Investing in Efficiency to Save the Planet: Software Motor Company

Greg Smithies
Jan 28 · 7 min read

A brief history of an investment in Software Motor Company

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Note: Opinions are my own, this is not an official BMW i Ventures post

BMW i Ventures just invested in Software Motor company — here’s my behind-the-scenes take on how that happened, and why we’re so excited about the company.

The Oracle of Electricity

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Source: https://medium.com/@andrewpgsweeny/beyond-the-red-pill-and-the-blue-pill-9ef953d6e133

For those that know Ryan, what followed would be expected; but for the uninitiated, the tidal wave of information and insights about everything from motors, to batteries, to electric vehicles that came gushing from him over the next few hours was awe inspiring. This was no ordinary investor. I was intimidated. I was shook. But I was hooked.


Down the SRM Rabbit Hole

On my first visit to the company’s discrete Sunnyvale lab+office it seemed the snoozefest impression was correct. The low slung industrial buildings had a way of inspiring excitement the way that beige paint doesn’t. I was starting to think about ways to get out of there as quickly as possible.

That was, until I heard the numbers. SMC’s Switched Reluctance Motors (SRMs) were seeing 30%-70% reductions in energy usage in THE REAL WORLD. None of this bench-top test stuff, they had hundreds of motors pushing thousands of tonnes of HVAC at real world facilities for years, and the numbers bore out across countries, customers, and climates. The Department of Energy, and top Electrical Utilities had verified the numbers in highly rigorous, peer reviewed tests, and they checked out.

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Source: Software Motor Company

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Source: Software Motor Company

I was intrigued. But how much of an opportunity was this? Surely this is a crappy market that no-one should care about? Again, I was wrong.

The AC Induction motors that SMC’s SRMs are replacing typically run behind the scenes in unsexy places (think HVAC, pumping stations, sewer systems…), so it’s easy to forget just how common they are. In fact, Electric Motors are a $100 Billion per year market; and they consume 45% of the world’s electricity — some 9,900 Trillion kWhs, at an annual cost of over $1 Trillion. That means that SMC’s motors could chase a $100 Bn direct market opportunity, but also open up an additional $500 Bn in electrical cost savings. That’s probably the largest real-world opportunity size I’ve ever looked at for a startup.

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Source: Software Motor Company

But surely there must be a catch. These new motors must use some exotic new materials, or designs, or be really tough to manufacture, they must cost a TON! Or maybe they are brittle and die all the time. There must be a downside somewhere!

And that was where I realized why Ryan was so bullish on this company. You see, Switched Reluctance Motors are conceptually the simplest motor architecture. They use no exotic materials or magnets (just basic steel and copper), and are simpler to manufacture than other motors. Even better, they are extremely reliable. In fact they are the design-of-choice for mission-critical use cases like nuclear power plants and mining where you need a fault-tolerant motor to continue running for decades. So they are cheaper to make, more reliable, and apparently more efficient. A seeming triple-threat.

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Source: Software Motor Company


But then why has no-one else made mass-market SRMs before?

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Source: Software Motor Company

However, SMC’s team saw a conflagration of trends coming together that would make SRM’s a realistic opportunity now, where they were impossible in the past:

  1. Firstly, compute at the edge is getting extremely cheap because of smartphones. A cheap ARM SOC has many orders of magnitude the compute power today that a mainframe had a few decades ago. Think Raspberry Pi for $35.
  2. Secondly, simulation software has come leaps and bounds allowing highly erratic, mechanically unstable systems like SRMs to be modeled effectively in the design phase; while GPUs allow the cost of that simulation to come down orders of magnitude.
  3. Finally, AI and Machine Learning have surged ahead allowing control systems to create solutions to highly dynamic problems in far more efficient ways than could have previously been done with hand-coded rule-based systems.

Bringing these three things together means that you can build the control hardware and software for SRM’s many orders of magnitude cheaper than was previously possible, and the capabilities of the algorithms are so robust that they take an unstable, inefficient SRM, and make it more efficient than any similar motor before.

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Source: U.S. Air Force/Shane A. Cuomo

A good analogy would be to modern fighter jets. Planes like the F-22 are mechanically unstable; they would not fly or be controllable by a human if you just fired up the engines and tried to fly them without a computer. But put a computer into the loop with the right control algorithms and you end up with a machine that is far more maneuverable than any non-”smart” plane ever could be.

SMC’s Switched Reluctance Motors are in effect the fighter jets of the electric motor world.

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Source: Software Motor Company


Not Just A Good Investment

  • Cheaper
  • More Reliable
  • More Efficient

We love companies that have unfair advantages like this.

But we would be remiss if we ignored the sustainability angle of this investment. If we just look at BMW’s infrastructure, it runs massive manufacturing facilities, each consuming tens-of-megawatts of electricity. In fact, BMW spends over €350 Million on electricity each year, and massive amounts of that are consumed by the process and HVAC electric motors in our facilities.

So the potential savings just to BMW on the facilities side are massive, and more than justify a large investment in SMC even if their technology never makes it into electric vehicle powertrains.

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Source: Software Motor Company

Sustainability done right should bring efficiencies that make the logic close to a no-brainer. And SMC’s motors are about as close to the no-brainer line that we’ve ever seen in the sustainability space. In fact, the payback periods are better than LED light bulbs in most situations, which is very rare.

So, needless to say, while we think SMC is a good investment in and of itself, the opportunity to make a meaningful impact on electricity usage, and hence CO2 emissions globally, is what really gets us excited about partnering with the fantastic team at SMC.


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