Hey everybody, welcome to Hammer Down on the Market Scale Network. I'm your host, Mike Busch here with Joost de Vries, who is the CEO of ZM Trucks. Joost, welcome to the show. Thank you for having me. And I so your PR team is terrific. Let me start by saying that. Cool. Gotten lots of great interest, lots of hey, you know, we're working on this working on that cool thing. Just had a grand opening in your facility. Let's start with the very basics. What is Centimeters Trucks? Long story, I'll try to make it short. Centimeters Trucks stands for TOW Motors. TOW is a Japanese company where we started. It stands for elephants in Japanese. And one of the first things we realized in the US is you can't sell elephants. So Zoho Motors became ZM trucks. Yeah, okay. That's the background. But we're a Japanese company originally. Got it. And what is the focus of the company today? What are you building? We're building today globally class two, three, four, five, six, seven, eight electric trucks, fuel cell trucks, hydrogen, hydrogen combustible trucks. We have buses. We have ground service equipment for airports and we have yard codes. So that's our yard code. We start production of the yard code here later this year. And then we are bringing hydrogen and battery electric buses also, but that's a longer term project. We still have to fight a little bit with the federal transit authority before that can go in. But that's a good proof point that you're more than just a startup and building something. What's sort of your secret sauce? What's the thing that should have a company that needs vehicles looking at ZM trucks versus a Tesla, a Windrose, a Hyundai? Look for size. Especially in the US, incentives here for the last decade have been really, really good. Lots of startup companies and lots of failures. I think early adopters have been burned a lot, and it's scary to step into it. So look for the bigger players, look for people who have vehicles on the road. We don't have any vehicles on the road in the US, but we're in other countries. So I think that's really my message. Be skeptical. Take a chance, but be skeptical. Sure, so if I got it right, it's sort of the old statement. Ever was fired for hiring Intel. Exactly. Yeah, exactly. Was it HP? Whatever. Yeah. But you know that. Very true. Very true. Nobody was ever. Okay, understood. Very cool. So now how long have you been in role here? You know I started with Choe Motors in Japan four years ago now. That's where we were born. We started with electrifying K cars. You know, these little dinky toys they have in Japan, 600cc that we converted, and that grew into class one and then class two and then class three. Then we spread out to Vietnam, Malaysia, Cambodia, and then we went to the Middle East. So we started the Middle East and North African countries. Okay, I have to ask you. So the Middle East is sort of famous for being big on oil production. How how well? That's awesome. How well were you received as you launched in the Middle East? Fantastic. Really? There is so much power there. They know oil is going to run out. They have fifty-sixty years left before they're dry, and they're transitioning today hard. So even in a country like Iraq, where oil is fourteen cents a gallon and electricity is free, essentially, they want electric trucks, especially in the urban areas. Long distance, not so much, but in urban areas they have pollution issues just as much as we do in LA. Got it. So you talked a little bit about, you know, the distance and short distance versus long distance. What's the perfect use case for let's start with Class eight and then we'll work our way backwards. But what's the perfect use case for a Class eight ZM truck? Drayage. Short distance, point to point going autonomous soon. But not long distance. Okay, I'm sorry. Did I hear that that that ZM trucks is going be doing autonomous drainage? Yeah, we're going to get there soon. And do we have a prediction on what soon it means? We'll be in drayage next year. We'll probably have some use cases on autonomous within the next twenty four months. This is the main line. It's now not working because we need to get our permits done. Got it. But this line is built for three trucks an hour in a single shift. That's amazing. So, and this line is flexible enough to build the ZM8, the drayage truck, and the ZM twelve, which is a class seven that's coming out next year too. And it can all go on the same line. Fully automated. This this whole line is testing. Fully one guy sitting in there, ABS brakes, weight, axle alignment, wheel alignment, everything is out of it. Now what was your career path that brought you here? So the whole the whole idea behind the show is like, look, people, people that are in supply chain either fell into it, right, direct quote ninety percent of that they fell into it, or they've got their legacy. Everybody wakes up and says, let me go work in trucking. But you seem to have taken a different path. I was twelve, but I wanted pocket pocket money. And my mom said, go get a job. So we were living very close to a commercial truck dealer and I was a big kid and I started changing clutches on trucks. I was terrified you were going say I wasn't driving at twelve. Was like, Good morning, man! And I was able to do that within half the standard time, so I was making very good money as a twelve year old. Okay. And I was born by diesel, really. Twenty five years with AB Volvo, in eight different countries, always trucks, buses. Then I went to a couple of EV start ups like Tesla, DeLorean, Karma, and ultimately back into commercial vehicles. Okay. So I know you said if I've got it right, there's sort of three power sources for the ZM trucks. There's battery pure battery electric battery, high fuel cell and hydrogen. What's your favorite? I know that depends on where I am. Is it is hydrogen today in the US makes no sense. The cost per kilo is way too high. But hydrogen in Norway is is seven dollars eight a kilo. That makes perfect sense. China, it's about ten. Japan is getting very hard now to get under ten. Canada is at nine. So in certain areas, cells make a lot of sense, sense, especially if you want to do long distance. US California is thirty six dollars a kilo. There's no ROI for a customer. Right? So don't do it. Yeah, no, agree. So so I know this because we work in trucking, we had to make things complicated as possible. We couldn't do we couldn't do gallons to kilos comparison, right? Like we need to know how to tune this kilos. You're right. You're right. Like I it makes me laugh, you know, but more like, oh, let's let's see if we can throw in some metric system here. So So for folks, you know, who are kind of checking out this show, generally speaking, is it fair to say that based on mileage, one gallon of diesel is pretty typically comparable to one kilo of hydrogen in terms of more or less. I mean, there's a lot of buts and ifs and asterixes, but more or less. Yes. Got it. Okay. So if you're want to have parity, your hydrogen needs to be around five dollars six a kilo and or that's where diesel is in most places now. Three to five dollars a gallon. The benefit, of course, is tailpipe emissions. The negative is fuel cells are still expensive. You still need batteries with fuel cells. People don't realise that, but you need a battery. But it is definitely a step towards getting it cheaper. Think on the larger power users like trains and locomotives and things like that, hydrogen is really, really good. Large power generation plants, mobile power generation plants, hydrogen is a fantastic solution. So when you talk about cost parity, and anybody in trucking will say and anybody in shipping will say cost parity is really hard to achieve when it comes to zero emission trucks, right? Some trucking companies are going to say, Oh, I need to add an assessorial, I need to add a fee in order to use a zero emission chart. Some companies are going to pass along that thirty six dollars a kilo as opposed to five dollars a kilo or five dollars a gallon because, again, metric doesn't. How how do you message around that? What would you say to somebody thinking the rest of the world's found price parity? Why isn't the US? In Asia right now, more than twenty percent of all goods transported are on zero emissions and customers do not buy the most expensive solution. If we can sell electric trucks in Cambodia, why can't I sell them in LA? It is. There are differences, of course, but if you look at pure cap cost upfront, forget about the total cost of ownership discussion. Asia is on price parity now with diesel when it comes to battery electric, not long distance, but interurban. So Class four, five, six. And you'll see that coming here too, where just the gap is so big. The US is unfortunately about twenty years behind where the rest of the world is, and that's really we haven't benefited on that huge curve that happens a long time ago in other areas. Yeah, we built our own charger for AC. What we're seeing is that the government spends billions in building out public infrastructure. And then when you go there as an operator, you have to pay sixty eight cents a kilowatt, there goes your profit. So, we're very much with our customers looking at behind the fence charging. Okay. Especially our box trucks customers, they have enough dwell time to charge for six hours. So, we have twenty kilowatt of charging inbound on AC And we build our own charger to support that. If you have to go to DC charging like with the drayage truck, the problems become a lot bigger. And you need to be ready for that. Don't rely on public charging because you'll go bankrupt. It's just too expensive. What it so there are companies that are kind of doing that middle ground thing. So whether it's for mobility or EV Watt, kind of saying, hey, look, we'll do a truck as a service for you, where for one cost you do a truck. Yeah, if it makes sense for you, then that might be a great solution. But if you're just a box truck owner that drives one hundred miles a day, if you can't rely on AC charging, you're not going to have a return on investment. And that's what it's very frustrating for operators that, oh, I'm electric now, so the price should go down. But then when you go to a public charging station and you see what you pay, it's like more expensive than filling up your diesel. Right. I drove this truck, this box truck from Fontana, California to Houston, Texas, forty two hours straight. I spent twelve hundred dollars in charging. I could have done that trip for three hundred dollars in diesel. So, where's the benefit? It has to make sense financially, otherwise there's no transition. So, we have to be super careful when we advise customers what they can do and what they can't do. And if I can't make it with them because they don't have any charging capability and we can't install it for them, I tell them, stay with diesel. It's not about selling green, it's about selling total cost. Which truck would you like to highlight? Let's pick it. Let's pick a truck. Talk about what's the most interesting thing about it. Box trucks, small box trucks, sixteen, eighteen, twenty foot liftgate side door, bread and butter of the local plumber who's driving an F350 today with the work body, the bread and butter for the local door and window company, the fish market, the local supermarkets, just the bread and butter truck. High volume, low distance, interurban, that's where we make most sense. So this is how we build. Naked frame, this is where it starts. We put in the batteries. This will go on the big line, of course. But what you see here is basically everything that is electronic is on the outboard. OBCM, power distribution module, battery management system, twenty four volt batteries, and the heater and the cooler. So, it's Lego. It's literally you put a block in. You don't fix any of those blocks. If any of those blocks ever go bad, change them out. Worry about it. Don't try to repair things. It's too expensive. Replace. Batteries go in the middle. It takes you about forty five minutes to flip a pack. And again, don't fix. Replace out the trucks need to be up and running downtime is too expensive for a customer. What's your thought on swappable? And I'm the reason I'm asking you is as we're looking at this chassis where you're saying look, we can we can really easily replace pieces. It feels modular to me. Are you is that what is that something you're kicking around? No, and I'll tell you what, the battery pack is by far the most expensive component in the truck. When you buy an asset, you know how you treat your batteries. If you go to swap all batteries, unless I can lease the chassis separate from the battery like they do in China on cars, it makes sense. But if I own the battery, I want to know the quality of my battery because my residual value is based on the back end of my lease, on my finance, on the state of health of the battery. And we publish the state of health in real time to every customer that we have, because all the trucks are connected all the time. So, the industry will learn that state of health is going to be the indicator for residual value rather than age or mileage. So, in drayage, the big challenges with using an electric truck are the weight of the battery. Yep, you got it. And we have sold that. And we have sold that. Yeah, we will launch early next year a drayage tractor at twenty two thousand pounds curb weight with five thirteen kilowatt of battery giving you two forty miles range. That's the first one in the market. So it's painful because we have to take weight out everywhere else. It's the funniest thing for folks who aren't familiar with with the space. So what happens is like and I'm very familiar with the Nikola trucks, right? So the Nikola battery truck weighs eleven thousand pounds more than a diesel truck. I know, which means you you have to actually take a look at it. Right? Or take eleven thousand pounds out of the container. And yet nobody wants to do that. I have to hit that sixty thousand pounds load capacity. And I'm still inside kitchen. I'm still three fifty kilos or six hundred or seven hundred pounds too heavy, but we're so close now and we have a path to get there and we will launch not be hiring riders. No, no, you can't do that. But we are. I'd say we're six months away from hitting twenty two thousand pounds and we won't launch until we hit twenty two thousand pounds And that's at a range of forty miles, Fully loaded. Pounds eighty two thousand gross So, next step after this is these guys are getting ready for the battery. There's a lot of wiring that goes in and all the other good stuff. See the battery pack is now ready to go in. We do the back battery first. And then the front will go in. Everything is modular, so they're the same size. Just flip them over and it doesn't matter front or back. Then we put the cab on. We're still we put the first fluids in. And it starts to look like a truck now. It does. It does. Good morning. So now the truck is on its wheels. Fluids, connections, but it's still dead. So and then the last station is where we plug in in all the ECUs. And six minutes later, we have a truck that can drive. So one of the biggest challenges I've seen with the zero emission trucks, and you can correct me if I'm wrong here. Insurance companies don't have a clue as to how to handle these vehicles, right? Like one, they're more expensive than their counter their diesel or, you know, gas counterparts. But two, it's not like there's a ton of zero emission trucks out there. It's not like there's every other fit every every other truck is a Tesla Semi. There's not a whole lot of data about what happens if these trucks are an accident. Like, like, all you have to do is go to Google and find, you know, test Tesla semi on fire that like that's number one trending thing all the time. How, how are you solving the insurance side of things to make it so that a trucking company can say, yes, this is a worthwhile investment as opposed to, hey, my insurance just quintupled, therefore my prices are going to have to change. Right. In the commercial trucking industry, and I'm not on Class eight, I'm talking box trucks now, the majority of premiums is based on replacement value. And California is a great example. If you're a California agent from a California company, you have to write a policy based on replacement value. But if I take a Pennsylvania company that's licensed to write in California, I can go on upfront cap cost. So you can go post incentive. My insurance premiums are lower than diesel with an electric truck. So you need to find different ways how to approach the market. California is a horrible state when it comes to legislation in that sense. It's it's it's got that we're a horrible state for legislation on the insurance side, but at the same time, we're the only state pushing forward saying, hey, you could have zero emission drug. Texas is the best in the country. Really? From incentives. New York, number two. California is a distant third when it comes to incentives and things like that. What we have is in the back wall there you can have an optional daybed. That's why we have curtains because in Mexico and in Iraq, for instance, when you want to get into the city, you have to go to two-three hour security base. Drivers go to sleep. Makes sense. Even in a little box truck. So, it is those kinds of things when people step in there, it's like, oh, damn. From the product perspective, we're not at cost parity with diesel yet. So we go to states where there are certain incentives. Post incentive, if I can't make at least twenty percent lower cost per mile versus diesel, we're doing something wrong. So there is a significant gap after incentives where we can actually prove to an owner we are cheaper to run. And that's where you win. Do we still need that help? Yes. Do we need the federal help? No. Do we need state help? Yes. Got it. One of the one of the questions I try to bring to every every guest here on the show is you're talking to somebody who's just thinking about getting into trucking, just thinking about starting their career and saying maybe supply chains for me. What's the advice you'd give that person? It's an awesome industry. Let me start with that. I mean, what is it? Eight point six percent of GDP in the US is logistics one way or another. Nothing in your house, what you're holding in the cup of coffee that I'm drinking comes to you magically. It's all logistics. It's an industry that is incredibly fast in innovation, changing constantly. Five years ago, nobody heard of TeamView or Hain, to give you some examples. Amazon was just building up. Now you have all these different logistics companies and they're constantly innovating. The new de minimis rules that came in from the government now that it's no longer there, that completely messed up the supply chain, which is a great opportunity for people who can shift fast. And you're seeing that, you're seeing those moves in the market. Such a dynamic industry. If you're willing to be super flexible, stay a little bit up to date on what the industry is doing, it's such an exciting industry. Sure. Perfect. Cheers. Thank you for being on the show. Cool.
