An electric vehicle leasing startup based in Hayward has shut down due to what its founder described as "bad timing" amid volatile market conditions.
CEO Andrew Krulewitz co-founded Zevvy, legally known as Flux EV Inc., in 2021 along with Alex Shulman, Miranda Spradlin and James Greff.
Its business model was leasing electric vehicles to consumers with a option for them to eventually buy the car, if desired. And its target customers were gig workers who might otherwise sign more expensive monthly lease terms at car rental marketplaces offered though Uber and Lyft.
The company was also one of Bay Area Inno's Startups to Watch in 2023.
"Good ideas don’t always make for good startups," Krulewitz wrote in a LinkedIn post on Sunday.
It was a perfect storm of bad timing, Krulewitz went on to explain in a nearly-3,000-word post.
Rising interest rates, slowing growth of electric vehicle sales and "plunging" resale values all contributed to the decision to wind down Zevvy, Krulewitz wrote.
Zevvy was "a great idea that we all agree makes sense and is needed now more than ever with slowing ... EV growth, but perhaps impossible to achieve without a massive, bankable operating platform as a foundation," Krulewitz wrote.
He also confirmed to Bay Area Inno that Zevvy stopped all leasing operations at the end of 2023 and officially shut down in early 2024.
Business filings in California also show that the company closed down at the beginning of January.
Zevvy operated with two divisions: a corporate parent company that acted as a guarantor and a leasing entity which managed an inventory of cars.
Most of Zevvy's remaining customers were able to buy their cars or continue leasing, but Zevvy's vehicle assets were liquidated in a sale and the company's other assets were "assigned for the benefit of a senior secured creditor," Krulewitz told me via LinkedIn.
The startup had raised $2.4 million in equity funding and $3 million in debt.
Its investors included BoxGroup, MaC Venture Capital, Mission One Capital, MobilityFund, Alumni Ventures, Climate Capital, I2BF Global Ventures, Natural Bridge Ventures and Pareto Holdings, according to PitchBook.
Not being able to raise more capital during a prolonged venture-capital pullback likely also contributed to Zevvy's problems.
"Unfortunately for me, faster-talking, multitime founders were able to raise more money more quickly, hoovering up capital and talent that might’ve been directed towards us," Krulewitz wrote.
By contrast, a Bay Area car rental startup called Kyte has raised around $100 million in equity funding since 2018. Kyte also secured a $200 million line of credit in 2022, which it refinanced and increased to $250 million, the company announced in March.
In January, car rental giant Hertz said it would sell off thousands of electric vehicles from its fleet due to higher costs versus gas-powered cars, Reuters reported.
