Melissa Smith, president and CEO of Portland-based Wex Inc., says the company’s investment in the EV industry is a natural step. Press Herald file photo

Hoping to accelerate the transition to electric vehicles, Wex Inc. will spend $100 million funding startups in the EV industry, the company told the Press Herald on Wednesday.

A new division, Wex Venture Capital, will distribute funds over the next two years to early-stage businesses focused on fleet electrification, EV charging infrastructure, energy management, and similar technologies.

The initiative might seem odd for a company that got its start with gas cards, but Portland-based Wex says it’s a fitting next step.

The company provides payment processing and information management services for commercial and government vehicle fleets. It’s been involved with electric vehicles and their users for as long as commercial EVs have been on the market, Melissa Smith, president and CEO, said in an interview.

That involvement grew in 2019, when Wex partnered with ChargePoint, an international operator of EV charging stations, to expand access to chargers in the United States.

As the popularity of electric vehicles has increased, many of Wex’s 600,000 fleet customers have begun making the transition, and Smith expects that to continue. It seemed only natural for Wex to follow. 

“We’re at this inflection point in the marketplace and we thought it was time to dedicate more capital to this, even though we’ve been involved for quite some time,” she said. 

The support is designed for companies working behind the scenes on the “critical back-end infrastructure” necessary for widespread adoption. 

“Wex Venture Capital enables Wex to play a meaningful role in the greater electric mobility ecosystem by assisting a variety of new stakeholders,” the company said. 

This segment of the market includes energy suppliers, charge point operators, original equipment manufacturers, charging locations, and energy markets, all of which will need to streamline their charging and payment systems – Wex’s bread and butter. 

The venture capital arm, a first for the company, is evidence that officials don’t need to choose between what’s right for the business and for the future of the industry, Smith said.

“From routing and energy management to fuel payment systems, the energy transition will benefit from innovation in fleet management offerings, creating flexibility for our customers to seamlessly charge or fuel at work, home, and en route,” Smith said in a statement. “This is a crucial moment for Wex and the larger fleet industry, and we’re proud to help lead this transition.”

Originally named Wright Express Corp., Wex started in 1983 selling fuel charge cards for truckers. When the company went public in 2005, it expanded its payment processing offerings. Wex now has 5,500 employees and in 2022 reported $2.35 billion in revenue. 

Jay Dearborn, chief strategy officer, said Wex Venture Capital will position the company to serve commercial customers while also helping to unlock innovation opportunities across the industry.

“In the years to come, the energy transition will transform how we move employees and goods around the economy,” Dearborn said in a statement.

WIDE-RANGING INVESTMENT

Wex Venture Capital already has invested in two companies, Chargetrip, a Netherlands-based company focused on EV range prediction and routing, and ev. energy, a UK-based company offering a managed EV charging software platform.

Going forward, Smith said, the initial investments will be between $2 million and $5 million, spread across 15 to 20 companies.

Whether any of the money could make its way to Maine startups remains to be seen, though it’s not likely. 

Joe Powers, managing director of the Maine Venture Fund, said he doesn’t know of any EV-related startups in the state. Most automotive companies are clustered in places like Detroit or Germany, so it would be more challenging to launch in Maine, which doesn’t have related legacy companies or manufacturers, he said. 

But there’s a great deal of opportunity for innovation – and therefore, investment – within the electric vehicle space, particularly around artificial intelligence and charging infrastructure, said Powers, who previously worked for Tesla.

This segment of the industry is still so new that many avenues are unexplored. 

Investment in such companies will help accelerate the shift to electric vehicles, Powers added, although the EV movement already has plenty of momentum.

“It’s an industry that has not changed very much in the last 100 years and is now changing very rapidly,” he said. “You don’t know what tomorrow’s going to look like, and probably the key technology that everyone’s got to have is from a private company that’s incubating today.” 

Electric vehicles are becoming more popular, thanks in part to state and federal tax incentives and rebates.

Some of the world’s largest automakers, including GM, Ford, Volkswagen, Mercedes-Benz, and Volvo, have pledged to go fully electric within the next 10 years or so. 

An electric vehicle charges at a station next to Portland City Hall in February. A $100 million investment by Wex might spur the development of companies that provide EV charging stations. Ben McCanna/Staff Photographer

Electric vehicle sales in Maine have soared in recent years as well. In July 2019, the state had 2,926 registered battery and plug-in hybrid electric cars. By July 2022, that number had nearly tripled to 8,049.

The growth in fully electric, battery-powered vehicles (rather than plug-in hybrids) has been especially sharp. In 2019, there were 899 battery-driven cars on the road in Maine. Three years later, that figure had increased to 3,448.

But sales would need to continue increasing dramatically to meet the ambitious goals of Gov. Janet Mills’ Climate Action Plan, which aims to have 41,000 light-duty electric vehicles on the road by 2025 and 219,000 by 2030.

Some of that growth is hampered by the fact that purchasing an electric vehicle, especially in Maine, can be an enormous challenge. 

Supply is limited, waitlists are long and some models aren’t even available here. While tax breaks can help offset the additional cost of EVs, those incentives are becoming complicated and more restrictive. And in the rural parts of Maine – most of the state – charging stations are scarce.