Revel founder Frank Reig a year later on driving EV adoption in big cities

Almost exactly a year ago, we interviewed Revel founder and CEO Frank Reig when Revel was on the cusp of expanding into multiple business lines beyond its original scope of providing shared electric mopeds. Today, we’re taking a second look to see how far the startup has come, and the distance it has to cover to achieve its stated goal of helping urban cities transition to electric transport.

Revel started its moped business in New York in 2018, and it has since expanded into Miami, San Francisco and Washington, D.C. But if you just heard about the startup for the first time today, you might not even think of it as a moped sharing company. Over the past year, Revel has pivoted sharply toward building fast-charging hubs for electric vehicles, launching its first “Superhub”in NYC last June.

Along the way, the company also started (and quietly shut down) an e-bike subscription service and launched an all-electric ride-hailing service in NYC.

Reig recently told me the company is aiming to build 200 fast-charging stalls in NYC by the end of this year, “and we’re shooting for hundreds more in 2023 on top of that.” Revel’s ride-hailing business, which currently has 50 Teslas driving around Manhattan, will also expand alongside the EV charging infrastructure, he said.

“The way we think about stations is at scale. Revel’s not interested in the one charger at a Walgreens. That doesn’t do anything for the city, and it doesn’t accelerate any transition. The only way to drive EV adoption in cities is with a real network of infrastructure, which does not exist right now. Until a company like Revel builds it all, this EV transition is just a lot of marketing and talk.”

We sat down with Reig to talk about Revel’s business, the company’s recent funding from Blackrock, the need to work grid stability into its business model and how the company thinks about profitability.

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

TC: It’s been a year since our interview, and Revel feels like a different company now! Back then, moped sharing was your main business, but now the focus is on EV charging infrastructure. Do you still have plans to expand your moped business?

Frank Reig: We have 6,000 mopeds across four markets, so it’s a sizable business that generates a sizable amount of revenue. At this point, we’re sort of waiting for COVID to be over officially until we really start to think about expanding our micromobility footprint.

That said, some of the mopeds in our fleet are three, four years old. So we’re starting to think about the next moped technology we want to use. How do we want to think about reinvesting in our markets, in our fleets?

You recently closed a $126 million Series B round led by Blackrock, and a lot of that’s going into your EV charging hubs. I believe you said you’re going to build another one in New York?

We’re building many more in New York.

Everybody keeps talking about the EV transition. Everyone keeps talking about how auto OEMs are saying they’re never going to produce another gas vehicle again. They’re falling over themselves to outdo one another. No one’s talking about where all these vehicles are going to charge. That story has not changed from last year. If anything, it’s gotten worse. Infrastructure is just so lacking, especially in some of these big cities like New York.

New York state passed a law that said all vehicles sold after 2035 will have to be electric, and 20% of new vehicles sold will have to be electric by 2025. We literally have millions of vehicles that need to transition to electric, and there’s really no charging in sight, which is where our strategy comes into play.

Tesla builds stations with multiple plugs, and it’s opening them up to non-Tesla EVs.

Tesla’s main focus is highway charging between cities to help ease range anxiety, while our main focus is high-volume, urban fast-charging.

What is the benefit of focusing on the biggest cities first rather than proving product-market fit in smaller cities where there’s less risk?

There are a lot of benefits. First, ride-share just works in big cities. It may have a reputation of being an unprofitable business, but if you set aside the thousands of smaller markets and focus on the dense urban centers, it’s very profitable. It’s an everyday part of life in cities, and has been for decades.

EVs also offer a huge environmental and public health benefit to cities like New York, where millions of gas cars are spewing emissions every day. Bringing our products to big cities allows us to make an impact on a larger scale.

In terms of charging infrastructure, we’re focused on cities because that’s where we see the greatest need. There are a lot of companies and entities building charging infrastructure mostly targeted at highways connecting cities, while we’re building at scale within cities. It’s a competitive moat for us to leverage.

How are you planning to tackle headwinds in the EV adoption space? There’s increasing demand, but also plenty of supply chain issues due to the Russia-Ukraine war and COVID.

This goes back to our business model, because we’re not just a charging company, we’re not just a fleet company, and we’re not just a tech stack matching supply and demand. We’re trying to solve the problem of this absolute lack of infrastructure, and we’re doing that by bringing everything together.

We’re also taking a longer-term view here. When you build a large-scale charging site, sometimes it can take two years. Slight fluctuations in the market, like lithium prices or oil prices, don’t necessarily affect us. I’m trying to build large-scale sites that might not come online till 2024. We’re also signing sites that could have leases of 20-plus years.

That’s why bringing BlackRock on board to lead this round was so important for us. BlackRock is a long-term thinker and understands infrastructure. We’re building a dense network of fast-charging infrastructure in the cities that matter right now.

What do you think was in your pitch deck that sold BlackRock on Revel?

BlackRock is the largest asset manager in the world; they’ve seen it all. You’re not going to sell them on flash — there needs to be substance. They understand the problem of EV adoption cities are facing, they understand fast-charging infrastructure is a huge gap right now, and they see how Revel is taking on both those challenges.

One of the big challenges for EV charging is managing the grid to sustain hundreds of charging stalls. What is Revel doing to enable a safe charging network?

There are two parties out there right now. There’s everybody on the mobility side, like car OEMs, living in their own little silo, saying they’re never going to build a gas vehicle again past 2030.

And then there are all the grid folks — the utility people. And that whole sector is becoming much more dependent on renewable power, so they’re shutting down nuclear and coal. They’re shutting down that stable baseload power, and they’re heading toward the middle.

The other trend is: We’re going from centralized power resources — a nuclear plant here in New York that provided 20% of our power was shut down last year — toward a much more distributed, decentralized grid, which is also inherently a lot less stable.

So you have everybody in mobility saying everything on wheels is going electric. Then you have the grid people over here saying everyone is crazy. The grids are already on the verge of blackout constantly as they become more renewable and decentralized.

These two trends are happening in silos. Now let’s address your question about how the grid becomes stable: We’re thinking about that by putting ourselves in the middle of these two trends and making them talk to each other. We’re the only company right now that controls everything from the user and the app to the driver and the vehicle, all the way to the grid and the charger. No one else is doing that.

Again, what about Tesla?

Fundamentally, Tesla builds fast-charging infrastructure to sell cars. Revel builds fast-charging infrastructure to scale electric ride-sharing in the markets that matter.

To answer your question more directly, once a Tesla rolls off the lot and into someone’s garage, Tesla no longer has control of it. It’s now privately owned, and what happens with that EV is at the discretion of the consumer. But we have full control of our fleet (which are all Tesla Model Ys), and we decide when and how much to charge them, when to put them on the street, and when to keep them in the lot.

I see you are something of a conduit between the grid and EVs, but how does that actually create stabilization?

It’s not really electric ride-hailing that we’re doing. If you’re thinking longer term, as we go from one large-scale infrastructure site in New York City to 50, and from operating a beta fleet of 50 cars to thousands of vehicles over this decade, it’s not electric ride-hailing anymore. We’re just moving energy on wheels around the city.

So when you think about stability of the grid, we’re going to be integral to that in the long term with these three connections and having control of how our vehicles are charged.

There are also vehicle-to-grid applications, which we’re piloting with ConEd here in Brooklyn that goes live in a month and a half. That helps the whole stability of the grid.

Which business line do you see leading to more revenue or profitability?

From a revenue perspective, one Tesla Y operating 16 hours a day in a city like New York means a lot of trips and a lot of revenue. So from a pure revenue perspective, yes, ride-share is going to be the dominant revenue source pretty soon as we scale the fleet.

When you break down the economics in terms of profit, where are you seeing the highest overhead?

The margins of infrastructure are the best across the three business lines, because you’re buying electricity from the grid at a certain price, and you’re simply selling it to a customer at a higher price. Obviously, there are capital expenditures — you have to build the site.

But from an operational expenditures perspective, nothing is going to beat the infrastructure side of the business. From a total revenue perspective, again, ride-share is just a massive opportunity for us.

I think people forget how big ride-hailing is in major cities like New York. Just from the public data we’ve seen on the Taxi and Limousine Commission website between yellow taxis and the incumbent ride-share operators and now Revel, you’re talking easily an $8 billion to $10 billion market in New York City. That’s one city.

What is one lesson you want startup founders to take away from Revel?

The most important qualities to have are flexibility and humility. Things beyond your control are always going to be changing, and the only way to really meet the needs of your customers and the market is to adapt and accept that there’s always more to learn.

Last year, you told me you wanted Revel to be a ubiquitous name for all transportation needs. Will you need to raise more capital to achieve that?

In terms of the EV transition, there is so much to do. There’s so much to build. Yes, we will have to raise more money, because there’s just so much work to do. We are so far behind.

I think about climate and infrastructure funds right now, and Revel is well positioned for what’s ahead. If you’re an investor and you’re thinking about which company to back to lead the EV transition in the biggest markets in North America, Revel is going make that pretty clear next year.

Where do you think Revel will be a year from now?

The majority of the growth is going to be in scaling fast-charging infrastructure in a handful of cities and pairing it with our ride-share service.

The team is shooting for 200 fast-charging stalls in New York City by the end of the year. By next summer, we’ll easily have a pipeline of 500 fast-charging stalls in NYC as well as other cities. It won’t be more than a couple of new cities because we are very focused on the biggest markets. We’re not going to be spreading ourselves too thin here.

On the moped side of the business, we are thinking about one or two other additional markets that we’ve been in conversations with for a while. Revel has developed a reputation, so now cities are reaching out to us saying they’d love it if we’d bring our infrastructure, ride-hail and mopeds to their city.