Ubco, the New Zealand-based electric utility bike startup, has raised $10 million to fund a global expansion focused on the U.S. market and scale up its commercial subscription service business.
Ubco’s hero product, the Ubco 2X2, is an all-wheel drive electric motorbike that looks like a dirt bike but rides like a moped. What began as a solution for farmers to get around pastures and farms easily, safely and quickly has expanded to include an urban version of the bike that caters to fleet enterprise customers, gig economy workers and city riders.
Since its founding in 2015, the company has produced two versions of its 145-pound utility bike: The Work Bike, the original off-road vehicle, and the Adventure Bike, the newer version that’s made for city riding but can handle itself off-road.
Now that Ubco’s got a fresh cash infusion from the round led by Seven Peak Ventures, Nuance Capital and TPK Holdings, it hopes to continue expanding into existing verticals, like food delivery, postal service and last-mile logistics. The company already works with Domino’s in New Zealand and the United Kingdom, as well as a range of other national clients, like the New Zealand Post, the Defense Force, the Department of Conservation and Pāmu, or Landcorp Farming Limited and other local restaurants and stores.
“We have a strong enterprise market in New Zealand and have developed a strong pipeline of sales internationally,” Timothy Allan, CEO and co-founder, told Stock Market Pioneer.
While direct consumer sales make up for most of Ubco’s revenue at present, the company is pushing aggressively into enterprise, and more specifically, subscription services. The 2X2 is built on an intelligent platform that includes vehicle and power systems, cloud connectivity and data analysis, which enables the subscription model to work alongside fleet management systems.
Ubco expects revenue to climb from $2.1 million in 2020 to $8.4 million by the end of 2021 as it pushes to increase its annual recurring revenue through subscriptions. Ubco’s subscription model, which costs about $50 to $60 per week ($75 to $85 NZD) for fleet enterprise customers, is being rolled out in New Zealand, Australia, the U.K., Europe and the U.S. this year and into 202. Consumers will get access to the subscriptions as well within the next couple of months, according to a spokesperson for the company.
Allan sees subscriptions as the future of the EV industry, not just because it allows for a high chance of profitability, but also because it’s far more environmentally sustainable. As the company expands this part of its business model, it hopes to lead the circular economy space.
The company predicts that vehicles run through the subscription model will have four times the life expectancy as those sold outright and produce 80% less carbon overall compared to a combustion vehicle.
“Subscription means we own the vehicle, so we manage the lifecycle,” said Allan. “So the first life starts at high intensity, and that might be 60,000 kilometers delivering pizza, or it might be 30,000 kilometers on a farm, which are equally hard for different reasons. Then after, that vehicle will go down to a lower intensity application. After that the battery can then be pulled out, and that might go into passive solar storage or something like that.”
Allan sees solving the end-of-life issue as a personal and professional challenge, one with room for creativity since no one has fully figured out the correct way of doing it. He says he takes a bottom up approach when it comes to the engineering of the vehicle in a way that allows for easier recycling.
“Like when you design a battery, fuck putting fire retardant foam into it because you can’t get it back at the end of life,” he said. “So it starts with correctly labeling, engineering with intent so that you’re designing for this type of assembly, and then your business or commercial system needs to support the concept. Now, we’ve got the advantage because the economics and incentives are aligned, and that all aligns with New Zealand’s product stewardship legislation.”
Trying to perfect the circular economy through utility vehicles isn’t just about doing what’s right for the environment. Allan thinks it’ll be a smart business decision in the end, one that will draw in customers and give the company a competitive edge with enterprise clients.
“This is a part of your journey with us as a customer,” said Allan. “If we can design subscriptions and the life of the vehicle in such a way that you feel good about it, that’s where we’re driving from. Most people want to do the right thing, and we can provide something that logically fits the economics, can be done at scale and can be managed holistically.”