The Mileage Purchase Agreement

Hundred Dollar Bills
The Mileage Purchase Agreement will save people money.

The mileage purchase agreement (MPA) idea is simple: Use the savings of driving an electric vehicle to reduce the up-front cost of buying an electric car.

The five year total cost of owning an EV like a Tesla Model 3 is cheaper than competitors like a Camry or BMW 3 Series. That means EVs are already a no brainer if people bought cars with cost in mind, with perfect rationality, perfect knowledge, and long term thinking. That, of course, never happens. Consumers and even fleet operators are driven by monthly payments and any number of other things like features, color, or whether they like the CEO. The MPA is a way to lower the monthly cost of driving an EV right away without having to do the math.

The economics will just get better over the years. A typical car lasts 16 years, not five, so the savings are even larger than the calculations above. Today’s electric cars should last even longer than today’s fossil-fuel cars. And it should just keep getting better with new battery technology, some of which claim to run one million miles.

One reason the MPA didn’t work in the past is that electric vehicles (EVs) were too expensive. Battery pack prices dropped prices by 90% from 2010 to 2019 due to ramp up in production and learning efficiencies.

Another reason it hasn’t worked yet is no one developed a version of the MPA that fit a burning need in the market. There was no “product-market fit” in startup language.

I ran a contest starting late in 2019 to find product-market fit for the MPA idea. We were successful in getting dozens of teams from around the world engaged. The top prize went to Flux EV, which is now getting ready to offer an MPA to facilitate getting a new EV and an in-home charger installation. Other contestants are also considering fielding an MPA product.

Simultaneous invention is a thing. You know an idea is ripe when many entrepreneurs hit on it around the same time. As a result of the contest, I know of several efforts to create variations of the MPA for different niches in different regions and countries. There may be others I don’t know yet.

If you are thinking of deploying the MPA idea or something similar, please reach out. You can drop me a line via Spring Ventures. I am looking for opportunities to invest in startup companies and creating a new fund to back MPAs as project financing for established companies as well as startups.

PS – If you want to stay up on the latest about the MPA concept, add your name to the Spring Free EV mailing list here or follow me on Twitter or Linkedin.

Photo by Giorgio Trovato on Unsplash