David Bennett, CEO of Proterra

by Alan Cooper
March 21, 2012

 

UpstateBizSC:
What is the origin of Proterra?

David Bennett:
Dale Hill, who is still with the company in a leadership role, is the founder of the company.  After launching the first and most successful fleet of alternative-fuel buses in the 1990s – the Denver 16th Street Mall buses – Dale formed Proterra and applied for federal funding to develop a future concept for public transportation, a need expressed by the Federal Transit Administration (FTA).  Proterra’s vision was to design and manufacture world-class, advanced technology, heavy-duty vehicles powered solely by clean domestic fuels.

UpstateBizSC:
What is Proterra’s core business?

David Bennett:
Our core business is the production of commercial vehicles, buses, for use in city transit.  The first bus that the company built, a zero-emission fuel-cell vehicle, is here on site at our Greenville, SC location and is on its second or third refurbishment.  Today, we are focused on making our fast charge, EcoRide™ BE35 battery electric bus.

UpstateBizSC:
Who are your customers?

David Bennett:
Most of our customers are transit authorities in cities and towns.  Our customers are in Pomona, California in the Los Angeles basin, San Antonio, Texas, and Tallahassee, Florida.  We are working with the South Carolina Department of Transportation and city officials to finalize procurement with the City of Seneca here in South Carolina.  Clemson Area Transit will operate these buses.  We also have a fuel-cell vehicle in Burbank, California and another going to Austin, Texas.  

UpstateBizSC:
How many buses do you currently make a year?

David Bennett:
We are right at the point where we are transitioning from prototype to low rate production.  We will deliver over twenty vehicles this year and then have much loftier production targets the year after that.  

UpstateBizSC:
Outline the growth of the company.

David Bennett:
We have grown from 30 to over 100 employees since moving to Greenville in June 2010.  Most of the employees are based here in South Carolina, but some are located in Colorado, Texas, and California. We hope to grow our revenue ten times this year.  

UpstateBizSC:
Why did Proterra move from Colorado to South Carolina?

David Bennett:
In the early stages of the company, Dale Hill connected with a few individuals in South Carolina and together they started exploring the possibility of moving our production facility to South Carolina.  The original plan was for just production to move here, but eventually it made more sense to move everyone to South Carolina including engineering and administration.  Today, over 90% of our employees are in Greenville.

I became CEO in October of 2011, after the decision was made to move to Greenville. I know that great support from the Upstate business and political community made it easy for us to locate here.  When you combine that with Clemson University’s local automotive technology initiative (CU-ICAR) and the talent base that we have here in the automotive field, Greenville is a perfect home for Proterra.   Proximity to CU-ICAR also offers us tremendous research and development resources.  There are a couple of CU-ICAR people involved directly with projects here at Proterra.  

UpstateBizSC:
What is different about a Proterra bus?

David Bennett:
Buses have been built in the same way for 40-50 years – basically, big square boxes that run on either diesel or compressed natural gas (CNG ).  Some advances have been made with hybrid technology, but buses are still mostly based on fossil fuels.  They are noisy, dirty, and not very contemporary in their design. A Proterra bus runs on electricity, has zero emissions, is quiet and looks more like the future than the past .  

Our vehicles are extremely quiet, so there is clear savings around noise pollution. In a residential neighborhood at 6:00 am in the morning, that can make a huge difference for our customers.  

The vehicle has zero emissions. Purists point out that our carbon footprint depends on the form of generation the local electrical grid is using – coal, nuclear, hydroelectric or renewables.  The fact is that because of the highly efficient operation of our vehicle, even using 100% coal, the EcoRide™ will result in less carbon emissions from well to wheel than any other bus.  The true promise of our bus is that when powered by electricity from 100% renewable resources it generates no carbon emissions and requires no imported oil – a big benefit to national security.  In contrast, if you buy a diesel or natural gas bus, you will always have carbon emissions from non-renewable energy sources and in the case of diesel and diesel hybrid, remain tethered to mid-east oil. 

UpstateBizSC:
Transit vehicles are big capital purchases and can range from $300,000 to $1M.  Often new green technologies are more expensive than traditional ones.  Are Proterra buses more expensive?  Why would a customer pay more for one of your buses?

David Bennett:
No one is going buy green just because it is green.  There has to be a value proposition in your business model.  Ours is around the total cost of ownership over the life of the vehicle.

Today, the price point of a hybrid or natural gas vehicle is about 20-30% less expensive than our vehicle. Our customers provide a level of service in the community often at a fixed cost.  Proterra needs to help its customers lower their operating costs so they can see the payback for this more expensive vehicle.  We combine the electricity rate with the number of kilowatts per mile, and we turn that into how much it costs per mile to operate the vehicle.  Compared to diesel powered vehicles, we are seeing a 50-70% reduction in the cost to operate the vehicle.  That kind of savings gets clear attention!  As a point of comparison, a hybrid car might have a 4-7% reduction in costs to operate versus a standard car.

Every regional or city transit authority has different objectives, but these first customers will help generate hard facts about the buses. We want to make sure that our first customers, who have taken a risk with us and purchased one of our buses, are happy in terms of the reliability of the buses and their ability to lower operating costs.  

Our second objective would be to then drive up adoption up by making our overall value proposition easier for our customers.  We are putting financing options in place.  We are also attracting partners who will work with us to drive down the cost of the technology so we can close that price gap as we drive the volume up with more customers.  

UpstateBizSC:
The original buses had fuel cells.  Are they still part of the equation for powering the vehicles?

David Bennett:
Technology is improving in this area, so we are working on a second generation hydrogen fuel cell that will deliver twice the power in the same space than what was in our original vehicle four years ago.   The fuel cells that you see in transit vehicles tend be hydrogen fuel cells.  We have five fuel-cell buses – three operating and two for future delivery which are currently in the design phase.  These fuel-cell buses have a few more design and technology hurdles to overcome compared to battery-electric vehicles.

UpstateBizSC:
How do you overcome some of the roadblocks that others have encountered coming up with a viable electric vehicle?   

David Bennett:
Over time, the electrical grid has proven to be more efficient and stable in terms of cost of energy than petroleum based fuels.  The price of electricity over the past thirty years has increased on average 2.4% per year.  In comparison, petroleum based fuels have gone up 8-10% every year.  Operating costs are getting much tighter around transit, so electricity makes a great deal of sense.

One roadblock to electrical is the amount of time it takes to power the vehicle. We have overcome that with an innovative way of charging the vehicle in 10 minutes or less – a typical layover time for a vehicle.  Our battery management system software optimizes the amount of energy that goes into the vehicle.  We are able to quickly put in an incredible amount of energy in the vehicle, operate for one hour to three hours in cities where there are fixed routes or drive cycles, and do that for 20 – 22 hours per day. The range of our buses is approximately 30 miles; depending on the bus route, a charged bus can last between one to three hours.  

A second obstacle has been battery life.  Another difference with our vehicles is how we maximize battery life through the use of composites materials such as carbon fiber and Kevlar to make the whole vehicle much lighter than a traditional bus.  

Lastly, buses need an efficient way to repower.  We have come up with an innovative and very cool design for the charge station itself, and have several patents in this area.

UpstateBizSC:
The way Proterra recharges the bus looks really cool, with an arm-like thing that hooks up to the top of the bus in the charging station.

David Bennett:
The charging system that you see coming down over top of the vehicle is all about making it simple, reliable and safe for the driver.  Safety with a transit vehicle is a key priority.  

UpstateBizSC:
Where do you source your inputs for the manufacturing of the bus?

David Bennett:
If you use public funds for a public service, it is important to show that you are sourcing domestically and thereby creating jobs.  The United States is on the leading edge of these new technologies that we are incorporating into our vehicles, so it is relatively easy to source domestically.  85% or more of our materials come from the United States; that is important to us.  About 30% of our inputs come from South Carolina itself where we source goods and services from seventy-five suppliers.  The shell of the bus is manufactured right here in South Carolina.  

UpstateBizSC:
How important is design to the success of the product?

David Bennett:
Design is a critical part of the buses.   We are staying with composite materials because of the flexibility they offer in terms of the design.  The composite materials that we use also provide better safety in terms of crash-resistance and insulation from the electricity around running a battery-electric vehicle.  

We tried to stay away from the industry conventional length for a bus.  We have a 35-foot vehicle which is five feet shorter than you might see with a traditional one, yet because of the space saving innovations that we have come up with, we still seat the same number of passengers.  We don’t have a large engine compartment that takes up a considerable portion of the vehicle, for example.   

The design of the bus has also allowed for some innovations in terms of safety.  We install four wheel disc brakes and independent front suspension on our buses, something you might expect to see on a car.  The industry standard is drum brakes and rigid suspension.  

UpstateBizSC:
What challenges are you facing?

David Bennett:
Finding talent when you are a startup entrepreneurial company is key, and one of our challenges is finding battery engineers.  This is not a problem that is confined to the local market; there is a global shortage of battery engineers. 

UpstateBizSC:
What is the ownership of the company?

David Bennett:
We are privately owned.  Our lead investors are Kleiner Perkins Caufield & Byers, General Motors Ventures and Mitsui & Co Global Investment, Inc. out of Japan and we also have some private investors who we are proud to have aboard from the Upstate.  Proterra employees are the second largest ownership group through stock and stock options.  

UpstateBizSC:
How will you build on your customer base?

David Bennett:
Every transit vehicle in the country needs to go through certification at a national test facility in Altoona, Pennsylvania.  We will be the first battery-electric transit bus to go through that certification process and the results should be out this month.  Once we pass that hurdle, it will allow us to sell in mass production to transit agencies.  

We believe there is a huge market potential for our product over the next decades as transit authorities around the world look to replace their aging fleet. We would love to move into the Canadian markets and selectively find the right partners. There have been some great efforts in Brazil and Chile and Mexico to invest into zero emission buses. While looking to the future, we do not want to get ahead of ourselves.  We want to take care of our current customers and look into these larger opportunities in 2013.  We are getting very close to proving that we have a vehicle that customers can bet their future on.  It’s an exciting time for us.

UpstateBizSC:
Do you have any competitors?

David Bennett:
There are a lot of people experimenting in this space around the world.  We are fortunate to be already in the operating model which puts us relatively ahead of the game.  Some new products have been developed in China, but after a year of operation, they have run into serious problems.  The buses work for a year, but then they develop problems with battery life.  

We are seeing a lot of announcements, but it takes a lot of time to ramp up and actually get a running vehicle out of the door.  We find that the presence of other competitors in the market helps to build credibility with the customers and the supply base.  Competition is good!

UpstateBizSC:
What is your educational and professional background?

David Bennett:
I earned my undergraduate degree from Duke University.  This is the first time since graduating in 1983 that I have been back in the Carolinas.  I worked for GE, then Honeywell for seven years, then Eaton Corporation out of Cleveland for about ten years.  I spent about half of that time overseas in Poland and in China.  

UpstateBizSC:
How did you hear about Proterra?

David Bennett:
After a stint in a pretty fast paced entrepreneurial market in Asia, I returned to Eaton to do strategy and business development.  I was approached during time by Kleiner Perkins, a company that does quite a bit of venture capital work and who is one of the lead investors in Proterra, about this leadership opportunity.  I have always loved the clean tech space and I have spent most of the time in my career in advanced technology.  It’s a perfect fit.