Fredericton-based startup Potential Motors wants to improve the performance of off-road electric vehicles (EVs).
The EV tech firm has secured about $4 million CAD ($3.2 million USD) in convertible debt seed extension funding to further develop its solution, grow its team, and begin showcasing its vehicle control software, which is built for electric side-by-sides.
“There’s just not been a lot of focus on this space, even before electrification.”
Founded in 2018 by Poirier, COO Nick Dowling, and former CTO Isaac Barkhouse, Potential Motors is currently developing artificial intelligence (AI)-powered vehicle control software for electric side-by-side vehicles designed to offer drivers optimal performance through shifting terrain while also simplifying vehicle architecture for manufacturers.
Side-by-sides, which are also known as utility task vehicles (UTVs), are small, recreational off-road vehicles with four-wheel drive that seat one to six people. They are typically gas-powered, big ticket items that can cost as much or more than cars.
In an interview with BetaKit, Potential Motors co-founder and CEO Sam Poirier described the off-road sector as “the most overlooked space in electrification.”
“There’s just not been a lot of focus on this space, even before electrification,” said Poirier. “What’s funny is that the growth has been incredible in the off-road industry, specifically with side-by-sides. There has been a really high consumer demand that’s been growing in the space, yet the investment has really just gone into increasing production of vehicles versus actually innovating on them.”
Potential Motors’ seed extension round closed in November and was led by Montréal-based Brightspark Ventures, with participation from Atlantic Canada’s Build Ventures, the New Brunswick Innovation Foundation (NBIF), and new investor Time Ventures, Salesforce CEO Marc Benioff’s venture fund.
Potential Motors aims to supply EV manufacturers with software and engineering services “for the next generation of electric side-by-sides.” The startup’s goal is to license its software to auto manufacturers for use in these vehicles.
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For the off-road sector, Poirier says the transition to EVs “has to happen in the coming years.”
“The drivetrain is one of the few parts of electric cars that run on older tech,” Brightspark Managing Partner Mark Skapinker told BetaKit. “Potential Motors is developing AI-assisted drivetrains, which means that drivers will indicate intent (e.g. turn on an icy patch) and the AI will determine the best way for each wheel to start, stop, or turn.”
The startup’s latest funding is an extension of its $2.5 million CAD seed round in 2020, which was led by Build Ventures with participation from Brightspark Ventures and the NBIF.
In addition to Poirier and Dowling, Potential Motors’ team includes founding members of Radian6 and Q1 Labs. Skapinker, who is joining Potential Motors’ board as part of the round, said the firm was impressed by the startup’s “passion, knowledge, and ability to execute.” Potential Motors’ latest financing brings the company’s total funding to over $6.6 million CAD.
Amid the broader shift towards electric, connected, and autonomous vehicles, which has been fuelled by a combination of environmental impact-related regulations and technological advancement, Poirier argues that the importance of software has increased.
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“Really, the fundamental shift that’s occurring is that the value of vehicles is moving further away from hardware … and moving more towards software, which is a skillset that many of these [automotive manufacturers] don’t necessarily have today,” said Poirier.
Poirier believes that the rise of electrification, in light of new and looming regulations, presents “a unique opportunity” to take a closer look at off-road vehicles to assess “what they are and what they can be.”
According to the CEO, because the off-road market is less regulated than the on-road market,
“looking at advanced ways to improve this transition to electrification can happen a lot quicker versus waiting for regulations to change to be able to make these adaptations.”
Potential Motors initially focused on converting gas-powered vehicles into cars with electric engines before shifting its business model to focus on software designed to improve the performance of automobiles. Since 2020, Potential Motors has narrowed its focus even further to the off-road sector, and more specifically, side-by-sides.
Brightspark invested in Potential Motors through its Canadian Opportunities Fund. Additionally, the firm created a Special Purpose Vehicle fund designed to enable individual investors to invest alongside Brightspark.
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According to Brightspark Investment Analyst Matthew He, Potential Motors’ market opportunity is “huge.” The startup operates across two markets: the electric recreational UTV market, with its prototype platform, and the electric drivetrain market, which He described to BetaKit as its “long-term market,” with its core technology.
“Their vehicle control software targets a rapidly growing segment, benefitting from tailwinds from the growth in electric vehicles, which is estimated to be worth $567 [billion] by 2025,” said He.
Potential Motors currently has 21 full-time employees, and plans to use its fresh funding to add three or four more team members.
“Over this next year, we’re really going to be starting to begin to come out and showcase the technology we’re developing,” said Poirier.
Feature image courtesy Potential Motors.