Einride founder Robert Falck on his moral obligation to electrify autonomous trucking

Robert Falck used to work at a Russian trucking factory by day, and by night, he built a nightclub guest list startup. He also collects old books, and once guessed that Chinese author Gao Xingjian would win the Nobel Prize in literature. He grew up on a farm, but has degrees in finance, economics and mechanical engineering.

No, this isn’t a game of two truths and a lie — indeed, these are snippets from the life of a serial entrepreneur who harbors a vendetta against the carbon emissions produced by the world’s trucking industry.

Falck, now the CEO and founder of Swedish autonomous freight company Einride, also worked as the director of manufacturing engineering assembly at Volvo GTO Powertrain. He learned how heavy duty vehicles are produced en masse during his three-and-a-half years there, and also helped start and invest in other companies. Einride, which he founded in 2016, is his seventh company.

Einride’s business is threefold. It currently operates one of Europe’s largest fleets of electric trucks, but its main offering is its electric autonomous pods, self-driving freight trucks built without a front cab and no room for a human operator. The startup also offers an IoT system called Saga that runs through its fleet and helps the company and its shipping partners optimize routes, and manage and electrify fleets.

Einride launched its U.S. operations this month and plans to operate its pods, trucks and OS with partners like GE Appliances, Bridgestone and Oatly. In May, the company raised $110 million to help fund its U.S. expansion, bringing its total funding to $150 million.

We sat down with Falck to talk about Einride’s strategy for scaling revenue, the need for autonomous vehicles to be built on electric platforms and why the future is in startups’ hands.

The following interview, part of an ongoing series with founders who are building transportation companies, has been edited for length and clarity.

TechCrunch: In addition to your work at Volvo, you’ve started two nightclub-related platforms and a hunting app. Why start an autonomous trucking company?

Robert Falck: Working at Volvo, producing diesel engines, gearboxes and trucks, made it clear to me the challenges the industry was facing and that I have a moral obligation. I mean, the heavy freight transport industry stands for between 7% to 8% of global CO2 emissions, and the engines that I helped to produce contribute roughly 1% of global CO2 emissions. That’s how much of an impact my previous position was actually making, and I realized that I was part of the problem.

It doesn’t exactly make sense to start a company. You’re either crazy, or if you’re in it for money, you’re not going to get there, because there are much easier ways to make money. But for me, I consider the CO2 emissions to be our generation’s greatest challenge. And it’s quite fascinating how secondary failure becomes when you know that you do it for the right reasons.

You have been described as a serial entrepreneur. Are you with Einride for the long run, or are you already thinking about your next startup?

I think all entrepreneurs get a thrill out of entrepreneurship. And I’m definitely more of an entrepreneur and company builder than I am an administrator and manager. I’m not the kind of person to sit there and keep the status quo. It’s not my thing.

So will your next startup tackle CO2 emissions, but just in a different industry?

A lot of the very traditional industries are ready for disruption, and that’s going to challenge and change society at its core. The main driver behind it is that if you look globally, there’s a huge demand for sustainability.

I think most of the companies that are going to change or save the planet will be created in the next five to 10 years, and there’s lot of potential in some of the more traditional parts of the economy. Everything from trucking and the automotive space to real estate, a lot of those big plays are still up for grabs. I think energy — smart grids and how we structure energy production — is going to be another one of them.

So you think most of the climate tech that’ll solve the biggest issues will come from startups rather than legacy companies?

It depends. Big companies like Siemens ABB, the ones who have the structure for electricity, I think they will win no matter what, but we shouldn’t underestimate how much of a challenge change is for the existing industry. The average OEM will need to write off between six and seven years of profit to get rid of the legacy investments in diesel platforms.

And that’s a tough sell for a CEO to go up and say, “Hey, we’re not gonna make any money for six to seven years so we can develop new technology. And we’re going to change maybe 30% to 40% of our old employees and train them in new skills. And we’re going to create new business models, and we’re going to adapt into a new ecosystem.” That’s a tough sell.

Most of the CEOs of those companies are also hitting 65, and they are looking forward to spending more time with their sailboats and yachts. So what would you like to do for the last three or four years of your 40-year career? Are you going to do something revolutionizing and change the world? Or you’re going to sit there and wait to get your retirement fund?

I wonder if that’s part of the reason Rivian’s IPO was so ridiculous, especially when you compare it to Ford and GM’s valuations.

The weird part is that it actually kind of makes sense.

I think the whole world is transitioning into a venture capital firm. Because we know electrification technology is happening, and if you look at 10 automotive companies out there today, none of them have any substantial electric bets. Except one, which is Tesla.

You don’t think Ford’s $30 billion investment in electrification is enough?

It’s still like 10 years off. Look at the volumes. If you look at the sales, the electric volumes are still almost non-existent. My bet is that Ford needs to do at least five years of write-offs adequate to the profit to make this transition from diesel.

I’m not 100% sure of the exact numbers, but I think maybe 25% of all Ford employees work with diesel or the drivetrain and engine production. So they need to re-school them, or, probably get rid of them, because they have an outdated skill set for something that is not needed anymore. And that transition is quite hard.

Yes, but some say even if Ford is 10 years out, Rivian hasn’t mass produced anything yet, so you’re really taking a bet on whether they’re able to do that.

If Rivian makes it, they have 10x upside. But they can just as easily turn 10x downward. It’s a risky game. The volatility of the stock is going to be interesting.

I think the main reason why Tesla is still around is the good Musk. I mean, everyone loves to hate on him, but what he managed to do — guide and change and disrupt — is going to be a lasting legacy. What Tesla has done to get where they are is bloody amazing.

What inspires you about Tesla’s strategy?

Daring to challenge the ecosystem itself. And what they realized quite early was that they needed to be vertically integrated, because otherwise, they would be too dependent on everyone else. You need to be very aware of the complete ecosystem to make this kind of disruptive change happen.

I think that’s what’s really made it possible for them with the gigafactories and the charging infrastructure — they just did a lot of the things that were required to make it happen.

We have taken a similar approach with Einride. We’ve taken a different route than a lot of others. So like everything with building a company, you’re either a genius, or the latest idiot that made a company go bankrupt.

I consider the role of entrepreneur is to showcase the future and visualize what potentials could be achieved. And then it’s up to society and customers to decide if this is a path for a future that we would like to see. That’s what really motivates me.

Einride doesn’t manufacture its own trucks or batteries, so how has it vertically integrated?

We’re vertically integrating the transport service market, not the hardware part. So what we are working with is to vertically integrate the shippers, the ones that depend on the transport service market, with charging infrastructure, hardware and the transport service itself.

So we’re vertically integrating the whole ecosystem to be able to provide a holistic approach to the technology. We are doing for the road tech transport industry what Uber did for the taxi industry.

Designing an AV to operate without a safety driver does challenge the industry, but won’t it make testing more difficult due to regulations?

Yeah, but unless you remove the safety driver, you can’t really reap the benefits of the business case. It’ll maybe take longer, but by developing the system like this from the start, with a remote driver and autonomous system with a basic safety system, we’re reaching our end state before others.

Even if you reach 95% of the business case, you’re still going to be the most profitable solution out there. We don’t have to wait for this magical being called Level 5, because that will never happen.

We spoke little bit about this before, but you’ve told me that you don’t really believe in Level 5 autonomy.

No human driver can reach Level 5. I mean, consider this: If it’s a blizzard, do you drive as fast as you would on a sunny summer afternoon? No, of course not. So that’s the thinking we applied.

We have something we call the degenerative system. It works in layers, so once the certain criteria are fulfilled, we increase the functionality. If there is sensor malfunctioning, or if the AV recognizes it’s in a blizzard, it decreases the functionality or speed.

So instead of saying that we start with high speeds at the most complex areas, we started with secure all-functionality and uptime with simpler use cases. Instead of waiting for the technology to be perfect, we should limit technology to the applications that can be done.

For instance, if you limit speeds to 20 kilometers per hour and operate in controlled environments, in certain applications, you can go autonomous today, and with a very good business case. It doesn’t have to wait for a magical future.

The toddler approach. Learn to crawl before you can walk.

The alternative is to spend a billion dollars a year for 10 years and still be a pre-product.

One of the major drivers for me is that if we go autonomous, there will be a surge in transport, because it’s cheaper. And if that happens on a diesel platform, we’re going to see a big uplift in CO2 emissions.

Electric is a very important prerequisite for this transition, because if we combine autonomous and electric, it’s cheaper than autonomous and diesel. I hope the whole industry is going to take this responsibility to utilize this technology to also make transport sustainable.

Some people in the industry say it’s quite difficult to make AVs electric because the computing power drains the battery. You’re laughing now?

I think it’s making excuses. In Sweden, we have a word that doesn’t translate well: “The arts of engineering.” Originally, engineering was one of the arts. Leonardo da Vinci displayed it best, but there was the idea that you had an obligation to try to utilize the sciences and arts to make the world a better place.

I love the fact that if you make something autonomous and electric, it’s going to be better, but we shouldn’t utilize technology to lock ourselves in a system that is literally threatening humankind.

You have a total $150 million in funding. How much more do you need to scale in the U.S.?

What we are scaling is profitable installations, so we scale with a small margin in each contract. That’s something we’ve done quite successfully in Europe, and that’s what we are also planning to do successfully in the U.S.

It’s a race, but I think we stand out against the competition, because we’re not scaling to develop technology. We’re scaling to make these revenue streams come through installation with clients and customers that we have.

How many trucks and pods do you have out in the world right now?

The exact number is something we keep to ourselves. But we will reach the milestone of 500 vehicles during 2022.

How are you able to produce that many vehicles with the funding you’ve gotten?

We work with manufacturing partners, and we do transport service contracts with our clients. Since we have a lot of great customers, we’ve been able to scale together with them.

I know you’ve got plans to build your U.S. headquarters in New York, as well as a few offices in the country, but are there any other plans you can share?

We will have a small volume production site and a testing site somewhere in the New York or Washington, D.C. area on the East Coast. It’s very important to be close to the home market, and that would be a major investment for us.

I’ve noticed a lot of automakers also building and selling their own software. You have Saga, Rivian has FleetOS and Ford has Ford Pro. Do you see this SaaS trend continuing?

I think what happens when you go electric is, the software becomes a more dominant part of the whole equation. The electric components that go into electric cars are trivial, but the system aspect of it — how to run and operate — becomes more complex as you scale.

So therefore, the software components become critical. I think that’s what we’re seeing in computers as well. The software keeps developing and improving, but hardware platforms are quite standardized these days.

Where do you expect Einride to be in a year?

We’re about to hit the first 500 installations, and we will have taken the next step in our funding journey. We are also expanding into new markets outside the U.S. as well.

I know where we want to be in five years. We want to be the game changer in this industry. The first to deploy autonomous electric transport vehicle on scale, period.