Spring Free EV Unveils Tax Equity Product to Accelerate Adoption of Electric Vehicles

Spring Free EV, a leader in sustainable transportation, has introduced a groundbreaking financing solution called Residual Capital. The tax equity product significantly lowers the financial barriers to scaled electrification and is poised to transform electric vehicle financing.

Developed in collaboration with leading tax equity structuring lawyers and accountants, Residual Capital offers a fresh perspective on EV tax credits - specifically 45W, which applies to commercial electric vehicles. The product was developed by a team with deep experience in solar finance and structured asset financing and companies such as Sunrun, Solar Mosaic, Morgan Stanley, and Robobank.

The concept takes its lead from traditional, solar/wind, renewable energy financing structures where tax equity accounts for greater than $20B in total financing contribution. The brand name, “Residual Capital,” stems from its core functions: providing residual capital within the financing structure and providing a buffer to the residual value risk of electric vehicles. Doing so enhances the capital efficiency of fleet financing and protects the residual value of the vehicle, both pressing needs in the EV financing industry.

Traditionally, when a company acquires its fleet, it relies on senior debt to cover 80-90% of the vehicles’ cost. The company must provide the remaining 10-20% and take a risk on the residual value of the vehicle. This final layer can be particularly capital-intensive, especially for fleets with hundreds to hundreds of thousands of vehicles. While the Inflation Reduction Act’s 45W tax credit can help soften that load for electric vehicles, not all fleets and auto finance companies can take advantage of the credit.

Spring Free EV’s solution revolutionizes this process, supplementing corporate capital with Residual Capital, allowing fleet operators to maximize their financial resources. To protect the residual value of the assets, Spring Free EV uses a package of smart technology to monitor and proactively help maintain battery health. This approach is critical as the battery alone accounts for up to 40% of an EV’s residual value.

Spring Free EV has already employed the product for its own fleet leasing program, demonstrating viability and need. With a robust pipeline exceeding $100 million, there’s a significant supply of capital to help others in the auto finance and fleet business.

“The remarkable demand for Residual Capital underscores the urgency and enthusiasm for sustainable fleet electrification. We are eager to partner with fleet operators who share our vision and are dedicated to a cleaner, greener future,” explained Sunil Paul, CEO and co-founder of Spring Free EV.

As the market for EVs continues to expand, Residual Capital promises to usher in a new era of accessibility and efficiency in the EV landscape.

About Spring Free EV

Spring Free EV is a financial technology company built to accelerate the adoption of electric vehicles through innovative fintech products. It has the bold mission to reduce CO2 emissions by one gigaton by 2030. Spring Free EV was co-founded by Sunil Paul, Martin Lagod, Tenni Theurer, Visrin Vichit-Vadakan, and Andrew Deitz in 2021 and is backed by leading investors, including Spring Lane Capital, Bronze VC, Reid Hoffman, Ev Williams, and others. Learn more at www.springfreeev.com

Contact Information

Anika Brown

V.P. of Marketing

Spring Free EV

anika@springfreeev.com