He Built Electric Trucks - Then Raised €22M to Fix the Grid Bottleneck | Decade Energy

Leon Urban: Commercial vehicles are expected to account for 10% of Europe's electricity demand, with nearly 80% of charging happening at depots. The real challenge is the grid isn't designed to handle thousands of depots charging heavily vehicles simultaneously. Today we're speaking with Karl Magnus Norden, co founder of Voltatrux and co founder of Decade Energy, an infratech company building the energy infrastructure layer, uh, behind fleet electrification. Welcome to a new episode of Net Zero. Hi, Karl Magnus.

Karl Magnus Norden: Hi, nice to be here.

Leon Urban: Yeah, nice to have you on the podcast today. Let's start with our first question. So you founded Voltatrax, I think, in 2019, to accelerate electrification. What did you believe at the time?

Karl Magnus Norden: Well, what I thought of Voltatrax was really started more or less 2016, I would say. Um, and a trigger for me was when Elon Musk launched the Model 3. So the car which was, as you, you maybe remember, it was, you know, they got thousands of orders in a few weeks time. And for me as an entrepreneur then and worrying about the climate, that was kind of a signal. Something is happening here. It's that new Trend coming. In September 16, most of the car industry came to Paris, the car show in Paris, and said they should go electric. Daimler or Mercedes, Volkswagen, BMW, etc. And I then looked around and looked at, um, the transport business or the road transport business with trucks. Nothing was even mentioned at the time in 16, 17, 18, about electric trucks. So then I said, well, if none of the big OEMs want to do it, let's see if we can have an impact or do something in that space. So that's really the origin of the idea of Volta Trucks. We actually founded a company and raised, uh, some of the first money in 2019. And we spent most of that money on building a, uh, prototype, which we then had ready actually in September 2020, middle of the COVID But we anyway managed to go around Europe and show it to, uh, potential customers, people that are driving trucks.

Leon Urban: What's the first impression back then? Because in 2020, were there a lot of electric trucks already or was it the first of a kind?

Karl Magnus Norden: Oh, there wasn't, there wasn't any electric trucks. 2020. So we were pioneers. I would say the reception from most of the people we, the big people driving trucks or carriers, was very positive. You know, there was nobody saying, uh, you know, I love diesel, I love dirty the nature and uh, kill my children, et cetera. They all said, okay, electric is probably the future. Then from there, from liking the idea to actually signing an order is Obviously quite some steps. We spend three years of course building a real truck, um, homologated in all over Europe, talking to different fleet operators in all 10 countries in Europe and so on and so on. But the general, uh, I would say the goodwill of bringing a product to the market was very strong. So I even had people saying, okay, I love your idea, how can we help? Basically there was no resistance really from. Even if people are used of course in many years to drive diesel trucks, they, they uh, were all interested in the future.

Leon Urban: Interesting. So if the interest is there and was there, where's the real bottleneck that y holds us back to really electrify the fleet?

Karl Magnus Norden: I think we were obviously a very small player. Uh, there are the big people in Europe, uh, so Daimler, the Volvo Group, Renault, um, Daf, Scania, Min, et cetera. I think even they, quite early on anyway, from 2021, 22 onwards have said we believe in. They started thinking about should we build cells, should we do packing, et cetera. But uh, uh, in m parallel to that, of course, the whole battery market was conquered by the Chinese. So if you and I were sitting in a boardroom of any of these big companies, we would ask ourselves what uh, in this technology chain should we be really strong at so we can justify high salaries in Europe? Uh, and you know, things like that. So it was not easy for them. And you know, normally for them developing a new um, diesel engine normally takes five, six years. And uh, they, if they started 2020, we're still only six years down the road of development. So um, right now, uh, the best long haul truck in the market is the um, Daimler Eactro 600 that they launched a little bit more than a year ago. Tesla is opening about now a new 50,000 uh, truck a year plant in Nevada, uh, for building the Tesla stem. So that will probably come by the end of the year to Europe and then we have the Chinese and the Chinese have of course scaled much faster than anybody else. Um, you know in Europe you sell about 300, 350,000 trucks a year. Last year in China, um, they sold about 230,000 electric trucks. So uh, they are already at scale.

Leon Urban: That's interesting and actually very exciting times right now. But if you change the perspective from OEM towards yeah, the fleet owner that wants to electrify their fleet. What are the big bottlenecks right now to electrify the fleet and really go all in in electric vehicles?

Karl Magnus Norden: What is really stopping them? So quality of the supply and the price of the supply and the price is still um, too high. I mean you hear different people, et cetera. But um, anyway, a year ago or less than a year ago, Uniacro 600 cost about 300,000 Ah€m, while an equivalent diesel truck maybe cost 120 to 140, so more than double the price. And for a buyer then you have to be able to justify that difference, uh, um, which is not so easy. Um, that is one factor then I think that is the short term factor why they haven't come at scale into the depots or orders anyway. And as I said, my forecast is that these prices for electric trucks will go down maybe 30% uh, over the next year. So then I think the economic argument, um, will favor electric trucks because you have other things you have. Of course, um, they always talk about total cost of ownership or tco. And uh, of course in the TCO you have the hardware, the truck cost, but you also have the energy. Energy prices of course with diesel going up right now and then also service and maintenance should be lower for electric etc. But anyway, so that to me is almost a short term problem which can be fixed very quickly. Some of the OEMs are lowering the prices and then the TCO stacks up the more, uh, what should I say the bigger problem is, as you maybe were indicating in the beginning, is to get enough power, enough electricity to the places where people would like to charge their trucks. And most of that charging they ideally would like to do in the depots. So uh, where often the trucks standing overnight or they come and pick up goods, um, or distribute goods. So that's. And the problem with these places is that a uh, normal transport depot today has very, very little need of electricity. Uh, so if they should charge, yeah, you know, whatever, 20, 30, 40 trucks, they need many times more, 15, 20, 25, 30 times more electricity than they have today. And the grid are not capable of providing that shortcut. So I think that's the big bottleneck for the next few years.

Leon Urban: So talking about this bottleneck, I think we are, yeah, we're coming closely to Decade Energy and maybe also the way that you are fixing this problem and. Yeah, and presenting a solution for this one. Could you explain in simple terms what you actually do at Decade Energy?

Karl Magnus Norden: Yeah, the background and uh, in our history from Volta trucks, we knew quite a lot, or I think we were actually were in contact with probably the 200 biggest fleet operators in Europe. So we knew that part of the market quite well. When we started this, we said the idea was the same, you need more power in the depots to be able to do the conversion. We started talking to them, but none of them really, ah, or very few anyway, had the intention to order an uh, electric truck very quickly. So the charging as ah, such was not their biggest problem. So then about a year ago, a little bit more, maybe a year now, uh and a half, we shifted focus to say, okay, who are the ones that are thinking about this long term? And then we shifted more to the um, property owner or the logistics real estate owners. Because what we do right now in the first phase we secure the um, grid connection to the site. And then to finance that, you can say we install a battery or a bess. And with the beas, you know, there are grid services that we can sell to the grid, to the distribution system operators or the transmission system operators. So that is then our model. We finance the whole uh, equipment and grid connection and all that and we finance or we sell that battery service to the grid. So that is uh, stage number one. But our long term mission is really that electric trucks should work basically and we should see a conversion from diesel trucks to electric trucks. Um, so we start with the property owners and we in principle secure them for the future. When their customers, the tenants come to them and say, okay, I bought 10 electric trucks, I need more power. Then they should be able to say okay, okay, yeah, I have power. We have already arranged that. So that's the first phase. The second phase is what I talked about is really when, when the fleet operators are then saying okay, I find it economically viable and I would like to then of course it's more about charging infrastructure and I would like to see as well, and it fits very well more, more solar on uh, all these people, warehouses, et cetera. They have big roofs. Yeah, it's obviously that you could use big parkings and so on. You could use all this space for um, energy production, local energy production through. So ideally over time we would like to see all these things integrated. So that is more or less phase two, which I think is approaching very quickly now and especially what's happening in the Gulf and uh, you know, the war, energy pricing up. People are I think starting to understand that the energy dependence we have on oil and gas, uh, is a horrible thing and that Europe is starting to go into renewables much quicker than maybe we have done before. So that's phase two and then phase three in our, is really two things. One is when the trucks are coming, obviously these trucks also have big batteries of their own. So uh, you know you can see vehicle to grid, the grid, um, I mean m, the vehicle batteries feeding into the system. And most importantly which we're developing, we're also developing a uh, uh, software layer that we call brain kettle that will integrate all these data streams. So it will integrate the data stream obviously from the grid, what their signals, when they would like to, from us, from the battery, from the chargers, from the PV on the roof, from the trucks, all this. If we integrate that in a smart way, we should be able to create the best flexibility and match the demand, the general demand on the energy market. You know, in the mornings, in the evenings, when people use the most energy, the sun is uh, obviously mainly working, uh, in the middle of the day. And you can combine all these data and the trucks are normally charged during night and going out during coming back. How do you integrate all these data streams, uh, to make it as uh, efficient as possible? That is our three steps of our function setting.

Leon Urban: Soon, the first step, you enable the location or you enable the grid access for the fleet owners, but without actual demand from their side. Right, so you're waiting, you're saying we know that you, in some, some years and some months, whatever, will have the demand for electric vehicles and we will be ready then, provide, provide the power capacity that is needed.

Karl Magnus Norden: Right, Exactly. Yeah.

Leon Urban: Kind of betting that in these places the demand will grow. Right.

Karl Magnus Norden: But the beauty for us is that the grid needs this capacity. You know what has happened in Spain for example, there was too much production from renewables and the grid couldn't absorb it. Um, and of course if you have battery capacity, and that's the next wave of this is more battery capacity. So you can harness some of this energy when it's produced and you can then disperse it when it's uh, obviously during night or so. Uh, and the grid is paying for that, for that flexibility and um, uh, so on.

Leon Urban: Yeah, I mean, so in the worst case you will still have um, the best operating at this grid connection and um, you will still make money. And yeah, in the best case, then the next steps will follow. Right, like the phase two. Phase three.

Karl Magnus Norden: Exactly.

Leon Urban: So right now, in which regions are you operating and in which phase?

Karl Magnus Norden: Well, so far we are, I would say 99%. We are only doing phase one and our home market is, uh, France. So we have, we're developing, I don't know what, 70, 80 projects in France. We have been lucky, um, to start working with some of the biggest logistics real estate owners in the world that um, all of them, or several of them have operations not only in France, but, you know, all over Europe. Ah. And then the natural way or the best way, uh, for us to expand is following our customers. If they're happy with what we do in France, it's quite natural to ask, okay, why don't we look at Germany together? Why don't we look at Spain together? Why don't, you know. So that is one way of expanding. And the other way is of course more proactively looking at different markets and trying to gauge where is the market ready, where is the revenue stack from the energy or the grid services big enough and secure enough, et cetera. Um, so right now we are talking to real estate owners looking at portfolios in France, obviously, Germany, Sweden, Poland and Romania. And we are now starting to look also at Italy and Spain and the UK so but actively 90% of our projects right now are in France.

Leon Urban: So when you say that 99% nearly is in phase one, could you give us, could you give us some number of best pipeline that you're operating or developing right now to just give us.

Karl Magnus Norden: Right now we are, I mean, whatever, the most advanced 50 projects. I think it's about M200 megawatt of uh, bass. Yeah. So that's where we are right now. We are looking at um, renegotiate nationally John Venture with another real estate group for five times as much of being able to do that. You know, it's money is not enough. You have to go to a market where we actually can get grid connection. So it's even if you have a portfolio of properties in France or 150 or 160 properties right now, uh, we probably can only get some 5 megawatt grid connection with I uh, don't know what 30% or 20% of that. Then of course the grid is not static, so they are building out. Uh, but this new demand for the grid was uh, obviously not there five years ago or even three years ago. So um, if you are one of the grid people or the energy providers as such, um, this demand from trucks and cars is quite new. The cars have been going now for a little while, but trucks has not released started honestly. So, um, we have quite a lot of, should I say talks with different grid operators, you know, to together see where will this demand come in the future and how can they try to build out or build out plans to supply to logistics centers where, where all the trucks are standing. So it's um, a, it's a relatively new for everybody and it's an educational task combined with obviously a technical Challenge.

Leon Urban: Yeah, sure. Um, you were mentioning the different markets that you are looking at right now, but how do you really define which one is the right market and why you enter this and that market?

Karl Magnus Norden: To be honest, France was a little bit more by chance, but it happens to be that it was probably the best market to start in.

Leon Urban: Yeah. Why?

Karl Magnus Norden: Because the grid is quite strong compared to other markets. So there is higher possibility in France to be able to get 5 megawatt in more places than some other markets. Uh, I think the, almost the worst is the Netherlands. The UK is difficult. Sweden is okay. And so on and so on. So how do we then evaluate the market? Well, we have to, obviously, whatever we do, we have, the revenue stream that we get from the grid has to be bankable and has to be enough. The cost of an installation is, I shouldn't say exactly the same in different markets, but not. No super big differences. More or less half or a little bit more than half of the cost is batteries and they cost the same if it's in Poland or if it's in France or if it's in Spain. And um, then of course, digging in the ground, et cetera, is maybe a little bit cheaper in some markets than others, but it's not a big difference. So on the cost side, it's about the same on the revenue side is then how the grid advanced? The grid is for the grid services and different markets are different advanced. Um, and then, so we have to, of course, the grid services have to give a certain expected revenue and an expected internal rate of return for the investment. And then the second thing is, in a market, is it bankable? Is somebody, if you sign a contract with an aggregator, as the people we sign with that actually manage the different grid services, how bankable are they? They. So there are different things.

Leon Urban: What are the factors, what are the different factors to make a project bankable?

Karl Magnus Norden: Well, it's, it's the, uh, it's obviously the. Well, number one, you have to get the grid connection. So that's, you know, it's already hard.

Leon Urban: Yes.

Karl Magnus Norden: If you don't get it, you don't have a business. So that's number one. But assuming you can get grid connection anyway, if you look at the portfolio of 50 properties, maybe 10 of them in any market you can get. So you assume that that's the first step. The second step then is, as I said, the cost side is relatively so it's obviously important, but it's not so fluctuating. And then is what kind of grid services are available on the market from the DSOs and the TCO TSO and then in some relatively little bit earlier markets you can have very profitable. But normally the depth of that market is not so big. It may be the revenue goes down quite quickly and we do, you know, 15, 20 year projects. So we have to obviously believe, our financiers have to believe that the revenue will continue over time and then bankable is, you know, you and I maybe could say, or I, you could tell me that, okay, I buy your battery capacity for the next 15 years and I give you millions. And that would give a super good irr to me. But if I then look at you and say, okay, yeah, but how can you guarantee that to me? Then you have to be bankable. You have to say, okay, I belong to, you know, a big corporation or something like that. So that's the bankability part of. So it has, these things has to come together.

Leon Urban: Okay. So if you continue to grow and if you, yeah, if you begin to enter the next phases, um, and yeah, obviously if everything succeeds as planned, where's Europe staying and where is the good energy staying in2035?

Karl Magnus Norden: I believe that everybody driving a truck in Europe would like to have it electric by 2035. Honestly, I think most of them will want to have it already 2030 because I think it will be not only cheaper, but if you talk to any truck driver, having driven an electric truck is a much better experience for them. It's safer, is less noisy, it's laser, less vibrations. So it is wearing them much less than driving a diesel truck. So from a driver's point of view it's, it's considerably better. And if it's economically better for the owners of the trucks, then why should anybody, uh, anybody buy a diesel truck? So, uh, that is on the demand side. Then we come back to the bottleneck with the grid. Um, of course if they cannot get the power to charge their trucks, then nobody can buy an electric truck. And of course you have the roadside, uh, charging that people like Milan, et cetera are developing. Anybody, most people are saying that the demand for that would probably be less than 20% of the demand of electricity. Similar to cars. Most people are charging the cars at home during the night or at the office when they stand in the office. It will be the same thing with trucks or people would like to have it in um, the depots. Short term, as I said, we need grid connection for doing that and that's obviously what we are concentrating on. Short term, um, medium term. I would like to See, and I think we will see local generation of electricity, solar, wind, et cetera, more local than a very big farm somewhere. And we can do it with, as I said, with the logistics, buildings, big roofs and parkings, et cetera. So that would unlock quite a lot of electricity. Then in the third phase, as I talked about the batteries themselves in the trucks, I think also that will enable more trucks to be electric. Because if uh, I think most people would come back in the depot at 6 o' clock or 5 o' clock in the afternoon with 30% of the batteries still with energy. And if we can take that, you know how it is, the grid or the energy systems have oversupply in most hours of the year. The grid today is set up for the maximum of all different people asking for um, electricity. But the actual average use is probably 20% or something like that. So if you balance that differences through uh, uh, battery storage, you can increase the capacity of the grid much more. So I think that is also a big factor that will happen. And then as I said, the grid people will uh, build out and so on, even if it takes five years with these things. So in 10 years time I think everybody should be able to charge and everybody should be able to have an electric uh, vehicle, electric truck. But I think you uh, know most of the big OEMs have ambitions to sell 50% of the production electric by 2030. So that's not to say that 50% suddenly on the fleet, on the streets or on the roads would be electric. Um, it will come quite quickly I think, but the big bottleneck will be power.

Leon Urban: And of the journey of decade energy, what is, what most excites you?

Karl Magnus Norden: Well, I think the opportunity to really have an impact um, on uh, decarbonization, which is becoming more and more important in Europe these days. System resilience. Because um, we have a Russian guy that suddenly can invade anywhere. And the big power systems, a big uh, power plant, uh, big Bess battery, big cables in Sweden, we produce all the energy in the north and we consume in the south, which means we have big cables going thousands of kilometers. If you are not friendly, they are very easy to um, destroy. And that's what we have seen in Ukraine. What do the Russians do? The first thing they do is going after the electric uh, system we had this winter. I don't know how many millions that was actually freezing in their homes because they didn't have any energy. That is um, a scenario that could happen anywhere in Europe today if we go then much more local. So what I'm after is really local, um, supply of energy, local consumption of energy, then that system would be much more resilient. We are also seeing right now with Gulf war that obviously somebody can close that tap. Right now it's called a straight over Hormuz and everybody is fucked. And that can happen even if they find a solution now, next week that can happen again and again and again. And for Europe, we don't produce any oil and gas. Huh. So for us going renewables is just not doing anything.

Leon Urban: No brainer. Yeah.

Karl Magnus Norden: And China has obviously already proven it can be done. The beauty of China doing this in scale for the last 10 years is that batteries, M and all renewables, the prices have dropped what, 90, 95%. So um, we uh, can buy it today. It's a viable alternative. Uh, I think right now it's probably much cheaper alternative to produce energy than buying oil and gas. And oil and gas is super dangerous for us basically independently of. We also obviously uh, feed global warming and all the bad things.

Leon Urban: With oil and gas, yes, you will have an important role. And as you said, we have to on one side decentralize the energy systems and yeah, on the other hand we have to make us resilient against any threat from other countries.

Karl Magnus Norden: And you know, even it is the same thing if you have a car and you have solar on your roof and a small battery, you can go in in the summer in Spain much more than in Sweden obviously. But you can continue operating for weeks, if not months on that. Um, and it's even more important of course, when it comes to trucks, as Today, the whatever, 8% of them or 99% of them are depending on diesel. Um, if said if somebody stops the supply of diesel, the, the trucks will stop within a week. And then what does that mean? It means that it will be no supply of food and medicine, et cetera to our cities. So people will start starving in the cities within a couple of weeks. And I mean we can just not accept having these risk hanging over us all the time. And the good thing compared to former Gulf wars and you know, oil shocks, et cetera, is that now there is a viable alternative, which is renewables have never been before, but now we should just go full scale into solar, wind, battery electric vehicles. Um, and we come out, if we do that in a serious way, we come out in a couple of years time, much, much better off.

Leon Urban: So we're coming to an end. What is the best way to reach out if yeah, there's interest?

Karl Magnus Norden: Well, I mean the best is of course, we have the Cadenergy website. Uh, we are trying to be Quite active on LinkedIn as well. Um, so I think these both, uh, kind of sources, uh, as always, when you start up so much is happening all the time. So not everybody, everything comes out in the public. But, um, I think we try to keep people informed what is happening and the opportunities and so on. So listeners of course would be very happy if people um, want to follow our journey. Um, and um, as I said, we want to learn more about all markets in Europe. Um, so we are very happy to um, hear people, uh, your input, uh, and so on, what we're doing, when is the best time to enter markets, and so on.

Leon Urban: Perfect. Yeah. Thank you so much for the time, Karl Magnus. It was really interesting and yeah, I'm excited to see where this journey will go to.

Karl Magnus Norden: Okay, very good. Thank you very much.