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Banking on KC - Kurt Neutgens founder of Orange EV

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Kelly Scanlon:

Welcome to Banking on KC. I'm your host, Kelly Scanlon. Thank you for joining us. With us on this episode is Kurt Neutgens, who is the co-founder of Orange EV, a company that manufactures heavy duty electric vehicles for industrial fleets.

Kelly Scanlon:

Welcome Kurt.

Kurt Neutgens:

Thank you very much, Kelly. Appreciate it.

Kelly Scanlon:

Orange EV was the first company to launch a heavy duty electric terminal truck, and I believe that was back in 2015, about five years ago. That was a pretty bold move on your part and some would say that what you did was industry disrupting. What prompted you to make that move to be the first one to introduce this?

Kurt Neutgens:

We delivered that first truck in 2015, as you say. We actually got started in 2012. I was with Ford for over 20 years in the industry and left Ford as the engineering manager of the F-150. At that time really looked like climate change was real, but it was accelerating faster than I had expected and others had predicted. So when I saw others trying to affect the automotive market and go electric at the time back in 2010, 2011, I noticed that they didn't really have the skillset necessary. Hearts were all in the right place, trying to do the right thing, but didn't have the background and the training that Ford gave me to really make a difference there. So, realized there was a need to give back, if you will.

Kurt Neutgens:

So after helping several other companies get started with electric airport tractors and delivery vans, I worked with my friend Wayne Mathisen, who is my partner and co-founder, and we decided to try and do something that mattered with a vehicle that we thought had a very big impact. That's why we picked the Class 8 market and the terminal tractor.

Kelly Scanlon:

Let's step back for just a minute and talk about that particular type of truck. What are they and how are they used?

Kurt Neutgens:

So, the terminal tractor has a lot of names to it. People here know it by switcher or spotter or yard dog or goat, and there are literally 25 different nicknames for this vehicle. They only go 25 miles an hour and they repositioned semi-trailers in a shipping yard or in intermodal or an a port, and they set those trailers up for the over the road diesel tractors. So it can run 24/7, pulls up to 80,000 pounds, lots of start and stop, lots of diesel use. It's often off-road, which means it has less emissions equipment on it. So really high polluters, really heavy users of fuel, so it really makes sense to make this an electric vehicle.

Kelly Scanlon:

So, talk to us about how the trucks actually work.

Kurt Neutgens:

Well, at Orange EV, our engineers have worked hard to design an elegant solution with the mindset that really less is more. So, the truck is very easy to operate. We don't have a transmission in the drive line, it goes from electric motor right into the rear axle. The truck utilizes our battery system that we've designed in-house to power the vehicle, so it's truly a battery powered electric motor that goes right into the rear axle.

Kurt Neutgens:

We encourage opportunity charging. So our customers when they go on break, the drivers, the operator, when they go on break, they just plug it in on their way in and unplug it on the way out of the building. We can run up to 24/7 without any extra time to charge, other than their normal breaks. It's very smooth, it's very quiet, it's responsive. Our accelerator diesel or pedal has faster stopping distance. So they're really very simple compared to the diesel counterparts, and they aren't so hard on your body and your mind with all that noise and vibration that a diesel has.

Kelly Scanlon:

Oh, I never even thought about that aspect of it.

Kurt Neutgens:

Yeah, it's pretty special. It's really better suited for the application than a diesel in every way. We've got trucks running over 525 hours a month, that's 130 hours a week. So, you know they're getting used and the job's getting done, and the operators are loving them.

Kelly Scanlon:

Talking about that use, how do they compare in terms of reliability and price to traditional vehicles? I know that that's been a knock against electric vehicles of any kind, is whether it's true or not, there's price, that maybe they aren't as reliable. Talk to us about that.

Kurt Neutgens:

That price discussion is why we picked terminal tractors as our first vehicle. The technology made sense here, and the more fuel use, the better your payback is for electric. So Orange EV trucks are considered right now in the industry, by our customers, as better than the diesels that they're replacing, as far as reliability and cost. We can save up to $60,000 per year in just hard savings of fuel and maintenance per truck, and our total cost of ownership is much less.

Kurt Neutgens:

So there's a little bit more upfront cost, but because we save so much in fuel and maintenance every year, the payback can be, for a moderately heavy use truck, can be three years of the difference, and then the truck can be completely paid for. It's literally a zero cost truck after six years for a medium, heavy user.

Kelly Scanlon:

As you say, the dividends that it pays to the environment and those kinds of more intangible benefits is there too.

Kurt Neutgens:

As far as reliability, one of our early customers, Bolthouse Farms, you might know of them as the carrot people, bought some trucks of ours back in 2017. They released a press release that we didn't even know about stating that the trucks were doing great for them. They had bought diesels at the same time to compare the two, and over a two year study that they did internally, our trucks had 20% of the downtime of the diesels they bought at the same time. So much high reliability, and much less cost for repairs. So, it's a better truck, it's shorter stopping distances, it's smoother, it's fewer parts. It makes a lot of sense.

Kelly Scanlon:

Last year, you moved into a larger production facility in the Horizons Industrial Park up North of the river. What's that move allowed you to do?

Kurt Neutgens:

Well, that was a big step for us at Orange EV. It was-

Kelly Scanlon:

Definitely.

Kurt Neutgens:

It was actually our second expansion since 2015. We started in 2,000 square feet, so then we went to 12,000 square feet and now we're over 52,000 square feet. The new facility really allows us an unbounded production capability at this point. I'm sure we'll find the limits at some point, but we've been growing fast and that's why we're moving to new facilities every couple years. It really allows us to expand that production and uncork that bottleneck.

Kurt Neutgens:

We now have over 80 team members for the company, and so we went from two back in 2012 to now we're over 80, and we're always looking for great people. We're still growing fast, and we've got postings on our website at www.orangeev.com. We're looking for great people who want to make a difference in the world and change the climate discussion.

Kelly Scanlon:

You talk about the fact that you have grown and that this will allow you to ramp up production. How many vehicles a year are you manufacturing right now?

Kurt Neutgens:

In 2015, we delivered our first production vehicle, but it was at the end of the year. 2016, we delivered about 20 trucks. In 2021, we're anticipating 250 trucks in that year. So, we've been almost doubling our fleet every year.

Kelly Scanlon:

Yeah, and how long does it take though to produce one? Going back to price, what is the cost of one of these trucks?

Kurt Neutgens:

Yeah, so we build our trucks from the ground up. We're kind of unique in the fact that we do both an all new truck, but we also do a remanned truck. So again for environmental reasons, we'll take an old truck that's dead in the weeds and tear it apart, sandblast the frame, the cab and repaint those, and then use those as the bones for a new truck with all new parts in it after that point. So that allows us to reduce our cost a bit for those remanned trucks, but also, again, save some environmental footprint. So, we've got these two different paths.

Kurt Neutgens:

However to your question, we tell our customers anywhere between 60 and 90 days from their order we can produce their truck. So, pretty quickly really compared to the industry average. In this industry, it can be six to nine months for a truck normally. So, we are working hard to make sure that we respond to our customer needs as quickly as possible.

Kelly Scanlon:

You manufacture these to order then?

Kurt Neutgens:

That's correct, we manufacture them to order. We have custom colors for the customers, we also have the ability to put options on, air conditioning or galvanized frames, lots of things. So, they're custom.

Kelly Scanlon:

There were not electric vehicles in these industrial fleets prior to 2015 when you came on the scene, what kind of education process have you had to go through? Because a lot of times people don't want to be the first ones to buy something new. They're not sure necessarily if all the kinks are worked out, or there's just different things they have to be educated about.

Kelly Scanlon:

So from your perspective, you take this big risk and it sounds like it's paying off, but what did you have to do in order to get customers on board, in order to get the word out and to educate them about all the possibilities and opportunities?

Kurt Neutgens:

There's a lot of work there and it isn't easy, but you find a receptive audience in a small portion of that possible customer base. Our first customer was DHL and they were very receptive.

Kelly Scanlon:

[inaudible 00:00:10:19].

Kurt Neutgens:

Yeah, they had done some things in the past with natural gas and that had worked out for them on their road trucks. So when they saw us come in and they saw what we had to offer and we talked to them, they said, "We want to go with you, we want to take a chance." They are one of our biggest customers. That first location, we delivered that first truck in 2015, in 2016, they made that location all electric, so they didn't have any diesels there at all. Now, we're in multiple states and multiple locations and we're preferred on their list.

Kurt Neutgens:

That's how it's been going for us. We really have been proving the trucks to the customers and the word of mouth is spreading. So it's getting easier now, there was an education. We do a full service, so it's a little easier for us. We have our own service people factory trained that go local to our customers. So we take care of the trucks after we deliver them, we also have our own charging solution. So they don't have to go out and do a lot of work, it's turnkey, we just bring it to them and get them up and running. We do the training, we deliver the trucks and we make sure that they're off and running.

Kurt Neutgens:

We've got telematics in our trucks, so we can watch how they're working and give them information they've never had on this kind of truck about how many hours they've used, when they ran them, how many lists they did, all kinds of stuff that they've never had in the past. It really builds a different opportunity for the customer.

Kelly Scanlon:

Let's talk about Kurt Neutgens a little bit more. You talked about how you were with Ford and you were working on the F-150, but still, people just don't wake up one morning and decide that they're going to go into this industry, that they're going to introduce something that's an industry disruptor. So, what inspired you to start your own company and what entrepreneurial influences might you have had?

Kurt Neutgens:

This is all really been driven by my recognition of climate change and how I believe it's going to hit us like a hurricane. The science tells us we can't reverse the changes, so timing is important. I couldn't see a better way with my experience and my capabilities to really make an impact than starting Orange EV and building heavy duty electric trucks. They replaced these very, very dirty diesels that make a huge impact on our environment and our health beyond the environment. So, I thought that was the right way to attack it.

Kurt Neutgens:

I want to make clear though that this has been a team effort. Maybe a vision for myself or a goal really is the right way to say it, but we have a spectacular team at Orange EV, and no one could do something like this without incredibly capable and energetic people. We've been able to bring just an amazing group together, and they're really the driving force behind what's happening, what we've been able to do. So, we're pretty proud of that and how everyone works together so well.

Kelly Scanlon:

I wanted to ask you, you were working on the Ford F-150, but there were probably areas where you knew you needed to supplement the skills and the knowledge that you had. So, how did you go about bringing those kinds of people in and finding people who not only had the skills, because that's very important, but who shared this passion and this vision that you do?

Kurt Neutgens:

I think the culture of the US right now is changing to where people really want to be part of something that's bigger than themselves. So, we've been able to luckily get people who want to be part of it because they see that opportunity here that's not in many companies. Then also, because we're a startup, because we're small, each person has the ability to really make an impact, so we've been able to really bring on just terrific people.

Kelly Scanlon:

You hear a lot of people talk about ideas, but to follow up on them not only takes the stamina and the persistence of the entrepreneur, it also takes a lot of resources, time, money, and with the kind of technology that you're dealing with right now where that changes so rapidly, how do you evaluate where to throw those resources, those limited resources, what to actually invest in and what to say, "Hmm. I don't think that that's going to pay off." So, talk to us about that.

Kurt Neutgens:

For me, there's two sides to that equation that you kind of have to marry together, and you need to understand the customer and what their needs are. Really from lots of perspectives, their productivity, their health, their safety, how they run their business, their capabilities, and then you also need to understand each of their stakeholders. What does the driver think? What does the mechanic care about? What does the owner care about? What does the CFO care about?

Kurt Neutgens:

Then you have to try and put those together, understanding what the needs are, but then go back to the other side, this is the second side, and that's understanding what that technology is. What does it cost? What's the timing of it? What's the availability? You really have to put all those into one equation, if you will. I'm an engineer by training, so I think equations, but one big bowl of soup that says, "This is going to work out in the end and I can find a way through it."

Kurt Neutgens:

The truth is you don't start with a full answer. One of the things that have been great working with Wayne is that he and I can bounce stuff off each other, and we're better together. We don't see the whole world and we definitely don't see it the same, but we work through it enough respectfully so that we get there in the end and we come up with a good answer. Maybe it's not the best answer, the perfect answer, but it's an answer that works and we go onto the next thing.

Kurt Neutgens:

There've been days where I've been, "Hey, we are going to conquer the world," and two hours later I'm like, "We should have never started this." Two hours later, I was back to conquer the world. Then I'd go to bed, can't sleep because we should have never started this. It's a roller coaster, it really is, but you just got to keep grinding. That's how you get there, and you got to have great people.

Kelly Scanlon:

It sounds like you challenge each other. Those are two things that I heard you saying. One is that you have to challenge each other, and then the second thing is, very important, is that you can't necessarily know 100% how something's going to work out or that you have it worked out. You've got to go to market eventually, you just can't let it get bogged down in constant polishing of the apple. You got, "Okay, we're 80% of the way there," or whatever the number is, "and here we go."

Kurt Neutgens:

That's absolutely true. I mean, I think you recognize something there that really is very important. That was part of the reason why we built our own service team, is we make sure that we understand what our issues are and correct them as soon as possible. When you have your own team out there, you know every issue and you know how you're going to attack every issue. Everybody goes after it and you have that close the loop opportunity to say, "Did that work?" You can do it in record time.

Kelly Scanlon:

Yeah.

Kurt Neutgens:

So, it really is about just staying at it. As I said, it takes a whole team to do something like this. It's very exciting to be able to see a vision and start to make that happen. I've tried some other things, I've failed. I tried to do an all electric Mustang in my garage, and of course, as a single person, that doesn't work. No one wants to buy a car from Kurt, someone wants to buy a car from Ford Motor Company because they have this coverage, this strength.

Kurt Neutgens:

So really that vision is important, but it's about the team members that come behind it and make that happen with the vision. It's exciting to see how we're impacting the world and how that vision can matter. If you look at the last year, the fires in California and the hurricanes coming two and three in a month and category five, and the nor'easters and all the different climate change things we're seeing, knowing that we're making an impact on that. Even if it's slow and it's not as fast as we'd like it to be, it's still exciting, and it's something the team can really rally around, and that's what's driving us.

Kelly Scanlon:

It always amazes me, always. As long as I've been working with business owners here in Kansas City, it still never ceases to amaze me some of the innovation that comes out of Kansas City and that are really well kept secrets like this. Why do you stay in Kansas City?

Kurt Neutgens:

Kansas City's a great place, right? It's a wonderful spot. You're doing the podcast for a country called Bank, and they've been an incredible supporter of Orange EV. It's relationships like that that really make the difference for us. It is heartfelt, it's eye to eye. It's not a game, it's about what can we do together and does it make sense, and making each other better. So, I really appreciate that.

Kurt Neutgens:

I was here for about seven years before we started the company and we're still here, right? We're growing here and we like it here. We've done a good thing for the community and the community's done great stuff for us, so we're really happy to be here.

Kelly Scanlon:

Yeah, so those relationships are incredibly important.

Kurt Neutgens:

It is nice that it's centrally located, it does help us look at the country as a whole. One of the things that others have done is focus just on California, because there is a lead there and there is additional incentive monies and stuff in California. When you can see your air and chew it, then there's a little more interest in going electric. So you don't see that in the rest of the country, and that's why California's leading.

Kurt Neutgens:

At the same time, it's been a real benefit for us to look at the country as a whole. We've got trucks already in Minnesota, we've got trucks in San Antonio, Texas, we got trucks in Buffalo, New York with the snow. So, we've been able to really prove our trucks get across all climates. That wouldn't happen if we were in California, we would've just been focusing on this beautifully, nice, maybe hot weather, but not very much cold, not very much snow, that kind of thing. So, it really has helped us expand our capabilities and expand our customer base.

Kelly Scanlon:

What does the future look like for Orange EV? Here you've come on the scene, you've disrupted the industry, but what else do you plan to introduce in terms of products or are there other industries that you might bleed over into? Are there new features that you see coming on board? Talk to us about that, lay it out for us.

Kurt Neutgens:

There is a lot of work going on. We are looking at other industries, we're looking at more of a stationary power discussion and really support of our own vehicles and our customers to get into more trucks in a certain location. But we're also looking at maybe forklift batteries and reducing the price for our customers there. We're looking at other completely different industries that I don't want to go into, but we see real growth here, we think there's a massive opportunity.

Kurt Neutgens:

Again, it's always driven by how do we do this so that it's cheaper for our customers, it makes more sense for them, it's safer, it's a better vehicle. That's when we're going to enter a market, and we think we have multiple markets we can enter. As the technology improves, the batteries improve, it just gives us more and more opportunities.

Kelly Scanlon:

Kurt, thank you so much for being with us on this episode of Banking on KC. We appreciate all that you're doing and the fortitude that you've shown in order to introduce this innovation to the marketplace. Thanks so much.

Kurt Neutgens:

Well, thank you very much. Thanks for having me on, and I really appreciate being able to contribute.

Joe Close:

This is Joe Close, President of Country Club Bank. Thank you Kurt Neutgens for visiting with us this week to share your entrepreneurial story, and thank you for letting me drive one of those yard dogs around the yard. That was a lot of fun and you trusted me and I appreciate it.

Joe Close:

There are as many pathways to entrepreneurship as there are entrepreneurs, some of the most successful ones are able to marry their talents with their passion. An even rarer breed of entrepreneur is able to leverage their talents and passion to disrupt an industry and change the world for the better. Kurt is one of those entrepreneurs and he's been able to build a talented team that shares his vision.

Joe Close:

Country Club Bank is honored to be a part of the team that fuels Orange EV. The bank's foundation is built on the entrepreneurial vision, passion and philosophies of the Thompson Family, and we welcome the opportunity to help other entrepreneurs realize their dreams. Thanks for tuning in this week. We're banking on you, Kansas City. Country Club Bank, member FDIC.