In this episode, I discussed swappable, rechargeable batteries in two-wheeled electric scooters with Horace Luke, the CEO of Gogoro. Luke’s company is selling subscriptions to batteries in bustling emerging-market cities like Taiwan. We talked about consumer requirements for swappable batteries, the other kinds of technologies that might use them, and his plans for expansion.
Full transcript of Volts podcast featuring Horace Luke, April 22, 2022
David Roberts:
Electric vehicles are all the rage these days, but at least here in the western world, most of the attention has focused on four-wheeled passenger vehicles, first Tesla and then all the companies trying to catch up with Tesla. However, across the globe, more than 50 percent of commute miles are undertaken on two-wheelers — scooters, mopeds, and the like. China, India, and Indonesia alone contain more than 500 million two-wheelers; anyone who has visited big cities in those countries has seen the vehicles swarming the streets.
And they are dirty as hell. Their two-stroke motors emit as much as five times the pollutants of the average new car in the US. Millions of people have died from two-wheeler pollution, to say nothing of the climate impacts.
But two-wheelers are difficult to electrify. Their owners tend not to have extra cash; theft is a constant danger; and urban density makes plugging in, especially in a place sheltered from the elements, difficult.
Today’s guest, Horace Luke, set out to solve this problem with his company Gogoro, founded in 2011. The idea was simple: consumers would own the scooters, but Gogoro would own the batteries, which would be made available in stations across the urban fabric, such that riders could easily find one to swap. Consumers would subscribe to the service, effectively ensuring that they would always have a charged battery available.
The company took a different course than he expected — Gogoro ended up building its own scooters, stations, and batteries, doing far more hardware than the software-minded Luke had originally envisioned — but his persistence won out and the model is taking off, preparing to expand from Taiwan (where it started) to a range of other burgeoning megacities in emerging economies.
It’s a clever model, a mental shift that opens up all kinds of new possibilities, so I was excited to chat with Luke about the problem of two-wheelers, the consumer experience of subscribing to Gogoro, and the other kinds of things, outside of transportation, that cities might be able to do with thousands of distributed, swappable batteries.
So without further ado, welcome, Horace Luke, to Volts. Thanks for coming.
Horace Luke:
Thanks, David.
David Roberts:
I'm so taken by this whole idea. Tell us a little bit about the problem of two-wheelers: where they are, how dirty they are, and how big a part of the climate problem they are.
Horace Luke:
Most of the people in the audience probably don't realize that more than 50 percent of all commute miles done globally every day are done on two-wheelers.
While we in the United States look at it as more of a recreational or very short-distance commute, in the East – Vietnam, Thailand, China, India, Indonesia – you can't cross the street without being hit by one if you’re not careful. They're just everywhere. In China, India, and Indonesia alone, there are more than 500 million two-wheelers roaming around every day – taking people to school, to work, to the market. They are the absolute utility dependency vehicle that people look for when they're moving around town, and people on average ride somewhere between 300-700 miles a month.
Unfortunately, because of the economics of it, the chance of them being clean is not very high. When compared to a gasoline vehicle in, let’s say, California, there are five times more pollutants coming out of the tailpipe per kilometer, easily. On top of that, you have people not using premium fuel and other carelessness that makes owning a two-wheel vehicle extremely polluting.
On top of that, they're usually being used in densely populated cities where thousands of people are living on top of each other. If you're walking down the street, you can definitely smell them, you can feel the heat from them. It is a central problem that we need to solve.
I grew up on the west coast of the United States. I worked for Microsoft, where I was one of the original founders of Xbox, then eventually was fortunate enough to lead the Windows XP user experience and product experience side of the business. Eventually I moved to Taiwan, where I worked for a company called High Tech Computer (now HTC). I created some of the world’s first Android phones – the T-Mobile myTouch, the Verizon Droid – and was pretty successful there.
At age 40 I was traveling around Asia, thinking, “I made that company number one in the world, shipping 43 million phones a year – now what? As the world is moving to 5G and then to 6G and beyond, is that really the end game? Is human computing to make humans more efficient and more productive really the way of the future, or is sustainability?”
So I picked sustainability. I think that this is the decade of sustainability. Mobility plays a huge role within that, and trying to figure out how to get the eastern hemisphere to adopt electric was the essential problem that we needed to solve. With Gogoro, we did that.
David Roberts:
So cities are choked with these two-wheelers, which have some of the dirtiest engines possible, and you're trying to think about how to solve this problem. One way would just be to go electric, the same thing we've been doing with cars. Why isn't that the intuitive solution, to make electric versions of these scooters?
Horace Luke:
In most areas of the world where two-wheelers are massively adopted, people live in stacked apartment buildings. Thousands and thousands of people live on top of each other, and these vehicles are being parked on the side of the road in a very ad hoc kind of way. You've got nowhere to park, so you really don't have a solution for nighttime charging.
During the daytime commute, some technologies are emerging for fast charging – something like 10-15 minutes for about a 50 percent charge. Maybe that's doable, but in a two-wheeler, you don't have the comfort of a sofa, you don't have a stereo system, you don't have an environment where you're protected against the natural elements. If you're in line in front of me and somebody else is in front of you, we're talking 30-45 minutes exposed to rain, to heat, to sun. That just makes it almost impossible.
Plus there’s the economics of it. You've got batteries, you've got a fast charger – now you're trying to figure out how much the vehicle actually costs. By removing the battery from that purchase equation, we help the user adopt the electric solution much quicker. Instead of buying the battery and charging it yourself, you stop by one of our GoStation battery swapping stations and just swap out the battery.
David Roberts:
Back in 2011 when you first started Gogoro, did this vision – that you take the battery out of the scooter and make the batteries interchangeable, a quick swap rather than having the consumer own the battery – just come to you in a flash? Is that what the company has always been about?
Horace Luke:
The company has always been about that. We started the company with 27 desks; we were thinking that we were a software company helping to create the algorithm and efficiency of swapping and managing these batteries. One thing we knew was that how and when you charge the batteries is very important to managing their lifespan. If you're starting a company thinking about sustainability, it's not about greenwashing or riding the electric hype – it’s about how you take the resources and minerals that are out of the ground today and extend the lifetime of use for as long as possible.
That's the thesis from which we started. Then we were looking for people to build the vehicle, build the motor, build the station, etc. To be honest, it sounds like a broken record – a lot of companies start very small and eventually find out “hey, that's something nobody can do, so let's go do that.”
Now we're fully stacked, we build our own smart batteries. We took the technology that we did with smartphones and we turned it upside down. Think of our battery as a smartphone that doesn't have a big screen on it. We took the ability to update and wirelessly connect and created perhaps the world's most powerful little battery that can power two- and three-wheelers.
David Roberts:
So you eventually got into making the scooters, the batteries, and the battery banks that the batteries are stored in, just because you couldn't find anybody else to do it any better.
Horace Luke:
Absolutely. I have this policy in our company where you ask twice, and if you ask three times, that means that you should have done it yourself. The first time you ask somebody “hey, can you help me with this?” and they're like “no, that's kind of impossible,” then you go to the second guy. And if they say, “you’re crazy, you can’t make that happen, that energy density is not something we can do” – if our science and our math work out that you could, we try and do it ourselves.
So we built the world's most powerful and dense small, compact motor for mobility today, a tiny little motor that powers about 7 kilowatts, about 10 horsepower. It's a replacement of the popular 125cc or so.
We've got our own batteries, we've got our own station, we even design our own charger. We subcontract out the bidirectional inverter that's in our station today. We even geek out on tires; a lot of energy is lost on tires. I sit down with the team to look at the compound of the tread pattern, the profile of the tire, so that we can save energy on tires to go as far as we can go.
We're a curious bunch that just want to make electric mobility a possibility in these big cities.
David Roberts:
If I'm a citizen of Taiwan and I need a scooter for my business or my personal life, what is the consumer experience like? What do I do, where do I go, what do I sign up for, what do I buy?
Horace Luke:
By the way, in Taiwan, there are 14 million two-wheelers on the ground for a population of slightly more than 22 million people. If you don't count old and young people, you literally have a vehicle per person.
Before 2015, when we launched our first vehicle, electric solutions were less than 1 percent of the overall sold in Taiwan. (In comparison, Tesla in the United States is about 3-4 percent.) We ended last year with about 26 percent in Taipei; in the overall market, we're somewhere between 12-13 percent.
What's amazing is that our battery-swapping system accounts for 90-95 percent of all the electric vehicles. So we not only grew the market ten times, but at the same time we became the de facto standard when it comes to people adopting electric. That’s because we partner people not only with our own brand vehicle, but also with Yamaha, Suzuki Taiwan, Aeon, and PGO.
David Roberts:
So if I'm going to replace my vehicle with an electric and I want to use the Gogoro battery system, I have different brands of scooters to choose from that can all accommodate your battery.
Horace Luke:
Yeah, not only brand but design and functionality. Think of us as the Android of EV, or the Windows and Intel of computing. We're 47 different models across 10 different brands, so lots of shops around town.
You choose the horsepower and design you like, you choose the form factor, you choose the brand, because at the end of the day each has different performance and different affinity to the brand. You buy the vehicle, and then you subscribe to our battery swapping system.
The subscription is kind of like a mobile operator plan, for those of us who are old enough to remember those. You used to have fixed minutes and fixed messaging; you buy the bundle pack up front and the more you buy, the less you pay for overage per minute or per message. Same thing with us. We have plans ranging from all-you-can-ride, where you pay and you can go crazy and ride all you want. Or you can buy a little bit, start with something like $10 and about 60 miles, and then anything more than that you pay per kilometer on overage. The more you pay up front per month, the more you get. We even have carryover miles, just like you had carryover minutes. We apply the mobile operator model to battery swapping usability.
David Roberts:
If you translate it into American dollars, what is an average monthly fee?
Horace Luke:
The average monthly fee starts from about $10. You get about 60 miles, or 100 kilometers, and for every kilometer (or 0.6 mile) overage, you pay about three pennies or so. Then you find yourself snapping to the next plan, which is about $16-$17, and for that, you get a little more kilometers on a pre-bundle. And you just keep going up on the mileage.
David Roberts:
So I've got the subscription, I'm riding around with one of your batteries, I'm getting low, I look for a battery bank – what do these things look like? What's the user experience of swapping a battery? How long does it take? And how common are these battery banks, how easy are they to find?
Horace Luke:
In Taiwan, we've been going at this for almost seven years, and we are now at about 2,200 locations. In the metropolitan area, we're more dense than gas stations. By the end of this year, we will definitely have more locations than there are gas stations across the island.
We have slightly more than 11,000 cabinets. Think of them as ATM machines or vending machines. We put them in places like convenience stores, cafes, universities, train stations, bus stations, supermarkets. Instead of gas stations, where you need a huge plot of land with a safe circumference around it, we can place them underneath your apartment building, wherever is most convenient for people.
David Roberts:
They're common enough that if I'm running low, there's probably one close by.
Horace Luke:
Literally, you're within a quarter mile from each one. The average distance that our consumer rides is about 40-50 miles, so they swap maybe every 3.5 days or so. Range-wise, we’re about 60-70 percent of gasoline vehicles, but with a lot more convenience than the gasoline vehicle.
We can swap out batteries in less than a couple of seconds. But when we do that, people think our system is broken, that we didn't do the bill right or we spit out the wrong battery.
David Roberts:
So I lift up the seat, I pull out the battery, and I put it in one of the empty holes in the bank. When I put it in, does the system know it's me somehow? How is it tied to my account?
Horace Luke:
We wanted to make that user experience as seamless as possible. One of the things that we absolutely needed to do is to make it so much better than gasoline from a user experience perspective, so that people would want to switch over.
So no credit card, no phone, nothing needed. You put your battery in, and because our battery has NFC on it, it carries your credentials – who you are, how many kilometers you’ve ridden. You put your battery in and it calculates whether you paid your bill, how much is needed for this time, how you rode and how much energy you used, then picks the right battery and spits a new one out for you that is fully charged.
That battery is then programmed for you. So if I stole your battery from your vehicle and I put it in my vehicle, it won't work. The security system is tied to you. Essentially, you can feel confident having these expensive batteries in your vehicle; it won't be stolen because it just simply doesn't work. A stolen good is no good if you can’t resell or reuse it.
David Roberts:
You're cutting out theft at a stroke there.
Horace Luke:
You're cutting out theft on the battery; you’re also cutting out theft on vehicles. If I go to your desk and steal your key and ride your vehicle away, you just call our customer center and say, “Somebody stole my bike, can you put an alert on your network?” We put an alert on the network, so when the guy that stole your bike puts a battery in to swap, that battery is locked. Your vehicle handle lock is locked, so all you can do is push the vehicle in circles. And we know exactly where it is, so we can send a guy out to pick up the bike. There literally has been no theft on our network, because you can't steal it. Even if you steal it and you don't swap, you're talking about a circumference of no more than 60 miles.
When a consumer takes a loan out from the bank, the bank gives a low rate because the system can be locked. If the guy doesn't pay his bill, we know exactly how to lock the battery or slow down the vehicle. If you don't pay your bill on time, we don't lock your vehicle right away; we make it go really slow first, so you can go to the bank.
There are a lot of interesting bits that we've been able to do with the system, and it's just a bunch of us sitting around the table adding feature upon feature. Think of it as a smartphone, except with wheels on it, that’s electric.
David Roberts:
These batteries you make are modular, so you could theoretically have a vehicle that requires two or three or four or more. You can imagine a lot of different vehicle form factors. What are the varieties that are out there now using your batteries?
Horace Luke:
We're working with Yadea in China to ship low-cost e-bikes that use a single battery, but the speed is not great. It’s like 17-18 miles per hour top speed; that's a regulation in China. That battery can go pretty much forever, a really long distance.
In Taiwan we have one that is about 50cc, a single battery. But the most popular vehicle in Taiwan, or across Asia, is 100-125cc, and that requires two batteries. We also have three-wheelers that we ship now with two vehicle makers; one is more just a quick last-mile delivery vehicle – think of it as Pizza Hut or Domino’s – and that's a three-wheeler with two batteries. We also have a vehicle maker that’s building a wet market big utility three-wheeler that uses four batteries.
We recently announced the world's first solid-state battery prototype for swappable batteries. That added about 40 percent energy density into our battery pack. As energy density increases, form factor variety can increase. To swap batteries on a four-wheeler today, you might have to swap out eight of them, and that’s kind of exhausting.
David Roberts:
I imagine once you get up to four you're spending a lot of time swapping.
Horace Luke:
Anything more than a six-pack is a little troubling. As energy density gets up to, let’s say, 3 kilowatt hours, now we're talking about ability to create a variety of different form factors.
Our system is also interoperable, so our battery can be placed into a Yamaha vehicle, and the one that's shipped with the Yamaha can be placed into the Gogoro vehicle and the Suzuki Taiwan vehicle.
We've had three generations of batteries, three generations of stations, refining, working out all that needs to work out in the system. But the very first vehicle can use the latest battery, and vice versa – the very latest vehicle, that literally just shipped yesterday, can use the very first battery. And we've now manufactured 1 million batteries, so it's really a scale in numbers. As we get more and more vehicles and batteries out in the network, the more efficient it gets.
If you go on our website, you'll see our vehicles are fun, colorful, and very eye-catching. The reason why we made them eye-catching is because, unlike a smartphone that you put in your pocket, every vehicle in the intersection is an advertisement. We wanted people to realize “hey, that guy's using something new, that guy is adopting electric, that's pretty cool.” We wanted to build that momentum as we built up the population of vehicles on the ground.
David Roberts:
You've recently had a few experiments using the batteries in other urban things that need low, constant power, like parking meters. Is that a big direction you want to go, or just a side benefit at this point?
Horace Luke:
Again going back to the word “sustainability,” it’s about taking whatever you need out of the earth. It's not about wearing nothing, eating nothing, sitting there with nothing. It's about the world becoming modernized, safer, smarter, and more efficient, attracting people coming into the cities of tomorrow.
Our batteries are great for their first life, which is you and me grabbing onto each other and zipping a bike up a mountain, going out for a ride. At some point in the future, the battery can no longer propel such a heavy vehicle with the energy demand that a vehicle needs. Instead of retiring those batteries and recycling them, we find a second use for them.
David Roberts:
In cars I know that's once you degrade it down to about 80 percent of original capacity. Is that roughly the same for two-wheelers?
Horace Luke:
Roughly the same. The energy demand of the battery on a two-wheeler is actually much higher than that of a four-wheeler. It's just the sheer amount of energy you have in your car. Your vehicle is probably 70-80 kilowatt hours; we have literally 3.4 kilowatt hours to propel you and your friends up a hill. It’s called a C-rate; the discharge rate coming out of a little battery is much higher. The draw on the battery is much more demanding.
Now, that said, once it retires at 80 percent, what are we going to do with these batteries to extend the life instead of recycling them? One of the things it’s great for is portable swappable power. You mentioned the smart parking pole. We're doing a couple thousand smart parking poles in Taiwan this year as a pilot. Just like we piloted our battery swapping system for scooters back in 2015, we're piloting a swappable battery system for smart poles.
A city like Taipei is not very orderly. In order to create parking poles, to get organized, it's not like you just paint on the ground and say “you park here.” You have to try and find ways to penalize and also charge people money for it. So we are putting our batteries into the smart parking pole that does not require you to dig up the ground and draw power from the ground; you just use the battery and we swap it out every 27 days or so. In a matter of hours, a non-monitored street can become a smart street.
As we think about all these batteries, there is going to be a lot of opportunity to not only turn smart devices to be powered on in cities, but also, as we most recently announced, a power backup. In a place like Taipei or other cities across India and in Southeast Asia, rolling blackouts are common, and the most dangerous part about rolling blackouts is an intersection. We're working to develop a system where we use our battery to back up the streetlights for three hours. Again, swappable power – coming up to three hours, we go and swap those batteries out so it continues to operate the intersection safely.
Everything from crosswalks to red, yellow, green lights, we're able to help cities become smarter and safer. Those are the extended uses that can continue the lifespan of that battery for another half a decade to a decade, easy.
David Roberts:
So you can use them all the way up before you recycle them.
Horace Luke:
To give you a philosophy of how we think, the other day we were sitting around a table going “okay, now we got second life figured out – what's third life? What do we do with it before recycling?” Wouldn't it be great to power education in places like the slums of Mumbai, where the family is not able to access energy for cooking and it results in wood stove burning or garbage burning in order to cook? Imagine these batteries are now fully exhausted when it comes to depreciation, when it comes to the cost of these batteries. If we can do that before we recycle, that would just light me up. That's something that we want to do to further humanity.
David Roberts:
One of the really interesting aspects of this network to me is that you're not primarily putting the computing power and intelligence and tracking in the scooters; you're putting them in the batteries. The batteries are the smart part of this. With batteries going in and out of all these different scooters and banks, you're gathering an immense amount of information. What is the intelligence making the batteries smart? What does that allow you to learn about what your customers are doing, and what does it allow you to offer in terms of features?
Horace Luke:
Think of the battery as really a smartphone. It can collect as well as it can dispatch.
You're absolutely right, there's an immense amount of effort that we pay attention to when it comes to machine learning and AI and control systems on the backend side. When we want to upgrade a swapping station, we literally do a FOTA (firmware-over-the-air update) to all our stations, and from there we can update the battery; the battery can carry a package and update the vehicle.
With consumer consent, we can add features. A couple of months ago we rolled out “rain mode” for our consumers. By looking at the weather report in the area that you happen to be at with your phone, it will say “hey, it looks like it's raining outside, do you want to turn your vehicle on with rain mode today instead of the regular high-power mode?”
David Roberts:
Rain mode is just a little slower and safer?
Horace Luke:
It’s basically less torque, less jerk when it comes to the rear wheel so you don't slip when you accelerate. That feature wasn't available on the first day, but over time, we continue to add features to the vehicle. All consumers have to do is say “I want it” and all of a sudden the vehicle is updated with the battery pack.
David Roberts:
Those come with a subscription price? You get those updates as long as you're a subscriber?
Horace Luke:
We try to get the consumer as many updates as possible. It puts a smile on their face.
That vehicle will sing “Happy Birthday” to you on your birthday. If I bought a vehicle secondhand from you, David, the second I registered, my server knows that I now own the vehicle and my birthday is in May instead of your birthday, and it’ll sing “Happy Birthday” to me on the right day. Little delights that you put in there because it’s a connected system.
The vehicle data is also collected by the battery and in turn, taken back to the swap station and fed back to the cloud. We know how you use the vehicle, how much you deplete the battery, how often you swap. Those are all data that we use to make your experience better so that you can predict when you're going to go to the next station, how much energy you're going to bring back, and what's most likely your preference of battery – do you care about durability, or do you care about high performance and thrust?
On top of that, recently we launched our usage-based insurance. The first step is through mileage, but eventually what we want to work toward is, if you are a safe rider – you turn on your blinkers all the time before you make a turn, you don't hard brake on your vehicle – we would like to know that data so that we can collect it and give it to the insurance company on your behalf so you can save on your insurance premium. Those are things that a connected system can do that other people cannot.
David Roberts:
This seems like an immense amount of data exposure. Can customers opt out entirely? How do you safeguard privacy?
Horace Luke:
Absolutely. We don’t take your GPS location of where you park your vehicle unless you grant us access to it. We all came from working on smartphones, so you can only imagine the scrutiny that my team and I are well aware of and practice every day. We only do it with the consumer’s consent. Everything from subscribing to the battery to letting us know where you swap or letting us know where you park is with user permission.
David Roberts:
Is this the kind of thing, though, that's buried somewhere in a long agreement that I just click “yes” to in the process of subscribing? Or is there something more granular and in your face?
Horace Luke:
Take a look at the insurance one. Without you granting us permission to work with the insurance company specifically on that feature, we do not do it. We do not take your data and share it anywhere else.
That said, though, we do look at whether or not your vehicle tipped. For example, if your vehicle crashed or you dropped it on the left side, our gyro sensor inside the vehicle registers. That's not for the insurance company, but for our workshop. By the time it can come in and the guy takes your wireless key – or our latest vehicle uses an NFC card so you don't even need a user key – we swipe the NFC card, your log comes up in the service center and sees that you tipped your vehicle on the left side and the mechanic needs to pay more attention to the left side of the vehicle to make sure that the brake lever has not been bent, make sure that everything is in tip-top shape on the left side of the vehicle. It's for customer safety, but within a confined use. Not really related to privacy, but related to safety and servicing.
David Roberts:
We've become familiar in the tech space with platforms, networks, and the way that the first mover company can get these network effects that make it very difficult for competitors to come in. Facebook is the classic example of this. If I'm imagining all these different vehicles from all these different brands, but everyone's using your batteries connected to your central banks and with your information, that looks a little bit like a monopoly. How do you not abuse that power? Is it possible for other networks to come in and compete?
Horace Luke:
Oh, absolutely. You ask a really good question. The first thing we need to do is make sure that we practice with fairness and with the consumer’s interest first and foremost. To be honest with you, the company today is EBITA positive, but at the same time, we are still losing money to build out the technology and build out the investment it needs for the network. We're 95 percent market share because of how fast we've built it out and how much we've built out in Taiwan alone.
That said, though, we have to make sure that the consumer always has a pricing grandfather ability. When you buy a vehicle, if you don't change your plan, your cost of owning that vehicle remains the same until the end of that vehicle's life. We maintain that to make sure that the consumer feels like they're not being strung along in any sense. That's the first thing that we need to make sure we do.
David Roberts:
You don't raise subscription rates on individual consumers in the middle of their subscription.
Horace Luke:
Exactly. We raise it, however, because our cost does go up – electricity costs go up, or recently with electronics components, everybody's well aware of the inflation that's happening globally. Prices do go up on components and costs of us running the network, so we grandfather the existing customer, but we raise it for new customers instead. As a consumer comes in, they can feel confident that what they signed up for is what they get. That's really important.
David Roberts:
That is great that you do that. But if you have 95 percent market share, maybe someday you retire and a less benevolent CEO takes over – what would stop them from changing that policy, once you've got everybody locked into the network? That’s the whole problem with a monopoly.
Horace Luke:
Will I retire one day? Probably in the distant future.
We enable a plan on our network called the Flex Plan. When you're looking on your phone for a charge station, we have an app that shows you all the stations and, more importantly, shows you which stations are stressed and which stations have extra energy that is ready to be distributed, and for that we’ll give you a discount. We will continue to invest in things that allow the consumer to have flexibility, to in some way game the system so that they can get it even cheaper if they want.
Our company is about 2,000 people at the moment, about 100-200 in the management team and the back office, and the engineers make up about another 400 or so. The culture is so strong. We have a slogan that says “do good, do well, and have fun doing.”
So “do good” is the first thing we need to do. Not just about sustainability, but we need to do good as far as building something that's fair, something that's great for the consumer to have. Brand credibility is all we’ve got. The second that people say “hey, you know what, this guy has me strong-armed,” the escape cost of getting out of that vehicle is only a couple hundred bucks. It's the residual value on the vehicle. So it's not hard for a consumer to get out.
David Roberts:
I could get out of your network, but are there competing networks? Are there other companies even trying to do this? Is there another swappable two-wheeler battery that I could go to if I for whatever reason wanted to leave Gogoro?
Horace Luke:
In Taiwan there is another company, created by the largest gas vehicle maker in Taiwan, that has built up their network. They continue to do promotions to attract consumers to go over to their side, to the point where they were offering free rides. Literally you can swap batteries for free. You just buy the vehicle and only have to pay a dollar for subscription.
You mentioned network effect; network effect is both from a business perspective and also from a convenience and user experience perspective. We have so many batteries in so many stations on the ground today that although the other guys are cheaper and more aggressive when it comes to throwing dollars at it, at the end of the day, it's not just about how much you're charging the consumer; it’s about the value the consumer gets.
That's an important part that people need to understand – we're not competing dollar for dollar. Giving something away only lasts so long, but we have to create a user experience that is so unique, that is so much a game changer when it comes to owning a mobility solution that you can say, “I want that.” “Want” doesn’t mean it's a dollar amount; “want” is something that is more emotional. It’s heartstrings that we are plucking in Taiwan, and it’s definitely worked very well so far.
In addition to that, we also created probably one of the most efficient ridesharing networks, called GoShare, on our system. So our platform not only allows for that user experience when you own the vehicle, but we have about 6,000 vehicles rolling around Taiwan today that allow the consumers to use an app, kind of like Bird and Lime, short term rental. But the difference is there is no range anxiety, because we have so many swapping stations in the network that the consumer just picks up a vehicle and at the beginning of the ride or mid-ride, they can swap out a battery. We've had people take a vehicle for two days and ride around the island of Taiwan.
More than 70 percent of refueling on our ridesharing network is swapped by the consumer. Think of it as a hotel room that cleans itself. The maintenance cost is really low, the OPEX cost is really low, and it allows the consumer the identical user experience as the vehicle they own. Maybe this time they're hanging out with friends to go drinking, so they don't want to ride their own vehicle; they ride one of our GoShares to the bar, and on the way back ride a taxi or hail an Uber instead. It allows for a lot of flexibility when it comes to what we call a platform to enable a number of solutions on the market.
David Roberts:
So ridesharing is built into the whole model, in addition to ownership.
Horace Luke:
Exactly. We have an overlap of consumers. People that buy our vehicles love riding a Gogoro, love swapping batteries as a means of refueling, and then they just sign up to GoShare and off they go. Same user experience, same type of vehicle, except sometimes you ride your own, sometimes you rideshare when there's one on the street next to you.
David Roberts:
An EV fleet is an enormous amount of distributed energy storage, and in the US there’s a lot of talk about trying to hook those batteries up to the grid such that they could, in addition to serving their primary purpose, also be relied on for grid stability – store excess energy in them when you need to, take energy from them when you have a shortage.
It occurs to me that these battery banks that you have all over Taiwan are all themselves big batteries, so you are building yourself a giant distributed storage network. Are you talking to grid operators, trying to hook those things up to the grid such that they could serve this ancillary purpose of grid stability? It seems like it would be incredibly useful for the grid, in theory.
Horace Luke:
That's something that we've been working on and prototyping with a grid provider here in Taiwan. The stations that you see on our website are bidirectional ready. Today in our network we have close to about 200 megawatt hours of batteries on the grid at any time.
Whatever EV you’re talking about – a Tesla, a Porsche, a Bolt – it’s a battery that is not owned by the provider and doesn't come home often. It's the consumer's choice. The difference is, we actually have that battery back on the rack every couple of days. At any time we have close to about 200 megawatt hours of batteries literally on the rack.
We're working on things like being bidirectional, so when the grid needs it, we can push that energy back to the provider, _____ charging of energy. We’re also working with Enel X, the world's largest virtual power plant provider, to do demand response. So the grid performance is at about 65 Hertz; all of a sudden, we see a surge coming, people need to stop. Whoever can stop gets paid, and our stations can instantaneously swap the stop, all of them. We're able to then participate in that model.
Extra revenue from that today is not very meaningful; we're still developing the technology. But one day it could be. As we become the de facto standard and massively deploy the batteries that we're talking about, that revenue stream can become very meaningful.
David Roberts:
With EVs, like you say, with every consumer owning their own battery, the big challenge to vehicle-to-grid coordination is the coordination itself, those soft costs of trying to network everyone together and coordinate and talk with everyone about what they're willing to do. But you have that problem solved out of the box – all your batteries are already connected, you're already in communication with all of them, so it's primed and ready to hook up to the grid.
Horace Luke:
Also, for example, about a month and a half ago Taiwan had a huge blackout; 40 percent of all households experienced a power outage. During that time, most of our stations, except the very early ones, can back up energy anywhere from 48 to 64 hours. Even if there's no power, it can still swap out a battery.
Battery-to-battery charging is something that we're working on, so that eventually somebody can say “hey, you don't have extra energy, I'm going to put it back on the station so that somebody else gets to have enough energy to go pick up their kids and go home.”
I always say to my team that energy is at the center of all human innovation. The fact that you and I are talking to each other on a podcast, the fact that we get to record it, the fact that I have earbuds on, it all has to do with energy. If we think of what Gogoro is making as portable, distributed, connected, smart energy units, and mobility being just one part of it, and smart cities being another, the limit is on the imagination on what we can do with it.
It sounds weird, but everything you mentioned, I'm working on. It really is just a matter of focus and getting it done. Stations that have batteries can do demand response to the grid, can do battery-to-battery charging that can take two half-charged batteries and provide one fully charged one. We can also have stations and ___ charging that energy back to the grid.
In Taiwan today, ___ charging doesn't make a lot of money, but if you ever deploy in Brazil, ___charging can be as much as 30:1. I can buy energy at $1 and at the right time sell it back up to $30 for a kilowatt hour. There's a huge amount of opportunity for us to do good and provide a modern, safe, connected energy system that powers mobility; at the same time, the business needs to be sustainable. If we can create a sustainable business that actually does sustainability, everything then makes sense.
Too many times I find companies that are trying to do greenwashing or riding on the sustainability trend, but when you look at the mathematics, it just doesn't work. Unit economics on a business, it has to fundamentally work, and if you look at what Gogoro is today, every individual that comes on the network is contribution margin positive on our battery swapping network.
David Roberts:
Also, every increment of cost decline you get in batteries, you're not just doing the things batteries were doing more cheaply, you are opening up new applications, new ways to use them. I've been waiting a long time for both solar generation and energy storage to get so small and modular and cheap and ubiquitous that they're infused throughout the city. Then, like you said, you could let your imagination run. What can you do with a city that has energy storage infused throughout?
Horace Luke:
That's exactly what we're working on. Having these stations placed almost at a frequency of ATM stations across town, and being able to have these energy stores accessible literally within seconds by the consumer, makes turning over to smart, connected electric a lot easier than if you are demanding somebody to charge and have to sit out there in the rain and wait for it.
I own an electric vehicle, too, a four-wheeler, as well as several Gogoros. Charging and sitting inside a car is easy because you can plug it in and you can do email, you can listen to music, I even watch a movie sometimes. But that luxury or that privilege cannot be had with the masses.
I still remember, when I was growing up, I had a poster of the Lamborghini Countach, my dream car. Today, what the next generation has on the wall is the Tesla Roadster or the Porsche Taycan. How many people can actually own a Lamborghini Countach? Not many. And how many people in emerging countries can own the Tesla Roadster or the Porsche Taycan? Again, probably, not very many. But definitely the trend of electric is here to stay.
As you think about us pivoting to this decade or two decades of electric mobility and sustainability, these young folks now in their teens are going to grow up to be the decisionmakers of tomorrow. If they can access these vehicles that are even cooler than a plug-in charging two-wheeler, a four-wheeler, wouldn't that be cool? That is the market that we're going after, a market that has half a billion installed in Asia, getting ready to pivot to electric.
In Taiwan, for example, where there are 14 million vehicles on the road, government a couple of weeks ago made an announcement that by 2040, no gasoline vehicles can be sold, so that by 2050, all vehicles on the road will be electric. And there are milestones to that: in 2030, 35 percent; 2035, 70 percent; 2040, 100 percent of what’s sold has to be electric.
David Roberts:
Speaking of the future, you recently announced a prototype solid-state battery, which is much more energy dense; you can fit a lot more energy into your battery. Everything we've been talking about that you could do with this distributed energy storage would be ramped up and accelerated if you got a 30-50 percent bump in your energy density. How close is that to reality?
Horace Luke:
When it comes to solid-state batteries, you see ideas coming out of a lab, or startups creating a membrane of film that allows solid state to happen in a small package. We’re the first in the world to package it into a battery pack that actually is functional.
David Roberts:
It looks and is shaped like your other batteries.
Horace Luke:
Identical, but with energy density that we're targeting in several years to be 40 percent higher. We're commercializing probably in the later half of this decade.
Is it feasible? That's the next question – can we get to a system where you see a shift to complete solid state? I think it's going to take time, just like hard drives and solid-state drives. In the middle, you’ll probably see some sort of hybrid system – guys that are using solid state but for very premium cases, and then hard drives continuing to have the density that rotational batteries have.
We are definitely staying ahead. As a company, we always look at new technology and always look at the application of such new technology to make sure that we're looking out for the best interests of the consumer. Because if you can provide that for the consumer at an earlier time, that will only translate to a happy consumer, and that translates to a happy Gogoro.
To give you a short answer, you’ll see some momentum in the solid-state battery space in the second half of this decade, but is it fully feasible and commercializable in the masses? I think it's going to be a tad longer than that, just because of how much capacity is built up in lithium ion. Our suppliers – LG, SDI, Panasonic – have built up a tremendous amount of capacity in the US, Europe, and in Asia. It takes time for that capacity to ramp down, and the cost economics are going to get better and better because of the amount of capacity they are.
David Roberts:
You require a certain amount of urban density for the network to work. Where are you now? Where are you going? And is there a single city in the US that is dense enough that you think you could pull this off here?
Horace Luke:
A lot of my friends are from the US. I grew up in the US, the early part of my career was in the US. Lots of people raise their hand and say “I want this in my city.”
One of the most essential things that we have to do as a company is to focus on the biggest challenge and opportunity ahead; with every challenge comes a great opportunity. We're now, in China, the world's largest two-wheel market with the number one electric vehicle maker Yadea and partnering with the number one gasoline vehicle maker in China, ____. We’re also working on the second largest market in India, looking to deploy end of this year or early next year. We're also working with Indonesia.
David Roberts:
At this moment, how many cities are you operating in?
Horace Luke:
All the cities in Taiwan. We're in China, in Hangzhou, Wuxi, Kunming, and several more to come very soon. We are in Seoul, Korea, mainly for food delivery. We're in Japan, with tourism rentals of two-wheelers. We are also in Germany with a ridesharing service, providing our vehicle and swapping solution. We have a pilot in Jakarta with GoTo and Gojek; GoTo has about 2 million riders on a network that's looking to turn electric through battery swapping probably by the end of this decade.
So a lot of conversation, a lot of pilots, and a lot of expansion. We just listed on the NASDAQ under the ticker GGR. The reason we got listed on the NASDAQ is to get ready for expansion. We needed the capital, we needed the transparency, we needed to grow the team. Going on the NASDAQ and getting to be a publicly traded company enables us to now go very fast into those regions.
We dabble in energy storage; we are wholly focused on battery swapping for mobility; we've got portable energy for smart cities solutions, and smart parking poles, and safety. We've got ride sharing, we’ve got rental, we’ve got food delivery. So Gogoro goes back to the thesis that energy is at the center of all human innovation. We can take what we're doing and enable different businesses to enable what they care about to become real now, because of our platform.
David Roberts:
I didn't hear any US cities on your list.
Horace Luke:
We're working on it. I would not say never. We’ve looked at places like Austin, Seattle (where traffic is terrible), San Francisco. We continue to see them, but it's a question of resources. We're 2,000 people, we're about to attack three of the largest markets in the world with several of the largest partners, and focus is really important for us.
David Roberts:
Thank you for coming on and taking all this time. It's fascinating. The whole world of two-wheelers is something I don't have a lot of occasion to think about.
Horace Luke:
If you ever come to the east side of the hemisphere, you'll see that most people travel on two wheels. In India, 80 percent of all commute miles done every day are done on two-wheelers, and 60 percent of all gasoline that is spent every year is on two-wheelers. That's how big the market is, but most people don't realize that in the West.
We live on one blue ball, right? If Europe becomes better, if the US becomes better, Canada is good, but what about everything else? If everything else is not good, then that would eventually creep over to the West, and that is a problem that a lot of us moved to the East to solve. That's something that we're adamant about – we have to make the planet a better planet so that our next generation can have one.
We are now at this critical point where innovators and business leaders have to put their resources and their time on sustainability, not just because it makes good business sense, but it’s essential for humanity. That's something that we as a team are so passionate about.
David Roberts:
Thanks so much and good luck with all your expansions.
Horace Luke:
Thank you, David.
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