Discussing the future of clean energy in the trucking industry. The climate crisis, macro trends, challenges, and opportunities for businesses to leverage existing infrastructure.
Episode 285: Wondering what the future holds for energy in the trucking industry? In this episode we talk with Gareth Evans, CEO and founder of VECKTA. We look at the history of energy production and its relation to the trucking industry. Aided by Gareth’s insightful perspective, we discuss the varied viewpoints on the climate crisis and the gradual shift to decentralized, cleaner energy sources.
Later, we reveal some exciting macro trends and the challenges that may spring up along the way. Gareth’s expertise sheds light on how businesses can leverage their existing infrastructure to produce, and possibly monetize energy.
Finally, we explore the future of energy – affordable, secure, and renewable. Gareth believes in the power of human ingenuity and creative entrepreneurship, which he suggests can steer us towards diverse and cleaner energy sources. Listen in and find out more about the energy transition, the challenges, the opportunities, and how you can be part of it.
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Transcript of Episode:
You are listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and this is the place where we have conversations that empower heavy-duty people.
Just about every day we hear something in the media about battery electric vehicles and the impact it is going to have. Or we hear something about the steps that governments are taking to mandate change that will help society address issues related to climate change.
Now we recognize at The Heavy Duty Parts Report that there is a wide range of opinions about this subject. We’ve got a guest today that’s going to be able to give us some truth and some facts, and I like that because it gives us an opportunity, we all have our right to our opinions, but what is the reality?
What is it that we should be considering? If you’re at a fleet and your job is to take care of an entire fleet, what do you need to know? If you are operating a repair shop on the independent service channel side or an aftermarket parts distribution company, what do you need to know?
If you’re on the dealership side, the OES side, how is it going to affect your business? At the end of the day, trucking is the backbone of society, and we have to take proactive steps to ensure that as technology changes, our equipment, the way that we operate, our businesses change as well. So I’d like to introduce my guest.
My guest today is Gareth Evans. He’s the CEO and founder of VECKTA. Gareth is committed to a mission of empowering businesses and communities to make the global transition towards a more affordable, secure, and renewable energy future. Gareth, welcome to The Heavy Duty Parts Report. So glad to have you here,
Jamie. It’s a pleasure. Excited for today’s conversation.
Fantastic. Well, when it comes to the future of the trucking industry, people have really strong opinions. Obviously if you work in the industry, you’ve got a vested interest in where this was going to take you in your future. So I’d like to talk to you a little bit about the trends of where we’re at.
We know that battery electric vehicles are coming fast and furious. We know that there’s going to be a lot of change to the technology of the equipment that we are operating, that we’re maintaining. So I’d like you to give us kind of a reality check. Where are we right now? What do we need to know about the future?
Yeah, well, I loved your intro, Jamie. Trucking is certainly the backbone of our businesses and economies, but I think what’s exciting for today’s conversation is energy is truly the lifeblood of everything, and without it, things grind to a halt pretty quick.
Yeah, they really do. And when you think about energy, I like to think about it in terms of what is actually energy, what is it doing for us? And the way I see it is it’s like it directly equates to work. So 200, 300, 400 years ago, you wanted to plow your field or you wanted to move goods. You needed you and a very large family and a bunch of friends to get the job done right, because you had to do human energy to kind of get that work done.
And then we had all of these technological advancements and all of a sudden we started to produce more abundant energy, which gave us the ability as a society and as countries to be able to then put that energy to use for us and to work it and to get more work done. So I think people are very concerned about where the future will be, especially since you hear so much about a lack of energy you hear about transitioning to different energy sources.
And I think that’s what’s really interesting. It is that energy transition is certainly a term everyone has now heard. It’s certainly become more common in our vernacular, but this is one of many transitions, like you say, we’ve gone from horse pulling cart, wind, power, water, power to then coal, then gas, and here we are now seeing more and more renewables.
But these things take time and they are this particular transition from what I’d say a centralized generation of energy, primarily using fossil powered energy sources to a more decentralized, distributed, cleaner source of energy. This is going to be decades in the making. And so it’s certainly not going to be an overnight light switch moment.
Certainly there’s varying degrees of opinion on how bad the, let’s call it a climate catastrophe, is actually what we are actually facing. And so I hear everything from people who feel like we are at this cataclysmic point in time and humans aren’t going to survive, all the way to this really optimistic view of the future where human ingenuity and entrepreneurship and the free markets are going to drive us towards multiple different energy sources.
This is going to be good for everybody and things are going to really improve. So you have this complete range of opinions. From your perspective in the work that you’re doing in energy, what do you think the future’s going to look like?
There’s a lot of super exciting macro trends right now around one, the energy transition itself. So the cost of technologies is coming down. I read a really interesting report yesterday saying, unlike oil and gas, where essentially we’re pumping up a commodity that then once used is gone, we’re able to bring down the cost of things like batteries, solar, wind, quite dramatically because you are now producing thousands upon thousands of these products and you’re becoming more efficient all the time.
And so the ability to drive down the cost curve for these technologies to make energy more affordable and accessible to everyone is very exciting.
I think the trend of decentralizing these assets is very interesting because it’ll create a more secure future for us all. Combine this with the digitalization, AI, autonomous vehicles. In this case, I think there’s a lot of really exciting opportunity, and I’m certainly of the opinion that yes, we are having an impact on our climate and on our society’s health.
No one can sit here and say that they want that. I haven’t met anyone who says they advocate for that, but we’ve created a lifestyle that we all enjoy and we want to maintain. And the key is how do we adapt purposefully such that it is more sustainable, but it is also affordable and profitable for businesses to do it. That’s really key to the transition.
Yeah, one of the big concerns I have personally is that we are implementing mandates and we are trying to move towards a more positive future. But in the process of doing that, we’re actually putting our most vulnerable people in society at risk, the poor. If energy prices suddenly skyrocket like they have been lately, but if that trend was to continue, it’s the poorest of our people who are going to suffer the most. And so for me, I’m looking for solutions that really contribute to human flourishing across the board.
I don’t want to see one group of people succeeding and flourishing and the other group of people suffering so that that other group can do well. We want to see a world where human flourishing is the standard, and that’s where, from my perspective, that abundant efficient clean energy is a large part of what is necessary, the preconditions for human flourishing to expand more globally.
Yeah, no, I love that. Part of the reason why I’m on this mission is right after the second Gulf War in Iraq, I spent two years there supporting the oil and gas industry to move into the region. And here we were unlocking the biggest oil and gas reserves in the world to feed our kind of energy thirsty economies. But the local populace who had gone through years of war and their infrastructure being decimated, they’re surviving on two to four hours of power a day.
They’re trying to do that in a hundred plus degree heat. And to our initial comment around energy being the lifeblood, horrible things happen when people don’t have access to reliable energy. And so what we were getting reports from the US military, because we were staying on the US military base there in Basra, was the mortar attacks we were receiving every night were not as a result of terrorists or insurgents.
It was largely like local populace being paid $500 by bad people to come and do bad things to us. But they were doing that because they needed to feed their families, they needed to be able to buy diesel to power their houses. And so our grid today is a hundred years old in some cases in the U.S., and it’s becoming very fragile, very unreliable, very expensive to maintain.
And these are some of the trends we’re seeing in terms of cost going up, outages increasing in severity and duration, and these aren’t good for us trying to run businesses, households, they can be a slippery slope quite quickly, and we want to avoid that.
And you’re absolutely right. I mean, when you have a choice between like, well, I guess I’ll cut down that forest and we’re going to burn that wood to keep our families from freezing to death, guess what? It’s going to happen. People are just going to do it. So we don’t want to go backwards to that time.
So we’ve got all this technology, we’ve got things that we can do to make meaningful change. We know that battery electric vehicles is a big part of the future of commercial transportation. There’s some issues though. You talked about the electricity supply and demand issue with the grid.
I think that there’s this idea, especially amongst my daughter’s generation, she’s 19, they almost think electricity just comes from, I don’t know what they think, but they certainly don’t have a concept of what it takes to produce abundant electricity, what it takes to produce devices to store it safely and to utilize it properly, and things like charging infrastructure and the load that all of these new vehicles who need electricity are going to put on this aging infrastructure.
So how does that kind of square with you and what trends are you seeing there or what insight can you give us there?
Yeah, I think there’s obviously the exciting component aside of the electrification of vehicles, which we can talk about. I think the challenges you’re describing were really highlighted for me last year when the same week that Governor Newsom came out in California and said, by 2035 you can no longer buy ICE vehicles.
He was also asking people not to charge their electric vehicles because there was a summer heat wave and they were worried about that increased load creating blackouts. And so when you actually look at the load growth that is estimated as we electrify more vehicles in California alone, the saying by 2030 we’ll need an extra 18% more energy to meet electric vehicle demand and by 2035, 55% more.
And so they’re saying that’s a minimum of 50 billion worth of investment between now and 2035 to make sure that the infrastructure is there to support this charging. And so as you can imagine, that’s not something that can just be turned on. Utilities are renowned for being extremely status quo orientated. They’re not super innovative. They’re not going to go out and deploy all this infrastructure without the price being passed onto ourselves.
We are the rate payers, and so they don’t do anything without passing the cost onto us. And so to your comment before about an equitable transition, how do we ensure that we are meeting these infrastructure needs while also not destroying people’s back pockets?
Simple basic economics 101, right? With supply and demand. Anybody who thinks that electricity is going to be cheaper in the future, if the demand goes through the roof, guess what? Yeah, you won’t have a bill to fuel your vehicle, but your electricity bill is going to be as big or maybe larger than your existing fossil fuel bill that you pay today.
So we’ve got to solve this problem. And of course, another very important aspect when it comes to commercial trucking is the charging infrastructure. So it’s not just producing capacity for electricity, but it’s also the charging infrastructure, putting it in the right places.
And some people are calling the charging infrastructure, the truck parking crisis 2.0 because we already don’t have enough room to park all the trucks now we’re going to have ’em lined up to charge. And there’s a major transition that would have to happen there for these mandates to be put fully into effect because let’s face it, all the fuel stations have to be transitioned over to charging stations. So there’s some challenges there as well, isn’t there?
A hundred percent. And I think the biggest barrier for EV infrastructure deployments today is that the grid capacity isn’t there and or the upgrades required are years in the making when relying on the utility. So I think to address both your comments around how do we all get access to affordable energy and how do we navigate this transition, that’s why we’re firm believers in what we call onsite energy where we generate and store energy right where it’s needed.
So instead of relying on, for your daughter’s sake, this magical energy ecosystem today where we generate energy hundreds of miles away from where we need it, it comes down transmission lines, distribution lines, and then it shows up when we need it. That’s a very fragile and single point failure system.
So instead, why aren’t we generating and storing it right where we need it and using our built environment to actually achieve those objectives. So that’s going to be the strategic nature of where, to your point, you put the infrastructure to have the greatest impact, that’s got the right amount of real estate to be able to have solar or wind or storage assets to support the charging infrastructure needs.
You use the word decentralized. I think a decentralized power source that is fully empowered by the free market is something that could be very, very good for us because that’s going to drive innovation, that’s going to drive entrepreneurship. There’s going to be lots of new opportunities both for people and business, but also for the consumers of what they produce. So that part gives me a little bit of hope.
So we’re going to take a quick break. When we get back from the break, we’re going to learn more about your company. We’ll be right back.
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We’re back from the break and before the break, Gareth, it was really great to talk to you about some of the trends related to the transition on energy, where it’s going to take the commercial trucking industry.
If you’re a fleet maintenance manager and you have a fleet you’re responsible for, or you’re a technician that either works at the fleet’s repair shop, or maybe you’re in the independent service channel, you work at an independent repair shop or a dealership, your job is going to be deeply impacted by changes in technology on commercial vehicles.
And certainly from the parts side, which is dear to my heart, there is this unknown out there about, well, what will the transition to new types of power sources do to the parts business?
And we’re really curious about that, but we want to learn from you about what your company specifically is doing and just get some insight into what VECKTA is all about. So maybe for the listeners, could you start by just telling us about what it is that you’re doing at your company and what would you be able to provide the trucking industry?
So I think there’s a really exciting opportunity for business leaders who want to embrace this. Certainly for your listeners, parts and maintenance isn’t going away anytime soon. Trucks have long service lives and diesel trucks are still being sold today.
And so for the next 15- 20 plus years, we’re still going to see a massive industry surrounding this. And even when we do move to electrified vehicles, there’s still suspensions, tires, wheel, all that still exists. Obviously the complex side of the propulsion system disappears, and that’s certainly going to be a transition.
But I’d say for businesses that really want to get ahead of this, my analogy would be we all used to use dial up phones. So we have all these poles and wires everywhere. We’d pick up the phone, we’d have to physically dial the numbers, and that’s what we’re doing today with a centralized grid.
Instead, we’ve now got an iPhone that’s sat on our desk and we’re all too fearful to use it, and we should be picking up the iPhone and realizing the power of it. And that’s in the form of onsite energy and the supporting infrastructure.
I think for all your listeners, they should be thinking about how could my facility be used to electrify the fleets? Should I be putting in the infrastructure? How do I monetize that? How do I sell energy back to the grid and make money from that instead of being at the mercy of cost continually going up?
So I think the opportunities are, one, protect your business and manage your margins and costs by taking control of your system and then thinking about how can you step ahead of the ecosystem and be ready for the transition such that you can support the build out.
That’s an interesting way of looking at it. So let’s say I have four parts stores in two different states, and I would never think of that as being an asset that I could use to help produce energy and put it back to the grid or even supply it to some of my customers. So explain to me how that would functionally work.
So we’ve built a platform that would help businesses like you described, where you’ve got multiple facilities, different states, different jurisdictions. The status quo model today is you’re at the mercy of a supplier coming in, knocking on your door and saying,
Hey, Jamie, I’ve got the best solar panels for you. Sign up today and I’ll install. And you don’t dunno whether this guy’s believable, whether you should trust him or whether you should trust the next five guys that knock on your door, or you’ve got to then go to a very expensive consulting model and pay someone a lot of money to tell you what’s right.
We created a platform where we automate all of that process so we’re able to ingest your site locations, and with that we know how much energy you consume, what it costs you, what your emission profile is, where you can get the greatest incentives.
There’s amazing incentives now, especially with the inflation reduction act. How much can you save in terms of the capital costs? And then we help you configure the optimal energy system for whatever your business needs are. Maybe it’s just to cover your costs and stabilize ’em for the next 20 years so that you can plan your business accordingly.
Maybe it’s to monetize it and get a revenue stream. How many EV charging stations do you want to deploy? What extra energy do you need to meet those demands? So we help you think through all that strategy, and then we’ve built a marketplace of thousands of suppliers such that then we bring you firm competitive quotes. So you’re no longer at the mercy of being sold to.
You are telling the market, I already know what I want to buy. Here’s what I want you to quote and spec, and then they’ll come and build it, and then we’ll monitor it and make sure you get what was promised to you. So it really simplifies and accelerates the whole process of thinking about energy. We don’t want you to have to be an energy expert. We want you to run your business, but capitalize on the value of the opportunity.
So how did you go from working in oil and gas in Iraq after, did you say the first or the second Iraq war?
Yeah, the second. How did you go from being in the oil and gas there as a contractor in Iraq and seeing those things that you described earlier in a first-person experience to where you are today offering this, what seems to be a pretty incredible opportunity for companies to really take advantage of something that would’ve been probably a step too far for them just a few years ago. So just tell me how does that transition happen?
Yeah. I had an amazing corporate career working for the world’s largest energy engineering firm, the world Warley. And my last role was running their global power consulting practice for, and we created what we call the distributed energy business unit. And it was there that I got very frustrated by the process of one charging our customers hundreds of thousands if not millions of dollars to do studies.
We give them a glossy report and then we’d still release them to the hounds to go and get competitive quotes from the suppliers in the market. Or I was seeing that the market was just very uncoordinated and that because you didn’t know who to trust, it was leading to indecisions.
So I suppose while operating as a consultant, seeing the trends of costs going up, outages increasing, businesses worried about their energy sovereignty, seeing more sustainability targets being set, and combine that with the cowboy Wild West Market that existed, we realized there needed to be a better solution.
So 2019, we launched VECKTA and wanted to automate and create a tech platform that just really simplified the whole process, but the business needs are there, and it’s only going to get more complex. The market’s only going to grow. It’s still early days, but it’s an exciting time.
There’s nothing like being in the trenches though and seeing firsthand the frustration of your potential future customers and thinking to yourself there’s a better way.
I am going through that right now where we’re launching a new business venture called VisiParts, and it’s all about parts visibility, and it stems from years of being in the industry. And so when you tell me that story, it just really resonates. It’s like, yeah, that frustration. It’s like, why are we doing it this way? It can be done better, right? Yeah. Okay. So fast forward to today.
You’re four years into this endeavor, so you kind of have an understanding now, I’ve mentioned fleets, I’ve mentioned dealerships and parts and repair shops. Who’s your ideal customer for this in that mix, and what would be the minimum requirements for them to utilize your service effectively?
Yeah, that’s a really great question. And the beauty of the product itself is it’s kind of sector agnostic. So we’ve supported everyone from a small micro brewery that sits on your local corner, right up to the biggest mine sites in the world, and oil and gas facilities.
I’d say from a marketing and sales perspective, our customers today are primarily manufacturing, food and beverage, and then fleet style orientated businesses who are thinking about how do we possibly electrify our fleet or how do we put in the infrastructure to support it.
So they’re the primary markets and ideally multiple sites. So there’s a degree of complexity and a desire to want to do something or a pain point that businesses are feeling that they want to overcome. That’s kind of perfect.
That makes sense. But I’m thinking about some of the big national players in parts distribution. I’m not going to name drop any of the names, but we all know who they are. They have hundreds of locations nationwide.
There’s probably an opportunity there. Think of some of the large dealership groups with, again, hundreds of locations. Definitely an opportunity there. So this is something that hopefully today’s episode puts that on the radar for people who work for those companies. I know you’re listening, so take note.
Talk to the powers that be and get them to listen to today’s episode because there’s an opportunity there. Describe to me in more detail the economic impact that this can have on a business once they start to implement these solutions that your platform will empower them to take advantage of.
Yeah. A really good example, we worked on a project recently in Northern California where they were suffering a lot of power outages because the wildfire risks there as well as their costs had gone up 40% in the last two years. And so you can imagine margin erosion was huge. So we looked at their energy system, they were spending $1.2 million per year.
With an onsite energy system that they could pay back in less than a year using the carbon credits they’re able to save $400 grand a year while also reducing their emission profile by 49% and being able to ride through outages of up to a day. And so you can see the triple win benefit of significant cost reduction. We’re not talking about small cost reductions here, and that being locked in now for the next 15, 20 years.
So even if rates continue to increase 3, 5, 10, 50% year on year, you’ve got control over your own destiny. You’ve got some resilience, so you’re not going to have to shut the shop every time the utilities power goes off. And then being able to then market yourselves as being more sustainable can then help you win more contracts, get cheaper capital, attract the right employees. So these are all softer benefits of doing a really good thing for your business.
Yeah, if you’re in need of capital, you better do some reading about ESG and the role that’s playing in getting capital. For sure. Well, I thank you so much for giving us some time and explaining what it is that you do and how it could positively impact listeners of the show. If you want to leave people with just one thing that they should absolutely remember from today’s conversation, what’s that one thing?
I’d say don’t be the status quo person picking up the landline dial phone. Move to the iPhone future and embrace technology and make it work for you because it exists. It’s there. People are fearful of it, but the future is coming, and so we should all be ahead of it.
You’ve been listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and we’ve been speaking with Gareth Evans, the CEO and Founder of VECKTA. To learn more about their company, go to veckta.com, links are in the show notes. Gareth, thank you so much for being on The Heavy Duty Parts Report.
Jamie, it’s been a pleasure.