A turnkey solution to electrify last-mile fleets

7Gen is leading the EV revolution with its efficient end-to-end electrification of buses and trucks for one monthly fee and no investment. The Vancouver-based company is easing the transition to zero emission for several Quebec carriers, especially on urban routes. 7Gen’s vision has sparked the interest ofseveral investors, including the Fonds de solidarité FTQ, which became a partner in late 2021.

Converting a truck fleet to electric can be daunting. The to-do list is long and requiressignificant expertise, from choosing a vehicle model to building a charging station, connecting and managing chargers, optimizing routes, maintenance, and repairs. And since electric vehicles are more expensive than diesel, there are the numbers to crunch. Although energy savings means the extra cost can be amortized over three to five years, electrifying a fleet still requires initial capital investment.

Financing was the main concern for a British Columbia bus operator in 2019 when he crossed paths with entrepreneur Frans Tjallingii. Tjallingii, who had led a software company and a mining vehicle tire recycling company to maturity, was looking for new ventures. That’s when things clicked.

“The operator had purchased three buses and he wanted to electrify a total of 80, buttraditional lenders wouldn’t back him,” said Tjallingii. “He was trying to figure out how to manage the charging infrastructure. It was obvious that he needed a turnkey service to get things moving.”

Three years later, 7Gen’s expertise was supporting several fleet operators in Vancouver, Toronto and Montreal, especially in the last mile delivery market where short routes and off the road overnights justify the decision to go electric. For starters, ten Ikea branded trucks, leased to 7Gen by the carrier GoBolt, have taken to the streets of these three cities.

“Ikea’s goal is to have 100% electric deliveries by 2024, a goal shared by the much of the last mile market, added Tjallingii. “An electric fleet costs 60% less for maintenance and 40% less for energy when planning infrastructure. Besides the financial benefits, zero emission drives new business opportunities.”

With 7Gen’s turnkey approach, the transition to electric vehicles pays for itself right from the first monthly payment. And contracts are flexible, ranging from five to eight years. Depending on the route and the need, Lion, Volvo, Kenworth, Ford and GM offer a variety of vehicles, while there are several options for charging stations.  

The market for leasing diesel truck fleets is firmly established so switching to electric will take a significant paradigm shift to find financing, Tjallingii added.

“Traditional financial institutions are hesitant because it’s hard for them to assess residual value and they can’t recover engineering and infrastructure expenses from installingcharging stations. That’s often the challenge for our customers.”

That’s why 7Gen partnered with Fonds de solidarité FTQ. As an impact investor, the Fonds is committed to sustainable development with the five-year goal of attaining $12–billion in sustainable development assets in such sectors as energy efficiency, waste recovery and smart transportation. In June 2022, the Fonds moved closer to its smart transportation goals when it completed an $8–million round of financing with 7Gen in collaboration with Siemens Financial Services.

“We want to contribute to the electrification of transportation for environmental reasons, but our mission is also to generate economic benefits for Quebec,” explained Dany Sarrazin-Sullivan, Investment Manager at the Fonds “With 7Gen, we’re supporting both zero emission and local companies, like equipment and vehicle manufacturers whose offer meets transporters’ needs.”

Besides established retailers such as Ikea, 7Gen’s turnkey solution is gaining traction withsmaller retailers. For example, Packmat of Saint-Jean-sur-Richelieu serves eco-centres with a Lion truck equipped with an electrical arm to compress waste collected from garbage bins. More compact waste means less trips to the waste treatment centre and less emissions. Another example is Courant Plus, which makes zero-emission deliveries in Montreal. Supported by 7Gen, the company switched from electric bicycles to Ford E-Transit vans and is now planning to add its first big truck to its electric fleet.  

“These kinds of companies are accelerating the transition of our entire economy,” saidFrédéric Bel, Vice President of Marketing and Business Development for 7Gen. “The big carriers will make the biggest impact down the road, but they’re also moving the slowest. Truck availability is still a challenge because they’re still on the production line. Based on our business model, we’ll support carriers of all sizes, because when the transition startsfor real, it will pick up speed.”