Quickly converting a fleet of trucks or buses to electric propulsion for a simple monthly subscription, with no upfront investment: that’s the idea behind 7Gen, which is already supporting several Quebec carriers in their decarbonization, particularly on urban routes. Its promising vision convinced several investors, including the Fonds de solidarité FTQ, which became a partner at the end of 2021.
Choosing a truck model, building a charging station, connecting and managing chargers, optimizing routes, ensuring maintenance and repairs: there are many tasks to carry out and areas of expertise to master when you want to convert a fleet to electric. That doesn't even account for the financial aspect, since these vehicles cost more than diesel models. Admittedly, energy savings allow the extra cost to be amortized over three to five years, but you still have to invest capital up front.
That's exactly what worried a British Columbian bus operator when, in 2019, he crossed paths with entrepreneur Frans Tjallingii. He was looking for new ventures after having brought a mining-vehicle tire recycling company to maturity, and before that a software publishing company. That was the spark.
"The operator had already bought three buses, but he wanted to electrify 80 in total, and traditional lenders did not want to support him. He was also wondering how to manage the charging infrastructure. It was obvious that the solution was to take the burden off his shoulders through a turnkey service," says Mr. Tjallingii, in impeccable French he retains from a previous life in Africa.
Three years later, 7Gen's expertise has already supported several fleet operators in Vancouver, Toronto and Montreal, particularly in the last-mile delivery market where short routes and overnight breaks justify the choice of electric propulsion. For example, ten trucks leased from 7Gen by carrier GoBolt run the streets of the three cities in Ikea livery.
"Ikea's goal is to carry out 100% electric deliveries by 2024. It's a widespread desire in the last-mile market, because an electric fleet costs up to 60% less to maintain, and 40% less in energy when taking into account the setup of the infrastructure. And beyond the financial criteria, decarbonization generates new business opportunities," says Frans Tjallingii.
Changing the paradigm
With 7Gen's turnkey approach, the move to electric is profitable from the first monthly payment. Contracts span five to eight years. Depending on routes and applications, several vehicles are offered among those from Lion, Volvo, Kenworth, Ford, GM and others. The same goes for charging stations.
The fleet leasing model is already widespread for diesel trucks, but the switch to electric requires a paradigm shift that is particularly delicate when it comes time to secure financing, notes Mr. Tjallingii.
"Traditional financial institutions are more cautious because it is difficult to assess residual value, and because the engineering and infrastructure expenditures to install chargers are not recoverable. This is often an issue for our clients."
Hence the partnership with the Fonds de solidarité FTQ. As an impact investor, the Fund is committed to sustainable development and has set itself the goal of reaching $12 billion in assets related to sustainable development within 5 years, in sectors that include energy efficiency, waste recovery, and smart transportation. It was in this latter area that the Fund's participation last June in the closing of an $8 million financing round for 7Gen (in collaboration with Siemens Financial Services) fit.
"We want to contribute to the electrification of transportation from an environmental perspective, but our mission is also to produce economic benefits for Quebec," explains Dany Sarrazin-Sullivan, sector director, structured capital, energy and environment at the Fund. "With 7Gen, we find ourselves both supporting decarbonization and promoting local companies, such as equipment and vehicle manufacturers, when their offering is best suited to carriers' needs."
Small businesses are showing the way
Beyond retailers like Ikea, 7Gen's solution is gaining followers among smaller companies. There is, for example, Packmat, from Saint-Jean-sur-Richelieu, which serves eco-centers with a Lion truck equipped with an electrically powered arm to compact the contents of waste bins. Their interventions reduce the number of round trips to the waste treatment center, and therefore emissions. Another example is Courant Plus, which carries out zero-emission deliveries in Montreal; the company moved from electric bikes to Ford E-Transit vans with the help of 7Gen, and is now preparing to expand its fleet of electric vehicles with its first heavy truck.
"It is through this type of company that the transition of our entire economy gradually begins," believes Frédéric Bel, vice-president of marketing and business development for 7Gen. "Yes, the large carriers will have the greatest impact in the end, but they are also the ones who move the slowest. There are still issues with truck availability, because they have only just entered production. But our business model allows us to take the lead alongside carriers of all sizes, because when the transition really gets underway, it will move very quickly."
