(Bloomberg) — Arc, a startup with a deep bench of former SpaceX employees, is entering the fledgling market for electric boats with a $300,000, 475-horsepower pleasure craft.
The Los Angeles-based company plans to have its first model, a sleek speed boat called the Arc One, ready for sale by the end of 2021, after which the company hopes to manufacture limited editions of the craft. Backed by Andreessen Horowitz with participation from Chris Sacca’s Lowercarbon Capital fund, the company has raised $4.25 million in seed funding.
Chief Executive Officer Mitch Lee founded the Arc Boat Co. with his college friend Ryan Cook, who shares a passion for sustainability and nature. Cook and Lee both majored in mechanical engineering at Northwestern University and have been working together since Lee helped recruit Cook to Boeing Co. After Boeing, Cook spent seven years at Elon Musk’s Space Exploration Technologies Corp. where, according to his LinkedIn profile, Cook worked on the first stage of the Falcon 9 rocket. All of Arc’s employees except Lee have a background at SpaceX.
“The amount of carryover between rocket-building and boat-building is actually surprisingly high,” Lee said.
Arc wants to electrify boats “as quickly as possible, because that is good for the world,” Lee said. “I’m solving a problem that I’ve felt myself very dearly, which is that being on a boat is so fun but owning a boat is so painful for so many reasons and it’s awful for the environment.”
The electric boat market remains small, with only some 15,000 vessels sold last year, according to Cambridge-based researcher IDTechEx, but is starting to take off as the technology improves, battery prices fall and consumers increasingly look for more sustainable options. IDTechEx expects the market for electric leisure boats to reach 70,000 shipments per year by the end of the decade and be worth $1.4 billion. Prices will have to come down further, Lee acknowledges, before boats sold by Arc and its peers become more than niche products for wealthy buyers.
Luke Gear, an analyst at IDTechEx, says because policymakers haven’t made the electrification of boats a priority, the nascent market will lag behind the auto sector. “We’re really limited to wealthy enthusiasts who want to pay the extra money to go electric for peace of mind because they care about the environment, but there’s no one forcing anyone to do that. So naturally, you’re not going to see that and have the double-digit growth that’s coming from other sectors.”
Arc’s competitive advantage is battery capacity, according to Lee, a key differentiator because boats require a lot more energy than cars to travel the same distance. Arc models will feature batteries with 200 kilowatt-hours of capacity, compared with about 125 kilowatt-hours or less for other electric pleasure boats, Lee said. The batteries will be built in-house and make possible “the highest performance boat in its class by far.”
Lee has partly modeled Arc’s approach on the Tesla Inc. blueprint: enter the market with upscale models, produce them at sufficient volumes to cover research and development costs and then gradually move down market.
Arc has a flotilla of competition already. In 2019, Swedish startup, XShore launched a similarly priced, all-electric boat and introduced it to the U.S. earlier this year. Orlando, Florida-based Nautique Boat Company Inc. sells similarly priced craft. And publicly listed Vision Marine Technologies, (formerly the Canadian Electric Boat Company) sells a range of battery-powered boats and outboard motors.
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