted into equity, O'Leary said.

Founded in 2009, Motiv subsisted on grants for its first eight years. It moved into early production in 2018. Its major customers include Aramark uniform services and Bimbo Bakeries USA, the nation's largest bakery company.

"It is a line of credit. And we'll draw it down as we need it," O'Leary said. "It's a way to fund some of our working capital and help us as we're ramping up production," following a COVID-19 shut down earlier in the year.

"We're at the point where we have about 200 orders that we're ready to fill. We have a total of about 100 vehicles in the field today. Getting those repeat orders is huge, not just for increasing our business with these two customers," O'Leary said. "But it sends out a pretty strong signal to other fleets."

Biggest Investor Remains Confident

GMAG, the Denver holding company that manages the assets of telecom heir Gary Magness, continues to support Motiv's growth.

"Despite the challenges created by the current pandemic, Motiv's progress continues at an impressive upward trajectory," Matt Gallaher, chief financial officer at GMAG Holdings, said in a press release. "We see great potential in the company's future as the leading player in the commercial [electric vehicle] space."

Greening Of Fleets

Motiv's new funding comes amid growing investor enthusiasm for Class 4-6 battery-electric trucks, especially in middle- and last-mile configurations. emission

The new California Advanced Clean Truck rule mandates 9% of trucks sold in the state have zero emissions by 2024. The rule requires that 50% of trucks produce zero-emission by 2035 and 100% by 2045. Fifteen other states are following some of what the California Air Resources Board mandates. This is pressuring fleets to accelerate efforts to adopt cleaner transportation options.

In April, Motiv surpassed 1 million electric miles logged by vehicles using its software and electronic controls. That equates to eliminating more than 900 metric tons of greenhouse gas emissions. That's like the emissions from driving 213 passenger vehicles for one year.

Related articles:

Motiv expands electric chassis footprint

Motiv Power Systems raises $60 million for electric truck conversions

$70 million financing keeps Workhorse share surge humming

Click for more FreightWaves articles by Alan Adler.

 

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