Telo Secures $20 Million to Develop Compact Electric Trucks for Urban Areas

Large electric trucks are facing significant challenges. The Cybertruck has underperformed, Stellantis recently scrapped the Ram 1500 REV, and even the once-promising sales of Ford’s F-150 Lightning are declining.

However, the American market has a strong affinity for trucks. So, could the secret to winning over consumers for electric trucks be… a much smaller option?

That’s the gamble California-based startup Telo has been pursuing since its founding in 2022. The company has developed a compact truck called the MT1, which comes with a notable starting price of approximately $41,000.

Now, investors are eager to place their bets: Telo announced on Tuesday that it has completed a $20 million Series A funding round. Co-founder and designer Yves Béhar, along with Tesla co-founder Marc Tarpenning, who serves on Telo’s board, co-led the round. Additional contributions came from Salesforce CEO Marc Benioff and early-stage investment firms such as TO VC, E12 Ventures, and Neo.

In the landscape of automotive manufacturing, $20 million does not stretch far. For comparison, Slate Auto, which is crafting its own vision of a small electric pickup truck, has raised over $700 million. Other startups, including Fisker Inc., Canoo, and Lordstown Motors, also amassed hundreds of millions before ultimately faltering.

Nonetheless, Telo has more focused ambitions and a clearer strategy than those companies.

“Our primary focus is on trucks suitable for urban environments,” co-founder and CEO Jason Marks shared with TechCrunch during a video call, while navigating Telo’s 10,000-square-foot facility in San Carlos — which is adjacent to the original Tesla headquarters.

While Telo might eventually explore other markets — Marks mentioned that some small farmers have shown interest in the truck — the company’s primary focus remains urban areas; Marks emphasized that his experiences searching for parking in San Francisco have influenced this decision.

Telo does not intend to produce hundreds of thousands of MT1s. Instead, it boasts a preorder list of about 12,000, and Marks indicated that Telo plans to manufacture around 5,000 units annually through contract manufacturers.

“Our entire philosophy revolves around achieving unit profitability as swiftly as possible,” he stated. “This has positioned us differently from other automakers who claim, ‘We need a billion dollars to reach production.’”

The Series A funding will be allocated towards finalizing the production-ready version of the MT1, ensuring the vehicle meets U.S. safety regulations, and completing crash tests. Marks emphasized that this last step is crucial, as the MT1’s compact front end has raised several safety concerns.

Telo aims to deliver its first MT1 by late 2026.

To maximize the funding’s potential, Marks stated that Telo will maintain a “lean” operation, keeping its workforce around 25 employees initially while utilizing consultants and contractors — many of whom have longstanding ties with Tarpenning.

The concept of employing external assistance is gaining momentum with the Series A, as Marks noted that Telo drew in angel investors and small firms from across the EV ecosystem. “It’s an incredible community that is eager to see innovative solutions for mobility succeed,” he remarked.

The MT1 represents an ambitious idea, but it’s not solely about size. Marks emphasized that Telo has dedicated considerable time to ensure the MT1 is practical. For instance, the project is centered around “performance per square foot.”

“We’re unique in offering seating for five along with a five-foot bed,” he highlighted. This means that despite its small size, the Telo truck offers about half a foot more space compared to competitors, such as the 4.5-foot beds on the all-electric Rivian R1T and the budget-friendly Ford Maverick.

However, the MT1’s key aspect may be its range. Marks is confident that the truck will achieve approximately 350 miles on a full battery, placing it among the most capable EVs available. This not only allows for longer drives but also reduces the frequency of charging for the city-dwelling demographic Telo aims to serve.

Marks explained that Telo reached this impressive range through a blend of seemingly opposing factors. The MT1’s small size contributes to its lighter weight, enhancing efficiency. However, this made it challenging to integrate the 106kWh battery pack so that the MT1 wasn’t merely a stack of lithium-ion cells with seating.

Marks refrained from delving deeply into details, as Telo’s battery-related patents are still pending. However, he mentioned that the MT1 sacrifices some performance features (like quicker 0-60 times) to accommodate the battery pack within the compact footprint of a Mini Cooper.

If the MT1’s impressive range is confirmed, it could prove appealing. The increasing popularity of imported Japanese Kei trucks in the U.S. demonstrates that consumers are willing to explore smaller vehicles.

Despite facing real obstacles for EVs in the U.S. market today, Marks is optimistic about Telo’s potential to navigate these challenges.

“You’re told to ‘move fast, break things.’ That’s very much the Silicon Valley ethos,” he noted. “But another aspect of Silicon Valley is figuring out how to accomplish a lot with minimal capital and a small team. It’s about doing what large corporations cannot.”

Correction: This article previously misidentified Marc Tarpenning as a co-founder of Telo. He is a member of Telo’s board. The article has been updated.