Nevoya raises $9.3M as its EV truck fleet reaches cost parity with diesel

Yahoo

6 days ago

Los Angeles-based Nevoya came out of stealth last year with the ambitious goal of breaking the EV truck adoption logjam. Nevoya made enough progress on its goal to attract investors — and a $9.3 million seed round — to help it move even faster.
The young company, which buys electric trucks and offers them to shippers, is now carrying goods for 10 different Fortune 500 companies. More importantly, it's offering services as a carrier to those companies in California at cost parity with similar-sized diesel trucks.
It's a noteworthy accomplishment, especially at a time of increasing anti-EV headwinds – fueled by an administration that has publicly criticized green energy.
Founder Sami Khan is unfazed.
The idea of lowering carbon emissions is still attractive to the Fortune 500s, Khan told TechCrunch. Khan said he also believes Nevoya is just running a much faster, leaner, and better carrier business than legacy operators – in large part by leveraging AI.
Nevoya applies AI to optimize trucking routes, and matching and balancing loads with the right trucks to maximize efficiency while minimizing energy consumption. The company also uses AI to help sort out charging schedules and battery management.
'When we started running the trucking business,' Khan said, 'we looked at what [everybody was] doing, and we meticulously looked at every minute-by-minute of what was going on. We came to the conclusion that 90% of what was going on could be automated or semi-automated.'
Khan said Nevoya's automation has been getting information to drivers faster, with fewer mistakes than humans would make. He also said that leveraging AI is not replacing dispatchers, but rather freeing them up to better communicate with Nevoya's customers.
The 'go big' funding conundrum
Khan expects to keep growing this model thanks to Nevoya's new seed round – a fundraising effort that was initially much more conservative.
Late last year, with a pre-seed round in the rear view mirror, and some early traction building Nevoya's all-electric trucking fleet, Khan found himself weighing options for how to grow his company: Do an inside round with existing investors? Or go bigger?
That's when Khan spoke with Shawn Xu from Lowercarbon Capital. Xu had introduced Khan and co-founder John Verdon (the former business development head of Waymo) and had followed Nevoya closely, but had not yet invested. Xu's message was clear: go for it.
'[Xu] basically said, like, no, no, no, do a big round now. We're going to lead it, and we're going to run with it,' Khan said. 'It was, really validating, frankly, to have an investor that in the first round said 'we're going to sit on the sidelines,' then come in and preempt the next round.'
Lowercarbon ended up leading Nevoya's $9.3M seed round, which just closed, Khan told TechCrunch in an exclusive interview. Floating Point and LMNT Ventures also joined, along with existing investors Third Sphere, Stepchange, and Never Lift. Qasar Younis, the founder and CEO of buzzy self-driving AI company Applied Intuition, also invested.
That funding will go towards expanding Nevoya beyond California into new states like Texas. The company is already hauling freight in Houston and Dallas.
A Texas expansion
That will help Nevoya generate more revenue, though Khan was quick to point out that there is a lot of work to be done in these new markets before they can also reach cost parity with diesel trucks. He also said Nevoya has to be more creative with how it manages its fleets in places like Texas because there is less charging infrastructure.
That involves workarounds like charging the trucks overnight at stations typically meant for passenger vehicles, or at school bus depots when the chargers aren't in use.
Khan framed this as a win-win. These locations get extra revenue during off-peak hours, and Nevoya gets to expand quickly with lower up-front cost. He said the plan is to ultimately invest in building out more dedicated charging infrastructure.
To manage this expansion, Khan said Nevoya is leaning on the same model that companies like Uber used as it entered new locations. Nevoya is hiring general managers that will run their own locations like a startup-within-a-startup.
'That kind of competitive element of pitting these incredibly smart, talented general managers against each other is really, really effective in driving that next level of performance for the business,' he said.
Xu said he initially held back from investing in Nevoya because he wanted the company to prove it could hit that cost parity with diesel.
'We want to understand the appetite and validation from the market,' he remembered thinking. But, he said, he also felt that 'a business like this must exist.'
As Xu saw Nevoya progressing, he remembered saying to Khan: 'what would it look like if you actually raised a lot more than you were expecting to raise?' The two spoke about using more artificial intelligence to optimize their fleet management, while also keeping an eye on an autonomous future (hence the inclusion of Applied Intuition's Younis in the round).
'They're getting lower cost per mile. They're getting lower maintenance costs. The AI orchestration for efficiency on the route optimization is starting to bear fruit,' he said. 'So yeah, we ended up raising a much larger round that ended up being even more oversubscribed than we had expected. And now we're off to the races.'