A mileage purchase agreement, or "MPA" is a financial agreement to make electric vehicles (EVs) more affordable. It reduces the up front cost of an EV and charges a fee per mile of use.
The cost of operating an EV is lower than for a fossil-fuel car or truck. The up front cost, however, is higher. The total cost of owning an EV over its lifetime is now lower than for a fossil-fuel vehicle. The MPA makes it possible to make the up front cost the same or lower for an EV, while the ongoing costs look more like those of a fossil-fuel vehicle.
If you drive over 20,000 miles a year you are a good candidate. With current economics, MPAs only make sense for drivers who put a lot of miles on their cars or trucks. Unlike traditional auto leases, the economics get better with larger number of miles per year.
It is a new concept, so stay up to date as new providers come online. Join our mailing list to hear when the MPAs are available. Companies are developing them for consumers, fleets, governments, rideshare drivers, carsharing owners and for markets around the world.
Sunil Paul, the well-known Silicon Valley entrepreneur and investor, first published on the idea in the fall of 2019. He held a contest, the Spring Free EV Contest, which drew over 20 teams from around the world.
There have been earlier attempts to deploy MPAs, notably by Michael Brylawski of Evercar, however, it did not scale past the initial deployment in Indiana.
Several trends have come together to make now the time for MPAs to grow rapidly. First, there are a large number of EVs being produced that have the range and features desired by consumers and businesses. Second, the rapid decline in battery prices has made EVs more affordable. Third, range anxiety is being reduced through larger battery packs, consumer education, and better charging infrastructure. Finally, governments around the world now recognize the role of EVs in solving the climate crisis and local pollution and have created policies to support rapid growth.
MPAs are inspired by the success of solar power purchase agreements (PPAs), leases, and loans. Solar exploded in growth when these financial innovations coupled with the declines in the cost of hardware and government incentives. When the state of Colorado, for example, enabled solar PPAs, they took 75% of the residential solar market in two years [source].
The auto finance world is different from solar. It has a massive entrenched ecosystem of loans and leases. It is also much much larger. World wide auto revenue was around $3 Trillion in 2017 [source]. Meanwhile, the solar market was $52 Billion in 2018 [source] a difference of almost 60x.
We believe the MPA can unlock massive growth in EVs, even beyond the current projection of 25 million EV and plug-in hybrid sales in 2030 [source]
Someday EVs will be free compared to fossil-fuel cars, because of the MPA concept. It could happen as soon as this year for high mileage drivers. Over time, as the business models refine and battery prices decline, it will be true for most cars.
Click the "Join" button at the top of the page and get on the mailing list. Or drop us an email here
Copyright © 2019 Spring Ventures SF LLC - All Rights Reserved.