The Price of Transportation in an Electrifying World

But if you step outside of that noise and go directly to a business owner, you might hear something different. Because what they care about is pretty simple: costs, reliability, and ease of adoption. And that’s where EVs are quietly winning. Which is why our Special Opportunities team recently invested in Mitra, a company that helps small and midsize commercial fleets switch to electric by delivering vehicles and charging together, in one integrated offering.

So in this episode, we wanted to look past the headlines and get to the bottom of what EV adoption actually looks like today. Sanjeev sits down with Mitra CEO Galena Russell, S2G Principal Marissa Sweeney, and Anna Demeo Managing Partner at Clean Tech Strategy Advisors to unpack the state of transportation, why EVs can really come into play as AI data centers reshape the grid, the advantages of electric drivetrains, and how China’s rapid acceleration could impact U.S. markets. We also talk about why Mitra’s value proposition has become a no-brainer for cost-conscious fleets and what it will take to finance the next generation of infrastructure.

It’s a practical, market driven, and incredibly timely conversation. We hope you enjoy it.

Sanjeev Krishnan: Alright, welcome to another S2G podcast. I’m delighted to talk about what’s going on in transport, the price of transport EVs, and also showcase one of our investments in our special opportunities fund, Mitra. So thank you Marisa, Galina, and Anna for joining us.

Anna Demeo: Happy to be here. Thanks.

Sanjeev: Anna, I’ll start with you. In terms of just broadly transport, just before going into EVs, I think of transport as energy density, mainly gasoline or oil or fuel that drive a lot of our transport systems, whether they’re passenger or commercial or other things.

Just would love to hear your like, macro view of where we’re sitting today from just a transportation perspective.

Anna: Yeah, start starting off small. I love it. It’s massive, right? We know that, right? So you think about the transportation sector and the utility sector. These are two sectors that are foundational to the way, our way of life. They’re both a hundred-plus-year-old industries, and they’re both going through transformational change at the same time.

So, just laying a really interesting space, Transportation itself, it has its own set of challenges different from the utility, but as it starts to transition, it’s coming up against those challenges as well. I think it’s clear that globally we are moving away from straight fossil fuels.

The numbers are staggering. You look at the adoption rates in places like Norway, China’s 50% of all new vehicles. In the US, we are certainly slowing down that adoption rate. But I think when folks think about this, whether you’re investors or startups or whatnot, you have to think 10 years from now, are we still going to be a fossil fuel based transportation system?

And to what percentage? And I think those of us in this space would argue that globally, that answer’s no. What happens in the US and when that happens is something that we can certainly talk about if you’d like to, but we are in the process of a transition, whether it’s going to be a hundred percent, whether it’s gonna be all electric, what part autonomous vehicles play in.

That is all to be determined. It’s not a matter of if, it’s a matter of when, and I think that’s how we have to look at these choices in this landscape going forward.

Sanjeev: If you think about why someone chooses what input of transport, what is your view of ice engines?

Tonya: An ICE engine stands for an internal combustion engine which generates mechanical power by burning fuel such as gasoline, diesel, or natural gas. 

Because it’s become a cultural issue, weirdly. Now it’s seen as, I don’t know. I guess in Chicago, it’d be like, do you put ketchup on hot dogs? It’s an anathema to some people. Like, why would you ever do that? But why has it become a cultural issue? I think I know why, but if you take it away from being culture issue, what are the first principles of the advantages of ice engines and the advantages of an electric engine?

Anna: So we can take this on a couple of different routes. We could take it down to the technical and the efficiency of engines and whatnot, but I think the first principles that I always go to, especially when I’m teaching about the this space is that when you went from the horse pulled wagon world to the combustion engine world, people who were say delivering mail or whatever their industry was, didn’t care so much about whether it was horse-drawn wagon or an electric or an ice vehicle, but they cared about that they could still deliver their mail.

And I think that’s the fundamental principle that everyone should be thinking about is making this transition as seamless to those of us who are in it. We’re all wonky about this charger and high voltage ​‚and interconnection agreements. Nobody who’s actually making this transition cares, right?

They wanna run their business, right? They want to run their plumbing business or their mail business. And that’s the challenge is to make this seamless. And that’s a very difficult challenge, right? When you look at, Sanjeev, if you wanna talk about the efficiency of the combustion engine versus the electric vehicle, I’m definitely biased, but in terms of the, just sheer engineering, you have incredible efficiencies.

Not just in the engineering, but also in the heat loss and things that directly impact things that we care about around climate and emissions.

Sanjeev: Galena, what is your view of where the landscape is for transportation and what are the different trends that you think are important to note, whether you’re an operator, space investor, or customer.

Galina Russell: Yeah, I think first and foremost, and I always talk about this being a practical thing, whatever solution we create as founders, entrepreneurs, and even as investors look at it, it has to be practically available and economically makes sense today for that business, right? So the value proposition has to be that there’s some sort of a saving, some sort of efficiency that gets to them month one and not year five.

And I think this is what we’ve seen with consumer vehicles. We’ve seen the cost parity happen over time. And now it really is down to an individual, right? Do they prefer to drive electric? Either it’s their cultural preference, or they really see it as a more economic means of transportation, or did they prefer to have gasoline.

And I think we’re seeing that same trend finally nearing the commercial space, but specifically in the, as I mentioned, the pickup truck van segment, where the cost of those vehicles is closer to what they’re used to paying on a lease basis, on a purchase basis, and also the operation of that vehicle in the range, right?

Where we’re seeing over 200, 300 plus mile range is feasible for their daily business needs. I think with the heavy-duty and the specialized segment, it’s doable but it still requires heavy incentives. And this is when we start to talk about infrastructure too.

Because in order for those longer haul, heavier duty specialized segments to really work, you really do need to have dense and purpose-built fast charging infrastructure.

Sanjeev: Marisa, maybe just first, you’re a leader in our Special Opportunities fund. Just talk about that fund, just for our audience may not know what that fund does, and then maybe talk about the industry landscape as you all saw it as you underwrote our investment here.

Marisa Sweeney: Absolutely. I’m happy to tee that up. So our Special Opportunities fund is a $300 million vehicle that is focused on asset-oriented investments. And we were particularly interested in partnering with Mitra, given that Mitra is originating both vehicle leases, which provide a source of contracted cash flows, and working to develop charging infrastructure where it makes sense and in parallel with customer needs.

For our investment mandate, we are really focused on downside protection. Like you can think of us as almost a classic infrastructure.

High CapEx needs require certainty of return. And I’m sure we’ll get into this on this podcast, but that creates a unique issue in a space like electric vehicle charging infrastructure build out because we’re trying to size a demand that is somewhat uncertain, and you’ll hear a lot of folks talk about the uncertainty of utilization vis-a-vis getting to the investment decision around signing off on charging infrastructure.

So just teeing up some of that discussion a little bit. But I would say, I think for the, call it true believers, Sanjeev, folks who are in and around the clean energy ecosystem are very bullish on EVs. Folks continue to be bullish and probably express a perspective that Anna outlined at the outset of the call.

I will bring up just to address your ice versus EV question head-on. This was a perspective I heard during climate week that honestly, I wasn’t expecting to hear. I was staying with a friend from college, and his parents own, and he owns as well a major automotive servicing company in the northeast in New York.

And he is not what I would call your prototypical EV enthusiast. He is an automotive enthusiast, and his politics probably don’t align with the prototypical, like gung-ho clean tech EV person. He is laser-focused on figuring out what his family will be doing in the next 3, 5, 10 years to migrate their business to something that is sustainable because his level of certainty around the transition is that high.

And I thought that was just honestly really interesting because the servicer angle is not necessarily an area that I come into contact with as much. But if anything, of all the comments at Climate Week that made me feel more bullish around what we’re doing and are we heading in the right direction, that was one that honestly made me feel pretty good. Granted, I think it reminded me that like I need to be better about touching base with other corners of the ecosystem. But I think that it’s easy to get caught up in the quarter-to-quarter announcements by public companies, whether that’s like this major OEM, like updating the model on this and shifting production over here.

There’s a lot of noise. But I think that, like directional guidance from someone who truly likes their future will be made by what this transition does is really telling.

Sanjeev: The second secular trend that I’d be curious about is anytime China’s gotten involved in something, they tend to deflate something and scale something globally. Maybe just talk about how you all see China participating in this market globally and how that could potentially impact sort of the US market, knowing that there’ll be both trade and non-trade barriers for them to come in, I suspect.

Anna: Yeah. China’s interesting. They are knocking it outta the park. Years ago, they started this electrification for all, building out a distributed network for their grid, which was a lot of that was microgrids. And they just got really good at the technology that was very portable into this space.

Not to mention then the EVs, in fact, I think the New York Times had an article that their largest manufacturer, car manufacturer surpassed Tesla for the most EVs sold globally. And that’s a big, and I think they’re at 50% of all new car sales in China is is an electric vehicle.

And that’s staggering, but how does that affect the US? And I think there are a couple of places both real and imagined, or philosophical. But one is that the US has this identity of being the car capital of the world. Whether that’s real or not you can ask Germany

Sanjeev: I grew up in Detroit, so

Anna: Oh, there you go. 

Sanjeev: It’s part of the water there.

Anna: Yep. And that’s really hard to get your head around that might not hold long term, from a US internal perspective. I think that to me, and I’ll definitely let everyone else weigh in here, but I put these parallels when Germany did a very strong solar story and then that drove down costs and rose awareness that a place like Germany had good solar that impacted everyone else globally.

And I take China’s really bullish move on electric vehicles, their ability to produce incredible products very efficiently. I think that is having a much bigger impact. But in the same way that we saw with the solar in Germany.

Galina: I wanted to add one more thing, and I think this is something that is talked about less, but it’s certainly connected. If we zoom out a little bit and we think of EVs more than just the next sort of generation of drive terrain, EVs are also the precursors to everything that comes next in terms of technology, right?

Autonomy, vehicle-to-grid, smart routing, and eventually smart city infrastructure. And I think China, part of their strategy with EV is to support that next gen of technologies because EVs inherently come with more data sensors. So I think, in a healthy way puts pressure on the US I think to realize that to have truly intelligent transportation or infrastructure communication, it has to be supported by electrification and connected endpoints.

So scaling EVs, it also unlocks the rest of the ecosystem that I think the whole world is competing for.

Sanjeev: Maybe talk a little about that, because I think, so one secular trend I think you gotta believe in, and I believe i,n is the total cost of ownership. Second is there’s a global phenomenon, and it’s gonna have ripple effects throughout. Before getting to autonomy, though, like I think you alluded to the potential to make the grid more flexible. Is that what you were getting at in terms of how the evolution of the grid will go and then how vehicles could potentially play a role in grid flexibility? 

Galina: Yeah, it’s future state and Anna, I think you’re probably a more of a subject matter expert here, but not just making the grid more flexible making it smarter, to really support much smart cities and also de-risking the more distributed the grid becomes, the less risk we carry versus having these currently very centralized distribution points.

I think that’s also what China has done really well, is they found a way to distribute as much of those endpoints as possible with their smart infrastructure.

Sanjeev: Anna, what is your view of how you integrate these vehicles into a more 21^st-century grid?

Anna: Yeah it’s significant. Look, even so vehicle to grid, that bi-directional use of all those batteries driving around, I am so excited to see that fully materialized. But even before you get there, that V1G, just the managed charging of the fleet, the Union of Concerned Scientists put out a paper recently showing what that could do to the California grid.

Significant impact. So as we have higher penetration of renewables, solar and wind, as we want to shape and shift load, EVs are incredibly well positioned to do that because not only do they have this battery. It’s funny I mentioned earlier about the transportation sector changing and the utility sector changing, and they could have changed any way, but the fact that they could actually be complimentary and help one another is just one of those things that doesn’t happen very often, I should say.

So the ability to use those batteries to buffer the grid to create more resiliency it’s such an opportunity. And the numbers are staggering when you start to look at it. And I’m just gonna add one more piece of this. As you think about electrification for data centers, especially vehicle to grid, another piece that could really help create a more fortified grid.

Sanjeev: That storytelling needs to get out there because it is now seen as, oh, why would we put transport interdependent on the grid because the grid’s already pretty stretched. So I think it is important that we articulate whatever the reality of that story is appropriately, because it’s very clear to me that making the grid 21^st century is bipartisan.

I think everyone is effectively now whether the incentive structure and the industry dynamics and the policy régime is there TBD, but when I spent out in Washington, everyone re mainly ​’cause of AI data centers and evidence obsession with it, which we’ll get to next.

It seemed, either it could be bipartisan positive to bipartisan, very negative, we’ll see. But it is a thing that is causing a pretty like less culturally divisive view of how do we upgrade the grid.

Anna: It’s interesting. So it’s really complimentary, and let’s not even talk about climate and all of that. But when you think about AI-driven data centers migrating towards 800 volts DC infrastructure for good reason, that’s the same voltage of the EV space.

So all of a sudden you have data centers and EVs growing up needing the same infrastructure. That isn’t what the grid is today. And so that’s spurring all of the legacy players to be developing really hard into this infrastructure space, creating an entire new category of growth that I think is not politicized, right?

Because it’s data centers and yet that equipment is what’s gonna serve the EV space. So whenever you can find these complementary industries that you can feed into, that’s a great win for everyone, investors and companies.

Data centers. There’s no, is it coming or not? Even if it’s overstated by half, it’s still coming. And you have these hyperscalers, the Googles and others of the world, that are driving forward one way or another.

And they’re like, okay, utilities, you’re either on or we’re going it alone. And that’s not viable. The other part about it is that the data center load, because of things like flicker is hard for the utilities to figure out. You think that a car driving away is a problem, and charging somewhere else.

What’s going on in data centers is 10 times worse. And so all of a sudden EVs look like a treat. Oh, okay. And this is a problem all of a sudden. We have no choice, and utilities have no choice, so much like telecom in the nineties.

Like either you adapt finally, or it’s gonna be a different scenario in the future. And so I think that’s a win for EVs.

Sanjeev: Maybe talk about the flicker issue and the load curve, because I don’t think a lot of people know that issue. And if you can figure that out, like the sort of the positive externalities that could come out of that.

Anna: Yeah, this is something I’m currently working on with a client so data centers because of the way AI computing works, and I won’t get way into it but basically in very short cycles, fractions of seconds, you can have loads go in these big swings from needing megawatts of power to needing none these huge fluctuations that grids just can’t handle.

And so when a data center does an interconnection with a utility, once they’re connected, those fluctuations that are happening at the data center are put onto the rest of the grid, creating a huge amount of problems, including instability. Utilities in Texas and California are basically saying to these data center colo and hyperscalers, look until your load looks like other industrial loads, like until you look like a cement plant, we’re not giving you an interconnection.

It’s not even because we don’t have the power anymore. It’s your power needs to look like power we’re used to seeing. And so now there’s a whole piece of this where it gets complicated, but providers are trying to figure out how just to do that. And is it the provider’s problem or is it the utility problem?

And, we could spend a whole other podcast talking just about that.

Sanjeev: And I think, the final secular trend I want to hit on one of the use cases I fundamentally do believe in personally is physical AI. To me it’s like the Netflix and chill moment. We built all this fiber, ​‘97 to ​‘01 and then streaming really lit up that fiber for a while. And to me, the physical AI thing, particularly what Waymo has done, but the Overton window has gone on autonomy. Nvidia released their partnership with Mercedes and the full stack chip. But, I know Marisa, you spent time with, looking at a lot of the autonomy thesis, but is there an autonomy thesis that doesn’t involve an EV car? Aren’t those two synonymous in many ways, or am I wrong on that?

Marisa: Sanjeev, I was actually going to go here in your last question, which is just what China’s been able to do is like execute on a level of stakeholder coordination that doing within the US is like near impossible. But what you can’t deny is the fact that the software-defined vehicle, i.e. the vehicles that are most suited for autonomy, which happen to be electric vehicles almost entirely.

Now, I should fact check myself on whether or not there are ice vehicles suited to that, but my sense is a core component of running an efficient EV is being able to hyper optimize state of charge and manage charging so that the vehicle runs well and runs efficiently from a cost perspective. And I think in that new world, folks really should consider like how transformative that is for EV demand and the overall use case for our transportation infrastructure.

You’ve heard me say this before, but I’ll say it on the podcast. I am incredibly long autonomous vehicles. I actually don’t drive. So that is something that I’ve just joked with people that I’m just really long autonomous vehicles. But living in the Bay Area and being actively serviced by Waymo, I mean it’s fantastic.

Like my friends take it over Uber constantly, and I really think that after data centers, this is the trend in power that people need to be tapping into. And I think that it is an instance of the service level will, and like just frankly like the product excellence, will drive interest and adoption in the US and demand a level of stakeholder coordination that I don’t think just like happens on its own in order to make the infrastructure build out happen.

But that’s obviously expressing an incredibly bullish perspective. There are a lot of nuances around how you work through permitting and how you work through use license and all of that. But I think on a five to 10-year period, like this is the direction we’re going in dense cities, especially cities with congestion issues.

Especially if you look at kind of the traffic data in places that have predominantly ICE engines, like what their emissions profiles look like. Like it works on every angle of the stack of like how to build a good transportation system.

With that backdrop, Galina, you’re the co-founder of Mitra, what is Mitra, and then what brought you to co-founding the business?

Galina: I think the first thing is the reason why we found Mitra is to solve for a practical need today for fleets and not for something that is a value proposition down the road.

Anna mentioned that fleet customers don’t actually shop for infrastructure, right? They shop for vehicles. Refueling is traditionally a big part of their operating cost, but they’ve never had to figure out how to install a gas station, right? So that’s never been on their radar.

That’s not part of their responsibility. And yet if we look at a lot of the electrification solutions that came out, they all structured around solving, charging, or solving range anxiety and not so much understanding what vehicle procurement looks like for these customers. And that’s just been a fundamental mismatch that we at Mitra figured out how to solve for.

I think the second piece is that EVs today can’t really be treated like standalone products either. So auto OEMs, right, put out their strategy with their dealerships on how to sell EVs. But they didn’t quite figure out, what do we do if a commercial customer comes in and they want an ​‚EV but they have no clue what to do about charging.

So they do have to come bundled with charging. So in the same way that when you buy a laptop, you get your charger right? Apple doesn’t sell you a laptop and says, ​‘here are 10 providers you can call to figure out what the best charger is.’ So fleet don’t wanna figure that out either.

Who to call, when to install, how to make it all work, what incentives are available. All all of these are complexities are outside of their norm of doing business. They just want their vehicle that works on day one. And I think that’s where we at Mitra said, okay, first and foremost, our customers are shopping for vehicles.

Let’s make sure that we have any available for them for their specific use case. And then let’s make the charging component something that is complementary with that offer that they don’t have to think about, and that seamlessly gets installed, managed, and delivered on the day that they expect their EV.

We service at Mitra primarily class two B to class three vehicles. So these are your pickup trucks, your vans. And if you look at the use case, as Anna already pointed out, for these home services, the plumbers, the electricians, the delivery folks that are driving local regional routes that are coming home to base daily.

This is where it starts to make economical sense, not just because we finally saw the electric vehicles within this class almost reached cost parity with their gasoline alternatives at an MSRP pure level, but also because they are much more efficient for that use case on a daily basis.

And the fact that these customers can then bring these vehicles back, charge them overnight, we’ve seen savings of 50 to 75% on refueling. And that’s where it starts to make sense. It doesn’t really matter what you prefer to drive. Every business prefers to have some sort of optimization to their bottom line.

And I think actually that’s been accelerated by the current political climate.

Sanjeev: What is your pitch to a target customer? What’s your value problem?

Galina: The value prop today is very simple. It’s would you like to save 50% or more on fueling starting in month one? And no upfront investment. And if the answer is yes, then we handle the rest.

Sanjeev: Who says no to that?

Galina: Exactly. I,n fact when we first started it was a little bit tougher because you go off of industry data, right?

But you’re going to talk to small, midsize fleets, mom and pop kind of businesses, in some cases, and you’re trying to quote a McKinsey study, they don’t really care. What they wanna know is, do you understand what I do every day? And how can you give me something that makes my life easier today?

And once we’ve had a year or two of operation and leases out on the road, and we were able to pull actual customer data on refueling, the numbers were staggering. Like it’s all the stuff that we calculated and analyzed, but it was in real time with real customers.

And now we can anonymize that data and come back and we do this and we say, look, these are fleet profiles similar to yours and this utility territory, and they’re saving about 75% on ther refueling. And that’s not even going into all the other benefits of savings on maintenance, the efficiency, right?

The longer-term benefits of better uptime, much better fleet data. But I think the starting value proposition is always to their bottom line. And there’s no fleet out there, regardless of their political stance, that doesn’t want that. And especially in the last two years where we’ve seen a lot of our customers’ disposable cash that they would typically have as a business to try new things dried up.

And it’s been a tough economy, I think for a lot of industries, and it’s actually played to our advantage because it just speaks to the practicality of what we’re giving customers and the fact that, they’re going to an EV not so much because they wanna make the planet cleaner, but because they wanna continue running their business in the most efficient manner.

Sanjeev: In terms of getting financed, I have a bunch of, as you can tell, hypotheses in the world. One of them, and I’m curious how valid this is. We think of this as a big productivity revolution that needs to occur across calories, electrons, energy, density, water, et cetera.

If you look at the last four big productivity shifts over, over the last 200 years, it was really railways, electricity, oil, and polymers and computing, all of them had four things in common. If you study it, innovation, so Bessemer steel process and steam engine Fairchild Semiconductor, et cetera, et cetera.

Business model innovation. So when railways went from local to regional, they started to become unit economic profitable. And then that got the bond market to finance it, civil society, and policy buy-in. I think that will sway back and forth, unfortunately in this sector.

But the fourth thing that I think all four of those productivity revolutions had was a fit-for-purpose capital system that financed it. So railways obviously had the bond market, Computing venture capital became from an artisanal asset class to an institutional asset class. 

As an entrepreneur, as an operator, was there a lot of fit-for-purpose capital out there waiting to be a partner for you so that you could deliver on your value prop? Obviously we exist to try to think about fit for purpose so it’s a bit of a biased question I’m asking, or a leading question, but I’m just curious the landscape of, is there enough fit for purpose capital for people like you and others to procure to finance the value prop that you’re projecting to the customer?

Galina: Yeah, our experience and the honest answer is absolutely not enough to propel innovation, I don’t think. Because the other thing that’s happened is we talked about the convergence of industries, and that’s really what’s happening a lot more these days. So transportation and infrastructure coming together.

And in transportation, you have the traditional leasing models, which is part of what we offer is for the customer to be able to lease a vehicle, something that they’re used to in their normal operating cycles. But then on the infrastructure side, you have these larger, longer-term CapEx expenses, and those are really long-term traditional infrastructure investments.

And so finding capital that understands both the kind of the shorter-term lease cash flows, but also the longer-term value of investing in infrastructure is, it’s really hard. ​‘Cause usually private capital specializes in either or, there isn’t really an intersection of the two.

And interestingly enough, as soon as you talk about infrastructure, you either have check writers that want at least 50 million in business, right? Otherwise, they won’t look at you. But when you’re combining it with leases to get $50 million worth of leases as a year or two startup it’s tough.

It’s gonna take some time to build that up. So to answer your question, no, I think there’s a big gap in the private capital sector. Luckily for us, and really fortunate that we have a partner like S2G to understand both segments. But I think there’s still a big gap there to incentivize these kinds of innovative solutions.

And then of course, the folks that had charging only, charging as a service businesses because of slower returns or just, I guess, poor management of those chargers, and really the political pendulum for the last decade. Those standalone infrastructure businesses are just not getting financed for the reasons that Marissa also mentioned, which is there aren’t any underwriting cash flows for those assets.

So I think there’s still, maybe it’s a learning curve within the capital sector. But yeah, there’s definitely a shortage of funding, and this is why federal, state, local incentive programs got created, right? To try to fill that gap that’s not being met by the private sector.

Sanjeev: Marisa, I think of special opportunities as a vehicle for fit-for-purpose capital, obviously in certain asset classes and sectors. How do you think about that in the context of Mitra? In terms of why’d you like it? What was your approach to create that fit for purpose?

Marisa: It’s a great question, Sanjeev, and I think Galina could tell you a lot about our early discussions on structuring and iterations. I think it’s a partnership where we spent a lot of time on the bullet points of the term sheet and probably less time on those same points when in documentation because we wanted to be super, super thoughtful in making sure that we’re putting together a framework that really works for the company and kind of simultaneously gets us what we need from a downside protection standpoint.

But also, and this is super important, baked in the appropriate level of flexibility to support a business like Mitra that is going to go through iterations in their customer offering, which, for the most part, will translate to iterations in their key agreements, like their leases and their site development agreements, et cetera, which all directly translate to assets in the collateral that we’re interested in.

So I think what it requires is one, first and foremost, being able to take a view on a team like Galena’s, that they’re able to orient themselves within the market to take advantage of what the value proposition is in a given quarter, in a given six months, and be iterative with them. 

And I think on the flip side, it’s a view towards how do we, as the special ops team, support a team like Mitra in accessing that 50, hundred million dollars, almost securitization-style product that is out there. And those types of investors, that type of money does not get paid to think in iterations, frankly. They want to get exactly the paper that they’re paying for, and that’s why the cost of capital is so low.

So we on the kind of less sexy, maybe more operational side, spend a lot of time with Galina’s team talking about how do we standardize this? How do we make sure that the parameters we’re putting in today for financing will directly drag and drop to when we refi this and make it a hundred-million-dollar facility?

And I think it’s a combination of both having the flexibility to support the business where it is today, and the guidance on financing to make sure that we’re driving to a place where Mitra can scale up big and ultimately have a full-on financing arm where it’s accessing super low cost of capital, because that’s the kind of holy grail of how a business like this is able to scale efficiently.

But Galina, feel free to jump in on that one.

Galina: No, I think you’ve covered that well. And the other thing I’ll add is just, when we look at our customer base, yeah. They can go the traditional vehicle route, and there are some leasing options. But again, you have the infrastructure hurdle, right? And those businesses are not sitting on piles of cash to invest in infrastructure.

It’s not part of their regular budgeting.

Sanjeev: We want Galina and her team to be very successful. I wanna scale with them. But how do we get more scaled capital into this sector? What do you think the capital markets miss?

Or maybe you don’t think they miss anything, but what is preventing more flows into this creative capital fit for purpose, pick your vernacular, of flowing into things like this, that it fundamentally seems to save people money.

Anna: Yeah. So when Marisa reached out for me to help with this diligence on Mitra, I was certainly super impressed by the team and their value prop, but the way they’ve structured it and Marisa recognizing that what they’re doing is they’re seeing a need, especially in that there’s not a lot of folks in this small business area because it’s hard, it’s very fragmented, and you see a lot of a lot of companies on either side of it, but not in it. And so it was, it’s a right place to do business if you can get the right equation, which I think Galina and team have gotten.

But I don’t think it’s as, I’m gonna go off on a limb here, as typical from the other type of EV investment I’ve seen that hasn’t gone so well. And for me, I think one of the biggest pieces of this is that a lot of folks who get into this space are infrastructure companies. I’ve seen this again and again, infra comes in, and especially people who’ve invested prior into solar and wind.

But solar and wind look a lot more traditional oil and gas than EV does. And the reason being is that you can’t decouple software from hardware when it comes to EVs. Software is absolutely, it can’t be an add-on. And that creates a whole bunch of issues around interoperability. And often the infrastructure investors don’t want to take tech risk, and so to them that’s software but those two don’t work separately.

And so that’s apples to oranges to what I think, what I know Galina and team have come up with, which is basically taking a sector that needs it, finding the pieces that are out there, and putting it together in a really interesting way. Whereas I think a lot of the folks who’ve been investing in the space of investing in the infrastructure piece and not wanting to deal with this interoperability, interconnection, the other hurdles that exist there which are real.

Sanjeev: What would make your business, Galina, even more scalable? And one of the things that that I’ve heard is if you could get reinsured on residual value so that people can make us a more high-confidence bet on residual value.

And we talked a lot about this at the investment committee, if you remember. Would that help? What other things would help that would make it even more fit for purpose, so that both this volume of capital could come as well as the fit for what you’re trying to do and your customers could do?

Galina: Yeah, you hit on one very important topic, the residual values. There isn’t a lot of data on residuals, and so inherently, we basically have to take the most conservative residual. And it also, I wouldn’t say prevents, but it makes it difficult to have flexible leasing options the way the traditional gasoline leasing vehicles have been for customers.

So I think whether it’s OEMs having some sort of buyback programs to stabilize residuals.

So I think not even having to reinvent the wheel, just OEMs doing some of the things they’ve done in the past that helps with those residuals, would definitely help bring down the cost of leasing and just, I think, the interest of private capital into this space. And then I think there are a bunch of other levers. Even insurance. We talked about data on EVs. And I don’t wanna go down a separate rabbit hole, but vehicle insurance, yes, there are insurance products for EVs, but they’re not really capturing the true value prop of EVs.

And I think if some of those kinds of ancillary industries or secondary industries adjacent to ours could begin to innovate their product offering, it would be even more of an attractive I think investment in the space.

Sanjeev: Anna, Marisa, are there other bells and whistles from a credit enhancement perspective or a financial innovation perspective that would draw even more capital?

Marisa: This is less on the credit enhancement side, but I think this is more on what utility partners can do. I think just more clarity and partnership around calculating savings analysis for electric vehicles for customers. I think the areas where Mitra operates, they have done, and frankly, like an incredible job of figuring this out. But I do think that in many areas of the country, I think it’s a bit of a mystery to folks as far as how they would calculate their total cost of ownership. And it strikes me as it’s great to have companies like Mitra running around doing that values analysis for a Prudential customer, but realistically, if this is a public priority, which I think in many areas it is, like that should be something that customers can just do and then be able to do with a plus or minus 10 or 15% degree of certainty.

And even that awareness, I think, would help people on their kind of psychological journey to like getting excited about switching over or thinking about it. And that is an area where I think that the solar industry has done that for a long time in specific areas. I know it was a thing at least 10 years ago when I was doing development, and it struck me as wow, if the utilities wanted to do this, they absolutely could. ​‘Cause I think it helps make it less abstract and frankly, like it comes from a source that’s not a company like Mitra, which I think is helpful for people because obviously Mitra is wonderful, but developers have an interest in getting a sale done, et cetera.

I think it would just help a lot in terms of demystifying what some of the overall costs are.

Galina: I agree with that utility piece. Absolutely. And it’s, I know this has been a pain point for a long time. Just access to live rate data, and it still continues to be an ongoing pain point.

First of all, most customers don’t even understand their utility bill. Still to this day, despite how much innovation individual utilities can claim they’ve done. And so when they’re purchasing an EV asset, I think it’s a similar thing. There are no tools, and there’s no way for them to easily and confidently understand how much savings they could potentially get from having an EV.

Anna: And I would just add on to the utility piece of, so you have, all of that and that variable rate and getting access to the data. And then a lot of your model right now is around the home charging. But as you want to be able to deploy more and more fast charging into the market, there’s that interconnection piece, right?

So that’s the piece that I think one of the great things that you’re doing at Mitra is insulating your model from that right now, right? So your success isn’t dependent on it, but in terms of the ability to scale more is having certainty around those interconnections for the more robust, fast charging will be key in driving things further.

Sanjeev: I want to wrap up here with a little bit of maybe a round robin on the, going back to where we started, which is really around the sector. Assume it’s 2029 or call it 2032. Where do you see EV penetration globally, and where do you see it in the US?

Galina: Yeah, this is a, ​’cause politics have been so unpredictable here. 2029 we can have a, for all we know, an AI running our country. I do think that EVs are going to be a realistic go-to solution for the small mid-size fleet segment, the very local and regional folks that run fleets as part of their daily business and part of their income.

I think it’s gonna be closer to what we see with consumers today, a matter of preference. Do they want gasoline versus EV? And then I think there is going to be a shift on the long haul and I think we’ll see a greater adoption on just the long haul routes because trucking has been such a tough industry. I actually, prior to Mitra, I worked on an engagement with a client for staffing truck drivers. And that industry’s completely fragmented, and it’s really tough.

But I think coming back to what Mitra is focused on, I think what we’ll see is absolutely a normal decision point for these small mid-size fleets that are running commercial operations to select EVs over gasoline. The learning curve I think will would have already passed. And I think the infrastructure for that type of an operation is going to be sufficient or near sufficient at that point in the US. I’ll talk about the US. I’ll let Anna and Marisa chime in on the globe.

Anna: Sure. Globally, I think, I would bet some money if I were a betting person that globally we’re gonna see widespread EV adoption, especially in parts of the world where there’s an increased ownership population, percentage of ownership of cars. And those are going to just leapfrog right into EVs.

So I think globally, I would be shocked if we’re not gonna just see this trajectory, 50% in China keep going up. Norway’s I think 70, 80% and so on. As far as the US I always look at things in sunny day scenario and rainy day scenario. Sunny day scenario is that common sense and economics win the day and we don’t end up with say, all of us using inches and feet and the rest of the world using metric. So that means that we start to regain that traction, and that it dovetails in with the upgrading and intelligent infusion into our utility grid. There’s no guarantee of anything right now, and there’s definitely a rainy day scenario in which the rest of the world goes in one direction and the US is slow to catch up. But I’m forever an optimist, and I do think that the economics and common sense will win the day.

Marisa: Yeah, I think I will take the sunny day scenario that Anna presented. And some of this is also just like being aware that as investors, you’re just kinda like watching this algorithm driven level of like bad news, good news, like good signal, bad signal, like constantly.

But I think like 2032, like that’s a significant amount of time away. And in general, it’s pretty challenging to like guess at transformations, and we tend to underestimate transformations, especially when they relate to transformative technology.

And I don’t know if you know anyone who has a friend who has a Tesla full self-driving vehicle, but my friends who do have them will not stop talking about them. Like Brian’s father, who at this point I think is over 75, expressed, like almost like a newfound level of his own autonomy and his ability to drive at night that he like wasn’t feeling before, and things like that.

And I do think that we really just can’t overestimate the product leading here. And it’s an incredible product. And I think as folks think about new car purchases of the kind of innovations on the autonomous vehicle levels bear out, which knock on wood they will, ​’cause I think it’s a much safer future for all of us.

I’m just extremely bullish on that case. And I think that the estimates we have now aren’t baking in, frankly, those levels of product excellence. That’s my take.

Sanjeev: As a kid from Detroit, I do think if autonomy is real, it seems real, the Overton windows there, I think it’s going to surprise a lot of people. I think just given where we’re going from a cost of living perspective and firms needing to save money at every aspect of their business, I don’t even think it’s a contrarian bet at this point because of the secular trends we talked about, the value prop, Galina, you’re offering to your customers and your view of the overall sort of landscape.

And then hopefully what, Marisa, we can participate in is fit for purpose capital that really can do financial innovation, business model enablement, around the value prop. So I’m very excited about this investment. Galina, welcome to the S2G family. Anna, you are an honorary member of the family, and really excited to have you both in our ecosystem.

Galina: Thank you. This has been great.

Anna: Yeah. Thanks so much for including us.

Sanjeev: Thanks for joining the podcast.

Tonya: Thank you for tuning into the S2G podcast. If you enjoyed this episode, please subscribe, leave us a review, or share it with a friend. For more information or to connect with us, check out s2gin​vest​ments​.com.