WEBVTT - We’re Going to Need a Better Boat 0:00:15.356 --> 0:00:24.116 Pushkin. One of the really striking things about technological progress 0:00:24.676 --> 0:00:28.996 is the way one breakthrough leads to another. For example, 0:00:29.596 --> 0:00:34.316 mass adoption of laptops led people to create better, cheaper batteries. 0:00:34.996 --> 0:00:38.356 Those better cheaper batteries made it possible to build affordable 0:00:38.436 --> 0:00:42.916 electric vehicles, and then the proliferation of electric vehicles led 0:00:42.916 --> 0:00:46.756 people to create even better, even cheaper batteries, and those 0:00:46.836 --> 0:00:51.076 better cheaper batteries are now leading to everything from grid 0:00:51.116 --> 0:00:56.316 scale energy storage to flying cars. Of course, those advances 0:00:56.436 --> 0:00:59.196 they don't just happen. People have to look at the 0:00:59.196 --> 0:01:01.876 world and think I'm going to start with what exists 0:01:01.916 --> 0:01:06.076 now and build something new. One of those people is 0:01:06.276 --> 0:01:07.236 Mitch Lee. 0:01:07.796 --> 0:01:11.596 That very first time I've one in at Tesla, my 0:01:11.756 --> 0:01:14.956 mind jumped forward two steps to this should exist for boats. 0:01:15.676 --> 0:01:21.796 It makes even more sense in marine applications because gas 0:01:21.796 --> 0:01:26.156 boats have all these acute problems with them. They're loud, 0:01:26.196 --> 0:01:29.836 they've got noxious fumes on them, they're pain to maintain, 0:01:30.516 --> 0:01:33.276 they're super unreliable, they're expensive to operate, and when you 0:01:33.316 --> 0:01:42.036 go electric you end up addressing those acute pain points. 0:01:44.596 --> 0:01:46.916 I'm Jackie Wolstein, and this is what's your problem? The 0:01:46.956 --> 0:01:48.996 show where I talk to people who are trying to 0:01:49.036 --> 0:01:53.436 make technological progress. My guest today is Mitch Lee. He's 0:01:53.476 --> 0:01:57.076 the co founder and CEO of ARC Boats. He grew 0:01:57.156 --> 0:02:00.676 up boating with his family in northern California, eventually became 0:02:00.716 --> 0:02:04.116 a software engineer, and he founded ARC in twenty twenty one. 0:02:04.916 --> 0:02:08.116 Mitch's problem is this, how do you build electric boats 0:02:08.156 --> 0:02:10.236 that are better than gas powered. 0:02:09.916 --> 0:02:11.356 Boats, and how do you. 0:02:11.316 --> 0:02:14.996 Do it at scale and at a competitive price. ARC 0:02:15.116 --> 0:02:18.596 is currently developed being hybrid electric tug boats, and they're 0:02:18.596 --> 0:02:21.916 already selling electric wake boats, boats people can take out 0:02:21.956 --> 0:02:25.236 on lakes or rivers for fun. To start, I asked 0:02:25.236 --> 0:02:27.596 Mitch to tell me the first big problem that he 0:02:27.636 --> 0:02:31.436 and his colleagues had to solve when they started the company. 0:02:31.476 --> 0:02:34.116 The challenge is that boats consume a lot of power. 0:02:34.436 --> 0:02:37.076 Water is a thousand times more dense than air, which 0:02:37.116 --> 0:02:40.436 means that if you want to stain a full day's 0:02:40.436 --> 0:02:44.036 worth of activity out on the water, you need to 0:02:44.116 --> 0:02:47.476 store a lot of energy on board. If you're going 0:02:47.556 --> 0:02:51.036 to go electric, that means really big battery packs. Those 0:02:51.076 --> 0:02:54.516 really big battery packs are the first order problem that 0:02:54.516 --> 0:02:56.476 you need to solve. If we say, hey, we want 0:02:56.556 --> 0:02:59.756 over two hundred kilo hours of battery capacity? Who can 0:02:59.756 --> 0:03:02.396 give it to us? We can't go to Amazon and 0:03:02.836 --> 0:03:05.676 just like buy one. So part of it is as 0:03:05.716 --> 0:03:06.636 it exist. 0:03:06.356 --> 0:03:08.836 And you can't go to like shen Zhen, like there's 0:03:08.876 --> 0:03:12.116 not somebody who sells battery packs to everybody somewhere. 0:03:12.236 --> 0:03:15.676 No, and okay, because they tend to be very specific 0:03:15.756 --> 0:03:18.236 to the use case, the geometry that you want, and 0:03:18.236 --> 0:03:20.916 there are people that are trying to do this. But 0:03:21.316 --> 0:03:23.796 then the problem shifts to okay, well now they're cost 0:03:23.916 --> 0:03:27.156 prohibitive and you almost have to bring them in house 0:03:27.516 --> 0:03:30.116 to get the cost down low enough to be able 0:03:30.156 --> 0:03:32.556 to make your product competitive. What we do is we 0:03:32.596 --> 0:03:35.956 go to automotive suppliers, people that are operated insane scale 0:03:36.356 --> 0:03:39.716 and have incredible quality standards because automotive operates at a 0:03:39.796 --> 0:03:44.396 much higher quality standard than marine, So we get to 0:03:44.476 --> 0:03:47.476 take advantage of all of those and then bring them 0:03:47.916 --> 0:03:48.996 into the marine industry. 0:03:49.516 --> 0:03:54.036 What are the particular challenges of building a battery pack 0:03:54.116 --> 0:03:57.196 for the water One is just its size. 0:03:58.036 --> 0:04:03.116 The arc sport are wakesport both today is two hundred 0:04:03.116 --> 0:04:07.276 and twenty six kilo hours battery pack. That's three or 0:04:07.316 --> 0:04:10.596 four times the size of an Alle Sedan's battery pack. 0:04:11.116 --> 0:04:13.596 That's kind of a sense of scale. So we're a 0:04:13.596 --> 0:04:16.836 little bit constrained on mass, We're not that constrained on volume. 0:04:17.116 --> 0:04:20.156 We're very constrained on price. If you go try to 0:04:20.156 --> 0:04:22.116 build a two hundred and twenty six kilo one hour 0:04:22.156 --> 0:04:26.036 battery pack, that can get very expensive very quickly if 0:04:26.116 --> 0:04:31.756 you are not driving really good economics behind the battery pack. Huh. 0:04:31.876 --> 0:04:35.356 So it's not a technological problem, but it's a technoeconomic 0:04:35.476 --> 0:04:37.396 problem really that you're setting out to solve. 0:04:37.756 --> 0:04:40.796 Now, the mass does come in in the sense that 0:04:41.596 --> 0:04:45.516 it's not necessarily that your mass constrained. But you now 0:04:45.596 --> 0:04:47.996 have thousands of pounds of battery pack that you need 0:04:48.036 --> 0:04:51.156 to place onto a boat. And where you place that, 0:04:51.276 --> 0:04:53.396 how you integrate it, how you offset the weight of that, 0:04:53.436 --> 0:04:56.276 how you support the weight of that. That all starts 0:04:56.276 --> 0:04:58.636 to become these second order problems that you need to solve. 0:04:58.676 --> 0:05:02.356 So Step one, build really big battery pack. It's heavy, 0:05:02.596 --> 0:05:06.436 it's expensive. Now Step two is go build the boat 0:05:06.476 --> 0:05:11.116 around that and have it compensate for the weight, for 0:05:11.276 --> 0:05:15.396 the price, for the volume of it in a way 0:05:15.476 --> 0:05:20.316 that isn't just not compromising on the experience, but is 0:05:20.316 --> 0:05:24.476 actually making the experience better. Same way automotive comes along. 0:05:24.516 --> 0:05:27.396 They build the car around the battery pack and suddenly 0:05:27.436 --> 0:05:29.876 you have a fronk and a low center of gravity 0:05:30.116 --> 0:05:31.756 and all this performance that you unlock. 0:05:32.076 --> 0:05:35.196 So where are you now? Tell me about the boat 0:05:35.276 --> 0:05:36.516 or boats that you're selling now? 0:05:36.796 --> 0:05:40.356 Yeah, we as a company started on the consumer side 0:05:40.716 --> 0:05:43.916 and started with a product called the ARC one. We 0:05:43.996 --> 0:05:46.796 called it kind of a luxury cruiser. It's got a 0:05:46.836 --> 0:05:50.876 novel seating layout, it's a lot of fun for lakes rivers, 0:05:51.156 --> 0:05:55.756 that sort of thing. And that was really our pilot production, 0:05:55.836 --> 0:05:59.316 our test bed, the product that we use to go 0:05:59.436 --> 0:06:03.756 develop the technology necessary to make electric boats viable at 0:06:03.796 --> 0:06:06.636 a larger scale. And we took all those learnings from 0:06:06.636 --> 0:06:12.236 that program and ported it over to what we are 0:06:12.316 --> 0:06:15.956 now ramping production of, which is the ARC Sport. The 0:06:16.036 --> 0:06:18.916 ARC Sport's a twenty three foot fully electric wakesport boat. 0:06:19.836 --> 0:06:22.596 You know, if you go look out at a laker 0:06:22.716 --> 0:06:26.596 river today, you're going to see families out there wakesurfing, wakeboarding, 0:06:26.676 --> 0:06:29.196 water skiing, pulling inner tubers. This is the type of 0:06:29.196 --> 0:06:32.836 boat that you do it with. We're ramping production of 0:06:32.876 --> 0:06:36.036 that right now. We've got a month's long backlog for 0:06:37.076 --> 0:06:38.876 the product. We're really just trying to keep up with 0:06:39.076 --> 0:06:40.316 the demand that we see for it. 0:06:40.956 --> 0:06:42.756 Yeah, what did it say on your website? Is it? 0:06:42.756 --> 0:06:44.836 It's something twenty twenty six? Is it summer? 0:06:44.996 --> 0:06:45.116 Like? 0:06:45.156 --> 0:06:46.916 If I try and buy one now, when can I 0:06:46.996 --> 0:06:47.316 get one? 0:06:47.796 --> 0:06:53.836 Yeah, we're working through basically the last slots before summer 0:06:53.956 --> 0:06:57.436 of twenty twenty six. That seems like is that a 0:06:57.436 --> 0:06:59.796 good problem to have? I mean, it's better than nobody 0:06:59.796 --> 0:07:00.276 buying it. 0:07:00.316 --> 0:07:04.076 I don't know, is it? How is demand working for you? 0:07:05.196 --> 0:07:08.516 Yes, it's a good problem to have, and it's still 0:07:08.516 --> 0:07:11.756 a problem, and those two things can both be true. 0:07:12.036 --> 0:07:15.596 It's the better problem to have versus nobody wants the product. 0:07:16.116 --> 0:07:19.196 It's still a problem in that we want to deliver 0:07:19.236 --> 0:07:22.876 great customer experiences to people, and your summer season matters 0:07:22.876 --> 0:07:26.276 a lot, and so if we slip production targets by 0:07:26.476 --> 0:07:29.436 a few weeks that can really impact somebody's. 0:07:29.356 --> 0:07:32.716 Yes, yes, it's the difference between February and March nobody 0:07:32.756 --> 0:07:35.676 cares about. But the difference between July and August is 0:07:35.676 --> 0:07:37.636 a big one, right heah out there for the fourth 0:07:37.676 --> 0:07:38.796 of July or whatever. 0:07:38.916 --> 0:07:41.356 So we really emphasize that as a company, and we 0:07:41.436 --> 0:07:44.836 try to not over promise to customers. And you know 0:07:45.596 --> 0:07:49.156 this is it's a balancing act we are that we're 0:07:49.156 --> 0:07:49.716 trying to strike. 0:07:50.436 --> 0:07:52.236 What's the rate limiting step? I mean, you just have 0:07:52.356 --> 0:07:55.236 one factory or are you like supply constrained in some way? 0:07:55.916 --> 0:07:58.876 Yeah, we're supply constrained. One of the things that we're 0:07:58.876 --> 0:08:04.636 doing well from a business perspective here, what we want 0:08:04.636 --> 0:08:07.836 to make sure that we do in priority order is 0:08:07.876 --> 0:08:11.196 build a product that people love and want. Build a 0:08:11.236 --> 0:08:14.116 better boat, deliver better boats to the market. The next 0:08:14.116 --> 0:08:16.116 thing is make sure that we make money on those boats. 0:08:16.716 --> 0:08:19.636 And then the third is ramp production of them, ramp 0:08:19.676 --> 0:08:25.236 supply in order to tackle those last two simultaneously. What 0:08:25.276 --> 0:08:28.156 we're doing is as the way that we're ramping production 0:08:28.756 --> 0:08:30.476 is that we're getting more efficient at production. 0:08:30.876 --> 0:08:33.596 Are you losing money on the marginal boat? Still? 0:08:33.676 --> 0:08:36.196 Is that I make money on the marginal boat. This 0:08:36.276 --> 0:08:39.396 is very different than automotive. Again, you will see many 0:08:39.876 --> 0:08:40.396 car companies. 0:08:40.396 --> 0:08:42.076 You don't have to sell a million of them to 0:08:42.276 --> 0:08:43.596 exactly yeah. 0:08:43.676 --> 0:08:46.556 Yeah, we can make money even on the earliest units 0:08:46.596 --> 0:08:51.636 of them. But the again dissimilar to how the automotive 0:08:51.636 --> 0:08:55.956 industry works, which is very robotic, very automated production lines. 0:08:57.196 --> 0:09:01.516 Boat building is much more labor intensive, is a bit 0:09:01.556 --> 0:09:02.276 of a craft. 0:09:02.796 --> 0:09:05.916 Indeed, boat companies have craft in the name sometimes. 0:09:05.396 --> 0:09:08.556 Right, exactly, it is very much a craft. 0:09:08.676 --> 0:09:12.236 I'm a business standpoint. That seems bad, right, Like that 0:09:12.316 --> 0:09:15.276 sounds like high unit cost to me when you say craft. 0:09:15.396 --> 0:09:17.316 It is high unit costs. And you'll see that boats 0:09:17.316 --> 0:09:18.796 are actually quite expensive. 0:09:18.796 --> 0:09:21.316 So, yes, your boat is expensive, right, How much does 0:09:21.356 --> 0:09:22.196 your boat cost? 0:09:22.676 --> 0:09:25.036 It's it starts a two hundred and sixty eight thousand 0:09:25.036 --> 0:09:26.916 dollars for the wake sport boat. 0:09:27.076 --> 0:09:29.236 Which I don't know anything about wakesport bucks. I was 0:09:29.276 --> 0:09:30.956 shocked by how expensive that is. 0:09:31.476 --> 0:09:35.596 That's shocked expensive. And the rest of the market is 0:09:35.596 --> 0:09:38.036 also there for the premium side of this market. 0:09:38.316 --> 0:09:41.276 So how many people in America buy a three hundred 0:09:41.356 --> 0:09:43.036 thousand dollars boat every year? 0:09:43.796 --> 0:09:47.476 The marine industry is interesting for a variety of reasons, 0:09:47.516 --> 0:09:49.716 and in this market in particular, one of the things 0:09:49.716 --> 0:09:54.676 that you see is that, well, you look at your 0:09:54.796 --> 0:09:58.756 sedan market and you have your Hanta Civics, your Nissan Ultimas, 0:09:59.436 --> 0:10:01.836 but then you have your Mercedes S Class, your your 0:10:02.156 --> 0:10:06.036 model ass whatever it is, and you see the volume 0:10:06.276 --> 0:10:09.636 really favors that economy class sedan, and then it's a 0:10:09.676 --> 0:10:13.756 smaller peak of demand at that premium sand class. In boating, 0:10:13.836 --> 0:10:15.396 it's the opposite. 0:10:14.836 --> 0:10:17.236 Well, because nobody needs a boat to get to work. 0:10:17.196 --> 0:10:20.156 Right, right, and if you have this house on a 0:10:20.316 --> 0:10:23.676 lake or a river, you know you care about Hey, 0:10:23.716 --> 0:10:26.676 I just want the best boat. You're probably rich, right, yes, 0:10:27.316 --> 0:10:30.156 so you end up wanting to buy the best one. 0:10:30.196 --> 0:10:32.436 So the demand is actually at that higher end, which 0:10:32.476 --> 0:10:35.116 is why you see the prices go. And kind of 0:10:35.116 --> 0:10:38.436 going back to that roadmap, that business is what ultimately 0:10:38.436 --> 0:10:40.916 supports everything else that we're doing. We started here for 0:10:40.956 --> 0:10:44.236 a reason. It's a premium class of boat. It has 0:10:44.316 --> 0:10:47.076 moderate volumes to it, so we could really scale up 0:10:47.116 --> 0:10:51.956 to a meaningful business just in that market alone. But 0:10:52.116 --> 0:10:54.116 what we're doing is we're taking that same technology and 0:10:55.196 --> 0:10:58.276 copying it over to other sectors. You could look at 0:10:58.356 --> 0:11:02.076 kind of any car company that uses the same platform 0:11:02.116 --> 0:11:07.516 to build multiple products. We're doing that same thing at ARC, 0:11:07.796 --> 0:11:11.396 so that allows us to expand pretty quickly into other 0:11:11.476 --> 0:11:13.716 consumer segments. We've already announced the Our Coast that's a 0:11:13.756 --> 0:11:16.876 center console boat that is intended for that fishing and 0:11:16.956 --> 0:11:20.316 leisure market that gets a lot more popular in Florida 0:11:20.356 --> 0:11:23.876 and the East Coast. And that same technology is also 0:11:24.116 --> 0:11:26.276 what lays the foundation for us to get into commercial, 0:11:26.316 --> 0:11:28.316 which is one of our big expansions recently. 0:11:29.316 --> 0:11:31.236 Yeah, I want to talk a lot about commercial. I 0:11:31.276 --> 0:11:35.116 mean that seems from a sort of broader it seems 0:11:35.156 --> 0:11:38.556 like a much bigger market presumably, right, if just in 0:11:38.636 --> 0:11:41.356 terms of dollars, in terms of emissions, in terms of 0:11:41.356 --> 0:11:43.196 lots of things. I feel like commercial is a really 0:11:43.196 --> 0:11:45.476 interesting part of the conversation. But before we get there, 0:11:47.356 --> 0:11:50.396 just a couple of things, Like one, tell me about 0:11:50.436 --> 0:11:53.556 safety and when you're sort of building an electric boat 0:11:53.596 --> 0:11:55.156 from scratch, what do you got to think about in 0:11:55.236 --> 0:11:55.996 terms of safety. 0:11:56.836 --> 0:12:00.876 We care about making sure that we are moving this 0:12:01.036 --> 0:12:04.916 industry in a safer direction. Gas boats today are not 0:12:05.036 --> 0:12:10.436 that safe. Engine fires are pretty common. You end up 0:12:10.516 --> 0:12:16.436 running these combustion engines in a chamber that traps fumes 0:12:16.516 --> 0:12:19.036 in it. So the whole of this boat can trap fumes, 0:12:19.036 --> 0:12:21.716 and so boats come with these things called blowers that 0:12:21.756 --> 0:12:24.276 eject those fumes. If you forget to run a blower, 0:12:24.516 --> 0:12:27.116 it can be disastrous and incredibly dangerous. 0:12:27.476 --> 0:12:29.116 So you're telling me your boat doesn't have to be 0:12:29.236 --> 0:12:31.756 that safe to be higher than a boat, I'm. 0:12:31.636 --> 0:12:35.756 Saying that you're dramatically safer where the industry is at today, 0:12:36.916 --> 0:12:39.156 I mean, is there, Like I take your point, and 0:12:39.276 --> 0:12:42.396 internal combustion engines are just kind of crazy, right, It's 0:12:42.396 --> 0:12:45.356 crazy that they work by having little explosions thousands of 0:12:45.396 --> 0:12:46.116 times per minute. 0:12:46.156 --> 0:12:50.156 But that's actually what's going on. I mean presumably, Like 0:12:50.196 --> 0:12:53.036 I totally believe that your boats are safer. Surely there 0:12:53.036 --> 0:12:56.676 are some risks associated with putting a giant battery pack 0:12:56.716 --> 0:12:59.036 on a boat. I mean, tell me about that. 0:12:59.396 --> 0:13:02.796 Yeah, So you think about safety in terms of redundancy. 0:13:02.836 --> 0:13:05.636 No system is perfectly safe, and so you're thinking about, Okay, 0:13:05.636 --> 0:13:08.756 if something fails, then how many war times can it 0:13:08.756 --> 0:13:11.996 fail before it actually becomes a concern. When we think 0:13:12.036 --> 0:13:14.836 about the battery pack, the obvious thing that you want 0:13:14.876 --> 0:13:17.916 to make sure you're safe for is water ingress. You 0:13:17.956 --> 0:13:20.236 want to make sure no water gets into that battery pack. 0:13:20.396 --> 0:13:22.836 And just to be clear, just like dumb question, why 0:13:22.876 --> 0:13:24.396 is it bad if the battery gets wet? 0:13:24.796 --> 0:13:28.036 Yeah, I mean because if you in theory, if you 0:13:28.116 --> 0:13:30.956 take a battery pack and you dunk it in water. 0:13:31.036 --> 0:13:33.716 It can it can go into what's known as thermal runaway. 0:13:33.756 --> 0:13:37.036 It can catch fire, and stopping a battery fire is 0:13:37.076 --> 0:13:40.956 really hard because those chemicals are good at burning even 0:13:41.076 --> 0:13:41.996 absent oxygen. 0:13:42.116 --> 0:13:45.676 That is obviously bad anywhere, and obviously particularly bad if 0:13:45.676 --> 0:13:48.356 you're out on the water. Classic thing you don't want 0:13:48.396 --> 0:13:48.836 on a boat. 0:13:48.916 --> 0:13:52.756 Yes, yeah, So if you kind of rapidly step through 0:13:52.796 --> 0:13:54.876 these steps, you're like, okay, you want to get notified 0:13:54.876 --> 0:13:57.476 about this. Great, Yeah, you've got leak sensors in there. 0:13:57.596 --> 0:13:59.796 Then you want to allow as much water into the 0:13:59.836 --> 0:14:03.956 pack as possible before it actually becomes a safety concern. Oh. Interesting, 0:14:04.276 --> 0:14:05.996 So you design the pack in a way that can 0:14:05.996 --> 0:14:08.196 actually tolerate a fair amount of water in the pack 0:14:08.236 --> 0:14:11.356 before it becomes a pro And then you say, okay, 0:14:11.356 --> 0:14:14.636 well then if it does, you know, if you just 0:14:14.676 --> 0:14:18.876 flood this pack with water, then what happens? And how 0:14:18.916 --> 0:14:21.116 much time do I have to react? And you step 0:14:21.196 --> 0:14:22.996 through all of this, and what it comes down to is, 0:14:23.996 --> 0:14:27.636 first off, we've designed the packs to be essentially IP 0:14:27.716 --> 0:14:30.756 six seven rated, which means you could submerge it in 0:14:30.796 --> 0:14:34.276 a meter of water for thirty minutes without water getting in, 0:14:34.316 --> 0:14:37.076 which is an insane standard to hold for a battery 0:14:37.076 --> 0:14:40.636 pack of this size. If water does get in, you've 0:14:40.676 --> 0:14:44.836 got time. Those league sensors are are alerting you on 0:14:44.876 --> 0:14:49.116 the boat, alerting our systems to give you a lot 0:14:49.116 --> 0:14:52.396 of notice. And then in the event that you do 0:14:52.716 --> 0:14:57.636 end up tripping a thermal runaway event, you have a 0:14:57.676 --> 0:14:59.756 lot of time to get off of the boat. Like 0:14:59.796 --> 0:15:02.436 we actually alert you and say, hey, you've got maybe 0:15:02.476 --> 0:15:05.196 ten minutes to put on your life jackets. It's safely 0:15:05.356 --> 0:15:08.756 get off the boat. All of these things really lend 0:15:08.796 --> 0:15:12.116 to this safety profile and compared to gas, it's you know, 0:15:12.236 --> 0:15:12.876 been comparable. 0:15:16.316 --> 0:15:29.156 We'll be back in just a minute. Let's talk about 0:15:29.156 --> 0:15:34.436 commercial boats. You're you're building a tugboat or you're building 0:15:34.436 --> 0:15:37.116 a tugboat with somebody, right, is that the place to start. 0:15:37.516 --> 0:15:44.156 Yes, we are entering the commercial market with hybrid electric 0:15:44.156 --> 0:15:48.876 commercial workboats. Okay. We signed a deal with Curtain Maritime. 0:15:49.796 --> 0:15:53.836 They are a major commercial operator. They started on the 0:15:53.916 --> 0:16:00.716 dredging side. They're also known for moving some of SpaceX's 0:16:00.876 --> 0:16:04.556 barges around. They are entering the tugboat market and the 0:16:04.596 --> 0:16:08.196 way that they are doing this is by buying a 0:16:08.236 --> 0:16:12.316 fleet of hybrid electric tugboats from US. 0:16:12.836 --> 0:16:16.236 Okay, so you're so what they placed a big order, right, 0:16:16.276 --> 0:16:18.316 Like you're supposed to sell them a bunch of tugboats. 0:16:18.556 --> 0:16:22.076 Yeah, it's it's for eight tugboats, which is a large 0:16:22.076 --> 0:16:24.676 amount of tugboats when each one of these is on 0:16:24.796 --> 0:16:26.316 the order of twenty million dollars. 0:16:26.756 --> 0:16:29.236 Yeah, so you have to sell a lot of wake boats. 0:16:29.836 --> 0:16:31.636 So you have that much money to do. So are 0:16:31.716 --> 0:16:34.796 you designing a hybrid electric tugboat right now? Like? Where 0:16:34.796 --> 0:16:35.956 are you in that process? 0:16:36.516 --> 0:16:42.516 So boats are basically two parts to the boat, maybe 0:16:42.556 --> 0:16:44.356 maybe three parts if I were to break it down. 0:16:45.116 --> 0:16:48.556 The first is the thing that floats. That's the steel structure. Okay, 0:16:49.436 --> 0:16:52.516 you take a bunch of steel, you cut it up 0:16:52.596 --> 0:16:54.476 into pieces, and then you weld it all together and 0:16:54.796 --> 0:16:58.756 you have something that floats. We're partnering with a shipyard 0:16:58.756 --> 0:17:01.356 to do that. Okay. Then there's the part of this 0:17:01.596 --> 0:17:07.076 that tugboats are kind of like houses. You have people 0:17:07.116 --> 0:17:10.676 on board that stay on board for long periods of 0:17:10.716 --> 0:17:14.036 time doing these jobs, or or at least spend all 0:17:14.116 --> 0:17:16.716 day out on them doing the jobs. So you care 0:17:16.756 --> 0:17:21.116 about where's the refrigerator and where do they stay, and 0:17:21.236 --> 0:17:24.396 what's the visibility from their control tower or what's known 0:17:24.396 --> 0:17:28.556 as the house of the boat or the wheelhouse, where's 0:17:28.556 --> 0:17:31.156 the winch go? How do you push and pull on 0:17:31.196 --> 0:17:34.556 these other boats? So that's kind of the operating portion 0:17:34.876 --> 0:17:37.996 of the curtain. Maritime has a ton of experience and 0:17:37.996 --> 0:17:41.076 how do you go optimize the operating ok Then the 0:17:41.156 --> 0:17:43.596 last piece of this is how do you make the 0:17:43.636 --> 0:17:47.036 boat go? How do you actually like push it through 0:17:47.076 --> 0:17:49.516 the water. That's what I mean when I say powertrain. 0:17:49.676 --> 0:17:54.116 It's the thing that actually delivers power into the water, 0:17:54.676 --> 0:17:58.676 and that goes from well, starts from some amount of energy. 0:17:58.956 --> 0:18:02.596 In our case, that is a huge amount of batteries. Okay, 0:18:03.436 --> 0:18:09.436 six eight to eight megawatt hours of battery capacity, a 0:18:09.516 --> 0:18:13.356 crazy amount of battery. Then there's all the okay, well, 0:18:13.356 --> 0:18:15.276 now you have the energy, how do you actually convert 0:18:15.316 --> 0:18:18.196 that down into a propeller under the water, some sort 0:18:18.196 --> 0:18:21.516 of thruster under the water. And that is also all 0:18:21.596 --> 0:18:23.076 part of that power. 0:18:22.876 --> 0:18:26.996 Train, and presumably the integration of this like crazy amount 0:18:26.996 --> 0:18:30.156 of battery mass you're going to need into the whole 0:18:30.196 --> 0:18:33.916 boat and what everybody else is doing. It's going to 0:18:33.996 --> 0:18:36.396 be something to figure out a hard part. One of 0:18:36.396 --> 0:18:36.996 the hard parts. 0:18:37.396 --> 0:18:39.356 It is, it is, it is one of the very 0:18:39.396 --> 0:18:42.316 hard parts. You know, each of these parts is super complex. 0:18:42.436 --> 0:18:46.436 The scale of these vessels is massive. It's hard to 0:18:47.436 --> 0:18:53.756 actually understand the amount of torque that these things put 0:18:53.796 --> 0:18:54.116 out off. 0:18:55.036 --> 0:18:57.276 That's the whole point of a tugboat, right right, That's 0:18:57.316 --> 0:18:58.156 what it's there to do. 0:18:59.636 --> 0:19:03.916 So there are these massive vessels that are capable of 0:19:03.916 --> 0:19:08.156 pushing and pulling these cargo ships that come in to dock, 0:19:09.716 --> 0:19:12.436 and that means that each of the components on there 0:19:12.476 --> 0:19:17.116 is just giant. Your thrusters are these these huge components, 0:19:17.436 --> 0:19:22.356 you know, way bigger than I don't know any any propeller. 0:19:22.396 --> 0:19:28.676 You've certainly seen, way bigger than people. Yeah. So each 0:19:28.716 --> 0:19:31.036 of those comes from different suppliers that have existed for 0:19:31.076 --> 0:19:34.636 long periods of time. And one of the integration challenges is, Okay, great, 0:19:35.036 --> 0:19:37.116 you've got a really big battery pack on board. You've 0:19:37.116 --> 0:19:39.356 got good pricing on that battery pack that makes it 0:19:39.636 --> 0:19:44.276 cost competitive. You still need to go get this entire system, 0:19:44.396 --> 0:19:46.716 all of these different components talking to each other and 0:19:46.796 --> 0:19:50.236 all wired up to work nicely together. And that is 0:19:50.316 --> 0:19:53.116 part of the integration challenge of all of us. 0:19:54.196 --> 0:19:56.236 Where are you on that project? 0:19:57.356 --> 0:20:01.956 We have already started construction on the first of the 0:20:01.996 --> 0:20:06.276 tugboats and we expect to deliver that to market before 0:20:06.276 --> 0:20:07.076 the end of next year. 0:20:08.156 --> 0:20:12.436 I saw in just my ordinary reading that is it 0:20:12.556 --> 0:20:18.036 the domin rsde tug two five one three was shortlisted 0:20:18.036 --> 0:20:23.316 for Tug of the Year. And I missed that? Did you? 0:20:23.316 --> 0:20:27.396 You did not miss that new? Surely you knew that 0:20:26.956 --> 0:20:29.476 that's an electric tug, right, You're not the only one 0:20:29.516 --> 0:20:31.676 doing this. That's why I bring it up, Right, that 0:20:31.756 --> 0:20:34.676 is an electric tug that is new. Like what's the 0:20:34.836 --> 0:20:39.836 broader landscape like of people electrifying boats in general and 0:20:39.836 --> 0:20:41.596 in particular this kind of what do they call them 0:20:41.636 --> 0:20:43.836 harbor vessels? Is that this universe grows? Is that what 0:20:43.876 --> 0:20:45.196 they're called harborcraft young. 0:20:46.196 --> 0:20:49.756 These are more popular internationally than they are in the US. 0:20:50.156 --> 0:20:53.756 The US has a pretty interesting piece of policy in 0:20:53.796 --> 0:20:57.396 place called the nineteen twenty Jones Act, and what it 0:20:57.436 --> 0:21:00.556 means is that if you have a vessel that is 0:21:01.236 --> 0:21:04.596 operates between US ports, it needs to be US manufactured, 0:21:04.596 --> 0:21:09.116 it needs to be US flagged. And what that means 0:21:09.236 --> 0:21:12.316 in practice is that if you are the port of 0:21:12.436 --> 0:21:15.676 la if you're one of these many other reports in 0:21:15.716 --> 0:21:17.956 the US and you have harborcraft. Those need to be 0:21:17.996 --> 0:21:20.316 manufactured in the US, and that limits the number of 0:21:20.356 --> 0:21:24.516 suppliers that you can go to. While there are electric 0:21:24.556 --> 0:21:30.116 tugboats and electric ferries internationally, there's only one that's I'm 0:21:30.156 --> 0:21:33.396 aware of in the US in this kind of ship 0:21:33.396 --> 0:21:38.676 assis market. And it was a heavily subsidized project that 0:21:39.596 --> 0:21:43.716 was very compelling in the theory of it and what 0:21:43.796 --> 0:21:46.476 it could deliver to the market, but it wasn't on 0:21:46.556 --> 0:21:51.476 its own economically viable. What's so compelling about what we're 0:21:51.476 --> 0:21:54.956 doing with Curtain and our entrance into the commercial industry 0:21:55.116 --> 0:21:59.196 is we are entering at a point that is directly 0:21:59.236 --> 0:22:04.636 cost competitive with making a diesel driven tugboat absent any 0:22:04.676 --> 0:22:05.516 sort of grants, and. 0:22:05.476 --> 0:22:08.036 It's cost competitive just buy in the boat, or it's 0:22:08.076 --> 0:22:10.556 cost competitive when you figure out the sort of cost 0:22:10.556 --> 0:22:11.556 of ownership over. 0:22:11.396 --> 0:22:15.196 Time off off the line. So is cost competitive when 0:22:15.196 --> 0:22:17.636 you buy the boat? And now, how can that be? 0:22:17.796 --> 0:22:20.116 Is it just that batteries got cheap enough for it 0:22:20.156 --> 0:22:23.676 to be possible, Like I'm surprised by that. Is it 0:22:23.676 --> 0:22:26.996 that the domestic industry is super inefficient because it's protected 0:22:26.996 --> 0:22:27.796 by the Jones Act. 0:22:29.196 --> 0:22:33.076 I'm I'm smiling because because you're you're hitting on some 0:22:33.116 --> 0:22:36.156