SKI-DOO WHO?
Taiga throttles up to disrupt and electrify BRP'S snowmobile territory
Paul Achard was reminiscing about ramen noodles, the inexpensive, salty, ready-in-a-snap staple he, Sam Bruneau and Gabriel Bernatchez consumed in great quantities, both for sustenance and to save money, during the impoverished early years of Taiga Motors Inc., the upstart electric snowmobile maker they started in 2015 with a brilliant idea — to build the world's first production electric snowmobile — and, alas, no money.
That lack of funds meant the founders, good pals all, who met as engineering students at Mcgill University in Montreal, lived lean and together in a three-bedroom walk-up apartment on St. Urbain that doubled as the company's first headquarters.
The apartment's interior decor could best be described as postmodern millennial startup, with Post-it notes, mind maps, schematic designs and mission statements papering the walls. Achard's tool box, smuggled in to avoid unwanted questions from the landlord, was typically situated somewhere central.
He and Bernatchez would sweat over prototype motors and other mechanical whirligigs, while Bruneau, the “visionary” and most business-minded of the bunch, pursued potential investors.
In the beginning, people with money didn't recognize Taiga's potential. Or else they simply didn't believe three guys fresh out of university could actually succeed, so they took a pass on an opportunity to, as the buddies saw things, “Tesla-fy” the $50-billion world of motorized power sports, a revolution that is now fully underway with the whiz kids leading the pack.
It hasn't been easy. Being broke didn't help, but it didn't dampen the founders' enthusiasm for the challenge.
“We all signed an implicit pact at the start that we were fully in, whether that was to a bitter end or a fantastic end,” Achard said.
Taiga today could be said to be a lot closer to fantastic than failing. Its founders are no longer crammed in the same apartment. Its finances are much improved, recently boosted by a decision to go public later this year as part of a blank-cheque merger with a company sponsored by Canaccord Genuity Growth II Corp.
The deal, announced in mid-february, pegs Taiga's implied market capitalization at $537 million, and is expected to provide the founders, none of whom have reached the ripe old age of 30, with about $185 million in cash to rapidly scale up production of their electric snowmobiles as well as electric jet-skis.
“It's pretty incredible, three friends, with no funds, going from an apartment on St. Urbain to now,” Bruneau said, and — not to sound like a braggart, which he isn't, but because it is true — it is pretty incredible.
In looking to disrupt an industry, Taiga set up shop, albeit in a three-bedroom apartment, in the big boy's backyard. Quebec, you see, isn't just another province in a country that loves its winter sports, but the spiritual home of the Skidoo and birthplace of its inventor, Joseph-armand Bombardier.
As a Canadian brand name, Skidoo is as recognizable as Roots or Canada Goose, and for good reason. Bombardier's recreational vehicle with front skis/runners appeared in the 1960s, allowing people in the dead of winter to access wilderness in ways that only the hardiest of souls with a good pair of snowshoes or cross-country skis had previously enjoyed.
Bombardier's sleds were loud, smelly, fast and terrific fun. They still are loud, smelly, fast and fun, and manufactured about 90 minutes east of Montreal in Valcourt, Que., home to Bombardier Recreational Products Inc. BRP has more than 10,000 employees, operations in Finland and Mexico, and shares that are trading around $95. Taiga started with three employees, and now has 57. But what BRP and the three other major snowmobile manufacturers didn't have six years ago, and still don't, is a market-ready electric snowmobile.
“It is one of the last bastions of the transportation sector that had not been electrified,” Achard said.
There is a reason why. Electric cars are built for paved roads, not snowdrifts. Car engines are generally only called upon to perform at optimal levels when, say, a driver punches the accelerator to pass another vehicle on the highway.
Snowmobile engines have an entirely different set of demands. They need to power a vehicle through two feet of fresh snow, with another foot of slush underneath, tow heavy loads, trundle through boreal forests, roar across lakes and scoot up mountains.
They are multitaskers that need to perform in extreme cold and offer both adrenalin junkies and easy riders maximum torque for extended periods.
From an evolutionary standpoint, the first big breakthrough in snowmobiles came around 1916, when Sergei Nezhdanovskim, a Russian, created a small motorized vehicle able to travel on deep snow, according to Pierre Pellerin, a snowmobile researcher and collector of vintage sleds.
Innovation was gradual thereafter, until Bombardier cracked the mass consumer market with his Ski-doo. Before 1960, snowmobiles were built for work; Ski-doos were built for kicks, powered by environmentally nasty two-stroke engines and geared to win converts.
“The Ski-doo became the definition of what a snowmobile is,” Pellerin said.
Pellerin remembers attending a dinner with a Bombardier heir 20 or so years ago, when talk circled around to the next frontier. The possibility of an electric sled was bandied about: a clean, sleek, quiet-running snowmobile. Imagine that? The sticking point was how to marry an engine that had maximum torque with a battery that wouldn't die of exposure halfway up a mountain.
It was a problem only an engineer could love, and it helped that Taiga's co-founders all grew up as avid skiers, and that they also got along.
Outdoors was their happy place to play. Solving the electric snowmobile puzzle would benefit that playground environmentally by reducing noise and other pollution, and, in the process, perhaps piss off fewer neighbours and encourage non-fans to view snowmobiles in a new, eco-friendly light.
“It was a continuous effort to get more money, and that was one of the biggest challenges of the business: being young entrepreneurs in a very traditional industry, and being in Quebec and being in the backyard of BRP, the most renowned power-sport manufacturer in the world,” Bruneau said.
Taiga would temporarily solve its cash problem after being named among the 2016 Mcgill Dobson Cup winners, earning them a $15,000 prize for entrepreneurship. The friends appeared at the awards ceremony dressed in matching green Taiga T-shirts, blue jeans and dark blazers.
Taiga, incidentally, was chosen as the company's name after a vote among friends and family. The hope was to stir an image of a snowy northern forest, and an e-sled passing silently through it.
The Dobson seed capital was critical, but even more important was having impressed Tim Tokarsky, one of the judges. He's a serial angel investor in Montreal circles, and one of those individuals, from way back when, driving around in a Tesla Roadster when hardly anyone else was.
Tokarsky was Taiga's first outside investor, and the pressure was then on the three friends to deliver a prototype and pre-market test it.
The team wrestled with the design challenges of maintaining both torque and a toasty battery, and knocked together their electric snowmobile before piling into a truck and driving cross country to Whistler, B.C., in early April 2017.
“Sam kind of scares us with the things he proposes,” Achard said of his friend, who was named chief executive of the company while the two “nuts and bolts” partners await more formal-sounding titles.
Whistler solved Taiga's problem of legitimacy: It was a mountain with great vistas and the area was full of avid, eco-minded sled-heads and tour operators keen to try an electric snowmobile. A failure in Whistler and the company might have been finished. The team arranged for demos, invited journalists from the local papers to watch and then let it rip, as they say, filming events on their smartphones. And the verdict was ... “Everybody thought it was pretty impressive,” tour operator Craig Beattie told The Whistler Question. “We had the odd glitch that happened ... but all in all I think we were all blown away.”
The Whistler Blackcomb ski resort reportedly expressed interest in electrifying its snowmobile fleet, as did resort operators in Europe. The buzz around Taiga gathered speed and the company secured another round of funding. In the years since, they have kept chipping away, perfecting their design.
They have not solved everything. There are no charging stations handy in the middle of the wilderness, and the Taiga sled's maximum range tops out at about 140 kilometres, or about half that of a gas-powered snowmobile.
But the pandemic has renewed attention on outdoor activities. There are 1.1 million registered snowmobiles in the United States, and about 540,000 in Canada, and the numbers are growing. North American snowmobile sales are up 20 per cent year over year through the end of February, according to the International Snowmobile Manufacturers Association.
Meanwhile, in the automotive sector, Tesla Inc.'s stock has soared as jurisdictions, such as California, have made commitments to go fully electric by 2035. Major automakers have announced massive new investments in the electric vehicle space.
The landscape has shifted from electric someday, to electric soon, which put Taiga in the ideal spot to finally land that metaphorical Moby Dick of a backer.
“It all came together really fast,” Bruneau said of the deal to take the company public. “It went from this could be an opportunity, to this makes sense, to, 'Oh, we are actually doing this.'”
Taiga currently operates out of a 50,000-square-foot research and development/assembly plant in Montreal, and expects to rampup production capacity to 2,000 vehicles in the coming months. The plan is to build a new plant capable of producing 60,000 vehicles by 2025.
Around 1,400 buyers have already pre-ordered Taiga sleds and electric watercraft to date. About half of the snowmobile orders are from individuals who have never snowmobiled before, a curious fact on the face of it, given the sleds cost $20,000 each, or about $5,000 more than a gas-burning one, but it is exactly what Bruneau and co. had been banking on all along.
Taiga's master strategy isn't to steal market share exclusively from the industry establishment, but to be first off the mark in capturing a whole new marketplace of buyers: Folks who love accessing the outdoors, but have never loved the idea of a noisy snowmobile. BRP, mind you, isn't sitting idle, and reportedly has plans to electrify some offerings within three years.
It all came together really fast. It went from this could be an opportunity, to this makes sense, to, `Oh, we are actually doing this.