Resources

• Einride company profile
• Electric, Zero-Emissions Trucks Industry Reports:
  • PWC: Strategy& (PwC). “The Dawn of Electrified Trucking. Truck Study 2022: Routes to Decarbonizing Commercial Vehicles.” October 2022.
  • McKinsey & Company: Preparing the world for zero-emission trucks. September 2022.
• Trucking Emissions Data:
  • EPA: Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2020. https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks-1990-2020 & https://www.epa.gov/system/files/documents/2022-04/us-ghg-inventory-2022-main-text.pdf

Guests

Climate Rising Host: Professor Mike Toffel, Faculty Chair, Business & Environment Initiative

Moderator/Panelists:

• Linnéa Kornehed Falck, Founder, Deputy CEO and Board Member, Einride

Transcript

Editor’s Note: The following was prepared by a machine algorithm, and may not perfectly reflect the audio file of the interview.

Mike Toffel:
This is Climate Rising, a podcast from Harvard Business School, and I'm your host Mike Toffel, a professor here at HBS. Decarbonizing the economy is going to involve all sectors. Some of these will be relatively easy and we have the technologies, but in others, we're still early in developing technologies that can be scalable and cost competitive. Today we're launching a series of episodes that focus on these hard to abate sectors.

In this episode, I'm talking with Linnéa Kornehed Falck, founder, deputy CEO and board member of Einride, a Swedish technology and transport company specializing in electric and autonomous trucking solutions. I'll ask Linnéa about Einride's business model and how the company is disrupting the trucking industry through its use of AI, electrification and automation. Here's my interview with LinnéaLinnéa Kornehed Falck from Einride.

Linnéa, thank you so much for joining us here on Climate Rising.

Linnéa Kornehed Falck:
Thank you so much for having me. It's a pleasure.

Mike Toffel:
Well, we're really excited to talk to you as part of our difficult to abate sectors episode arc. And today we're going to talk about trucking and electrification in the trucking industry. Can we just start by asking you to introduce yourself?

Linnéa Kornehed Falck:
First of all, I'm Swede, born and raised in Stockholm. I have a background in computer science. I worked as a technology developer for a few years and I think I'm very much an entrepreneur at heart. I helped to found three companies in total, including Einride. When we started Einride in 2016, there was no real player in the market to actually challenge the way that we were doing transportation. That's what we set up to do and we're seven years in and it's an exciting journey.

Mike Toffel:
Great. And now I know many of my entrepreneur friends look to see where should they enter a market and they're looking for a space that they think a pain point exists or will exist and they have some comparative advantage to try and solve that. As a computer science person, as a founder of other IT-based platform companies, what was the opportunity that you saw? What was the problem that you were thinking you and your colleagues could solve with this startup?

Linnéa Kornehed Falck:
Initially what we saw when we started out was that there were new technologies that were being rolled out and being more and more available. We believe that the future will look different in how you do transportation. It will be carried on an electric platform and it will be autonomous. But since the beginning, our ambition has always been to be the operating system for how to make this new ecosystem work.

Mike Toffel:
So let's take these one at a time so that I can understand what each of these pieces are. On the electrification side, you've mentioned there's lots of concerns in trucking that the distance and weight and battery density meant that not only is our batteries heavy, but they would take up too much cargo space in the truck to make it worthwhile and maybe range concerns as well. How are you seeing that world differently compared to those who are skeptical about this?

Linnéa Kornehed Falck:
I think there's a good reason to be skeptical if you're thinking that you should replace it, one-to-one, with a diesel truck today. And that's also where we see the criticism coming from. So if you start to try to make a business case where you're replacing a diesel truck and an electric truck in the current ecosystem, it just doesn't make business sense. It's so much more expensive to buy an electric truck today, even though we are seeing the prices decreasing, but it doesn't necessarily make sense.

And here's where we are taking a bit of a different approach because we believe that you need to look at it from a system level. You need to work with a fleet of electric vehicles to work with utilization of filling rate. And so just to give you an idea of how it's working today, and I want to highlight that we're not building electric trucks, we're buying electric trucks, we're putting them to operations. To give you just a number, the average filling rate of a truck today is less than 20%, meaning that there's so much waste if you look it from it from a system perspective.

And one of the biggest reasons for that is because the OEMs today, they sell a truck to an owner and operator. So basically someone that owns a truck and operates it. And their business model is based on selling as many trucks as possible with an interest rate. And we're coming from the other perspective. So we're looking at the demand, we're talking together with the customers and the shippers from our end and we're looking into how are their volumes being moved today and how can we work with that to make sure that we have a certain filling rate and also utilization of the vehicles.

And it turns out that if you're really good at that, electric vehicles in that setup is cost competitive to diesel today and can also potentially, as the hardware cost goes down, be cheaper than diesel. And so that's how we are thinking about this in a bit different way. And in that sense, you might argue that the biggest change this industry is going through is maybe not the electrification itself, it's the change of the business model.

Mike Toffel:
Interesting. And so the change of incentives which lead to potentially higher utilization of the trucks.

Linnéa Kornehed Falck:
Yeah. Both utilization and the filling rate. Utilization is also around 20%, so there's a huge waste if you look at it from a system point of view.

Mike Toffel:
So let's talk about the autonomy piece where you're taking people out and you're replacing it with technology. And a common example would be robotics in factories replacing laborers. And the rationale is often that, well, we can invest a bit more upfront, but then the marginal cost of operation is much lower. Machines don't have to take breaks, they can work 24/7. And so there's a rationale often there. Is that the same argument that's being made here in the trucking industry or is there something else?

Linnéa Kornehed Falck:
Yeah, I think you're absolutely right. In the beginning I thought how you apply autonomy to trucks would be similar to how you're thinking about it for cars. But the great things when you're working with transportation is that you want it to be repetitive, you want it to be reliable and you want it to be very systematic. And so I think the example with how you're using robotics within big factories or in warehouses is a great example. And that's also where we draw inspirations from the AGV systems that you have currently in the factories. Because it follows the same methods that you want it to be going in a certain way.

And that's also how we're working with the customers that we have today, some of them in the US where we are applying this technology. So we're looking for a limited route, so to say, where we can make sure this is a route where we have a good understanding of the complexity that this technology is being applied to.

And so in that sense, it is more similar to a rail system or an AGV system. So it's not like when you're applying autonomy to cars where you want it to be able to work everywhere, you want to be able to have your freedom, you want to be able to drive on a road trip and you want to be able to go to the store. And the complexity of how to apply autonomy becomes so much greater than when you're doing autonomous with freight transportation because you just want it to go from A to B, you don't want it to take a detour going to C, you just want to go back and forth.

Mike Toffel:
So I get your point about rail for example. Many of us have been to airports where you're on a light rail system going from one terminal to another, which is autonomous and electric. And there the issue is, well, there's nothing else on the tracks. There's no people crossing, there's no bicycles to worry about. It's a very clean environment in a sense. And so it's a simpler automation process. And I can imagine highways being similar, it's just one use case of passenger vehicles along with lots of other use cases of back roads and night driving and trying to avoid people who are swerving in front of you. Are the trucks that you're designing, are they only meant for highways or do they also have to get off the highway and go on local roads in order to get to, for example, warehouses?

Linnéa Kornehed Falck:
We have created a mythology [methodology] that we call AT one to five. And where you would say that AT1 is the more simplified environment or application if you will. So that would be for example, an industrial area where you go very low speed, almost like walking speed, but you go between A and B. And I mean that's actually real use cases today where you would have a truck driver driving back and forth 50 times a day because that still needs to happen, but it doesn't necessarily need to happen in speed, it just needs to go there. So that is a great use case for autonomy. And then if you would increase the complexity of the environment, of course you need other technologies and you need another skillset for the vehicles.

Mike Toffel:
Right. Your company is not the one building the trucks that you're helping to design, you're working with technology partners who themselves are building them for you. Is that also true on the autonomy piece? Are you designing the autonomy software or are you working with partners who are developing that?

Linnéa Kornehed Falck:
It's a combination. And it's the same with electric trucks because we don't buy electric trucks just off the shelf, so it still needs to be according to our technical specification. So something that's very important for us for example, is to have a vertical integration towards the electric trucks. And when it comes to the autonomy, it follows the same approach. We're working with different technology partners.

Mike Toffel:
I see. And so with your software background, just coming full circle to our earlier conversation, so certainly the whole idea of autonomy is a software-based phenomenon, but also you mentioned earlier sort of a route optimization in order to increase the utilization of these trucks to increase their fill rates. That sounds like a different set of software skills. Can you talk about that area of digital and AI that your company is using?

Linnéa Kornehed Falck:
Yes. I think to lay the foundation, electrification is a fundamentally different technology than what we used before, and it's also operating in a very different way than a diesel truck. And so things that you need to take into account if you want to be able to operate a fleet of electric vehicles is one is the health of the batteries, which has multiple variables for how you use the batteries. And so the life length of a battery can vary from let's say 9 years to 12 years. And of course that has a huge impact on the pricing. And so what you want to ensure when you operate battery vehicles is to make sure that they have as long life length as possible.

For us to be able to do that, we of course need to know how we run these electric trucks, but we also need to understand other factors that you don’t necessarily need to care about when you’re driving diesel. And one of those might be topography, for example, are you going uphill downhill? What’s the weather like? Is it very hot outside? Then you need more energy. And are you carrying frozen goods? It becomes very fast, very complex. And so to running electric vehicles in fleet is enormously more complicated than driving diesel. As a diesel technology is actually a great technology for some use cases, but at the same time, by applying an operating system using AI, you’re actually able to do this in a way that wasn’t possible to do before.

And just to give you an example, a lot of our clients has been using pen and paper before or even fax to be able to plan their routing and to plan their logistic setups. That is not possible if you need to look into all of these variables, it becomes very complex very fast. Again, coming back to electric can actually be cost competitive, but it has to be done through a platform. And I think that’s why we hear when people are talking about the electric vehicles and saying that there’s no real business case for it yet is because you’re applying an electric truck into the current ecosystem when you cannot really think about it in that sense because it is a fundamental different technology. So if you want to reap the benefits of that technology, you have to have an operating system.

Mike Toffel:
One is necessary to make the other really cost competitive it sounds like. So let’s talk about the EV technology that you’re using. The typical questions one would imagine when you’re thinking about buying an EV car would be what’s its range? What’s the capacity? Does it shrink the capacity of the vehicle in terms of storage? And what’s the charging time? Presuming you’re going and charging up and not swapping batteries, how does the EV trucks that you’re using stack up along those dimensions?

Linnéa Kornehed Falck:
When we start to work with a big client, and we work with a lot of really big shippers globally, we start by looking into their volumes. So we take a data dump of how their volumes are being moved today. And from that we run simulations for how it would be possible to take that into electrification transformation plan. We do that by looking into both what’s available from a charging infrastructure perspective, but also where the energy is coming from, which is of course also very important.

But maybe the most important thing is we look into how would this make business sense? Because what we don’t want to end up is for our clients to pay a very expensive premium for going electric. We still want it to be competitive to what they do today. And so after we have done that first one, we usually agree upon a commitment that, for example, we want to electrify 30% over the next five years. And then we start looking into different projects where it would be suitable to do that.

And the reason why I'm bringing this up after your question is because in many ways it doesn't really matter if you're going to supercharge it or the range because that becomes secondary towards the demand from the customer. So if the customer has a need, that they need to ship X amount of goods from A to B, you look at that specific range and you look into do we need to stop and charge to get to that point? As all of this is already calculated into the pricing point of how you are assessing these sort of projects. And there's something else we do, we build out infrastructure, charging infrastructure, which has the same mythology [methodology] where we look into where is it needed, could it be at the customer site for example?

So one great business case for a lot of shippers is that can we charge while we load and unload the truck. That of course saves a lot of time standing still. And so everything breaks down to each and every customer depending on what their need is, how much volume they're shipping, and what the infrastructure is already like in that site.

And so for example, range is something that we discuss a lot because that's also a very common question that you said before. Sometimes there's a bit of a range anxiety in the space because we are still trying to compare it to a diesel truck and we're trying to compare it to a model where you have an owner and operator that wants to be able to go for and take these businesses where they are going to drive across countries. But most of the market actually doesn't look like that. I would say I think it's around 80% of the market is actually highly repetitive, mid to short range transportation. So it's going from factory to stores or from the warehouses into the cities. Since you have so much predictability when you do that, range becomes secondary, of course you're going to have to be able to deliver what you have committed. But the range is not necessarily what makes a decision if you're going to go electric, it becomes about the price, price for the volumes being moved.

Mike Toffel:
There's a lot of parallels, but also some key differences between trucking and electric vehicles on the passenger side. One of the commonalities is trying to figure out how to put the charging infrastructure in a place when the vehicle is stopped anyway. And so you mentioned sort of the client site when you're loading or unloading. Or the warehouse or the factory, the passenger vehicle equivalent is putting the charging station at home or at the workplace when the vehicles anyway sort of stopped.

But then there's some really key differences I think when we think about EV on the passenger side, you think about really minimizing charge time and extending range because our goal usually is to get from point A to point B as quickly as we can, but in your description of the freight industry, quickly might be one thing you care about, but precision actually is something more important. Making sure you're there to load the truck at the time you committed to and making sure you're at the other end to unload the truck at the time you committed to. And maybe if that takes an extra hour or not, depending on the traffic or depending on the routing, that may be less critical. Am I summarizing that correctly?

Linnéa Kornehed Falck:
Yes, I think that's very spot on. And I mean, one of the nightmare scenarios for a lot of shippers would of course be to have a hundred electric trucks, a hundred drivers, and they're all going to charge at the same time and it takes two hours to charge. And how do you coordinate that in a way so you don't end up there standing there in the line for six hours to be able to get to that charging point. And all of this needs to be coordinated and orchestrated somewhere. And that's something that we do with help from our platform.

Mike Toffel:
So the business model that you're describing is you'll own the trucks and operate the trucks and the shippers will pay you? Is that the model that I'm hearing?

Linnéa Kornehed Falck:
Yeah, it varies a bit from different clients, but our business model is freight as a service agreement. So it's a contract that spans five years typically, and then we take the responsibility from the customer to move their goods in a sustainable way from A to B, and of course with the requirements on the SLAs, but that's basically it from their point of view is to make sure that it's as reliable.

Mike Toffel:
That sounds to me a bit like how freight works in the rail industry where the large companies that sort of take responsibility from end-to-end, and of course sometimes in shipping as well. Sometimes there's the shipper itself is the owner of the vehicle, the ships and the containers. Sometimes there's other freight forwarders who work through other people's assets. But it sounds like you're really thinking about a model that's really not so common in trucking, but common in other modalities.

Linnéa Kornehed Falck:
When we look at it from today, I think it is a shift, but it will make even more sense as you move into autonomy because when you get into that setup, you need to have that in a more disciplined way.

Mike Toffel:
And there's been some talk about that even with passenger vehicles. Like right now Uber and Lyft rely on individuals driving their own vehicles, but in an autonomy space, it's not so clear that Lyft or Uber will be borrowing individual's autonomous vehicles. They might in the end operate them and own them themselves in a way that allows them to coordinate them as much in the way that you're talking about with sort of route optimization and uptime optimization. That's interesting. So where are you in terms of commercialization? Where can one see these vehicles on the road, first of all, and who are the types of clients that are engaging with you and whose goods are being shipped by you at this point?

Linnéa Kornehed Falck:
Yes, we are working with several big [clients], especially in the grocery retail sector, but also, and I don't know how this happened, but we're a very big transporter of beer. That seems to be our niche. So we are working together with Heineken, with Carlsberg, AB InBev to name some of them. We're also working with the PepsiCo, but these are mostly the electric vehicles, so not the autonomous, of course, with the platform as well. But then for the autonomous, we have a very exciting project in Selmer, [Tennessee] where we worked together with General Electric appliances where we [are] actually driving on part public road with an autonomous electric vehicle. So we were actually the first in the US to get an approval to drive on public road.

Mike Toffel:
Where do you expect us to see autonomous trucks?

Linnéa Kornehed Falck:
I'm a true believer that it's perfect for industrial areas, fenced areas, even ports. It's a great application for these technologies. So it's basically taking what you have inside of the factory, just extending it a bit until outside of the actual factories or warehouses. And then in terms of when we will start seeing them on the highway, I think there will be selected highways where you might have a lane where you say that this lane is for autonomous vehicles. That might be one. And that's one of the things that we are investigating if that could be a path forward. But I think there's still some work to be done to figure out exactly how that's going to be made in a big scale.

Mike Toffel:
We took some students to Denmark in the Netherlands last January and we're going back this January. I was really surprised to see autonomous trucks operating in the ports of Rotterdam moving shipping containers within the shipping yard. They were electric and autonomous just as we're discussing, moving at slow speed as you mentioned. And in this case, they actually knew when their batteries were getting low and when to go back into the battery charging shed in order to charge themselves up. And it was quite a scene. We were all kind of blown away by that.

And so you're talking about bringing those from fenced settings like that as you're describing, which have low variability, certainly no bikers or pedestrians who are going to get in their way, to step-wise moving into, okay, fenced in highways, slow speed highways, fast speed highways, and then maybe seeing them on interstates as well at some point soon. It's very interesting.

So this is characterized as a difficult to abate sector, and yet it seems like your approach is saying, well, how can we figure this out using this combination of autonomy, electrification, and optimization? And so it sounds to me like that's your bet. Your bet is that these three pieces of technology as they are cusp to mature is going to be the way to unlock decarbonization in the trucking sector. Is that right?

Linnéa Kornehed Falck:
That's absolutely right. And the good thing is that electrification autonomous goes very well together because it's the same way you are looking for that same kind of repetitiveness and reliability for both autonomous and electrification. So even though we're working a lot now with electric conventional trucks, it will be a very natural step also to take it to autonomous in the next step.

Mike Toffel:
Yeah. And when we're talking electric in your technologies, we're talking about batteries, right? We're not talking about fuel cells, for example, which is another bet some companies are taking.

Linnéa Kornehed Falck:
No, you're absolutely right. It's absolutely battery.

Mike Toffel:
So how do you compare this technology path that you're pursuing to the others? For example, I know there's experiments going on with trucks carrying compressed hydrogen, using that to fuel a fuel cell, which then generates electricity sort of onsite in the truck. So that's another approach. I'm sure there's others out there. When your clients ask you, "Well, tell us about your approach versus the competing startups that are out there." What's the differentiation that you feature? How are you better than those other approaches?

Linnéa Kornehed Falck:
I mean, if a client would say that, we will say, that's not going to be your problem. We're going to take care of what technologies you're going to use. What we can promise you is that it's going to be sustainable. We can promise you this decrease in carbonization and we can do it at a cost competitive price. We truly believe that electric battery powered vehicles is the best technology today, both from a pricing point of view, but also because it's a proved technology in many ways, electric and batteries has been done for so many years now. While we have other technologies that are not as mature and also more expensive, frankly.

And so I think what we see is that we have this technology that we know works today and we know how to make it cost competitive. Let's go with that. If that changed in the future, that might be something that we are going to look into as well. But I think coming back to that, we are the operators of these systems and we're selling the freight as a service towards the clients. So when we've been in those dialogues, a lot of the customers has just felt a relief like, oh, good, I don't have to try all of these different technologies. I can choose you pick for me what you believe. And I mean, that's the expertise that we have also. And we're a technology company. This is what we spend our time on.

Mike Toffel:
That makes a lot of sense. So you're saying leave it to us. This is the as a service approach, whether it's software as a service or transportation as a service, the idea is you're trying to relieve your customer of having to really invest in the whole technology comparison and just leave it to you, and I guess it's up to your team to keep an eye on the advances of the different technologies, to double check, to make sure the assumptions you're making continue to be correct, and then pivot if you need to.

Linnéa Kornehed Falck:
We met with a customer outside of Madrid this spring, and we talked to their logistics manager and he was like, "I tried everything. I tried battery electric trucks, I tried hydrogen trucks, I tried rail, and I'm getting exhausted." Because everyone is complaining that nothing is working, so we should just continue with what we have. And we frankly said, I mean, we are here to solve that problem for you because of course, what they get from their boards and from their management team is that here is the ESG report. You need to cut emissions. And so they start to look into all of these options of how can we do that in a way? And all of a sudden they become worried that they should invest in a technology that they have no experience to operate. And so yeah, that's exactly where we come in and where we hope to be helpful for these customers.

Mike Toffel:
And where are you on pricing? Are customers willing to pay a premium for greener transportation, or are they saying we would prefer green subject to as long as you charge us the same price?

Linnéa Kornehed Falck:
It varies a lot of course, you have some customers that are very progressive when it comes to, and they're willing to pay a green premium. But I think the bottom line is that it has to be cost competitive, and it has to also have a path towards being more competitive than diesel over time. And I think especially in the current environment where we are, where everything is a bit stretched, it becomes even more important to be competitive on pricing.

Mike Toffel:
And are you seeing any of your clients bragging about using you as a provider? I know there's some companies, especially beer companies, some of them are trying to portray themselves as more natural or more green. Are they putting on their websites or in their marketing materials anything about the relationship with you?

Linnéa Kornehed Falck:
I mean, we have amazing customers, and so we've been getting a lot of those, like let's do joint partnerships. Let's see what we can do together. I think that a lot of our customers, of course, working with consumers, like the end consumers that very much care about sustainability or environmental questions, they very much appreciate when we do announcements like that. So yeah, that has been historically something that we had done a lot with clients just to kind of showcase this is how much CO2 emissions we have saved by transporting these beers with Einride.

Mike Toffel:
Great. Well, we're going to keep an eye on your company and on the sector. It's super interesting. So before we close, let me ask you just a final question that I ask all of our guests. We have a lot of listeners who are thinking about how do I get involved in business and climate change in some manner. They might be computer science folks, they might be transportation people, they might be engineers, they might be business folks. What advice do you have for them as they're thinking about entering this space?

Linnéa Kornehed Falck:
It's an amazing space to be in. I think one of the things that really stands out is all the amazing people that you get to work with. You get to work with people that has a... It's a deeper purpose for them. And we've been able and been very fortunate to hire, I would easily argue, some of the best people in the world because they want to try to make something good for society. And so it's a great sector to be in that sense. And then, I mean, it needs to happen. We need more companies that are challenging the structures, and we know that we need to create a more resilient [society], not necessarily only from an environmental, which of course is a really big part of it, but we also need to make it resilient. And that's something that I think becomes more and more obvious for all of us that the way that society is operating is not really working as well as I believe it could be.

And so the best time is still ahead of us, and there's so much great things to do. I would, in a humble way, say that it's a very tough environment right now to raise capital. It's very hard for a lot of companies out there, and we've seen, at least here in Sweden, but we know in the US as well. But at the same time, it's also a great opportunity to start in this climate because you will have also the access to a lot of great talent. What I'm really hoping is that we will continue to see a lot of great entrepreneurs and companies being built within the impact space. It has never been more important than now that we actually build for a more sustainable future.

Mike Toffel:
Great. Well Linnéa, thank you so much for sharing your story and the story of Einride. It's been a really fascinating conversation.

Linnéa Kornehed Falck:
Thank you so much.

Mike Toffel:
That was my conversation with Linnéa Kornehed Falck, founder, deputy CEO, and board member of Einride. Thanks for listening. If you like what you hear, please subscribe wherever you get your podcasts. Share with your friends and don't forget to rate and review. For show notes, head over to climaterising.org or click on the link in the podcast information. You've been listening to Climate Rising. I'm your host, Mike Toffel. Lynn Sceank is our producer, and Craig McDonald is our audio engineer. We'll be back in two weeks with another episode of Climate Rising. See you then.