Tesla-Inspired Sports Boats Prepare to Electrify the Waters

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Afloat on the San Joaquin River — Grant Jeide looked like just another guy riding the crashing waves left by a 23-foot boat tearing through the water at speeds of up to 40 miles per hour on a river in the Northern California Delta earlier this summer.

But Jeide performed his aquatic stunts behind a different kind of boat, powered by electricity rather than gasoline. Free from the noise and acrid smell of a combustion engine, the boat’s passengers could chat with Jeide as he surfed behind them, enjoying the afternoon breeze blowing down the river.

“It’s like a playground out there, it feels like you could drive all day,” exclaimed Jeide, a member of the sales team at Arc Boats, a 3-year-old startup embarking on a journey to electrify the waters in the same way Tesla led the charge to electrify the roads.

Like Tesla did with its first car 16 years ago, Arc Boats is launching with luxury vessels that will appeal to a small, affluent audience that doesn’t mind spending big bucks to own the latest technological advances.

They’re people like Jonathan Coon, a self-proclaimed geek who got rich after starting 1-800 Contacts in his dorm room in the 1990s, and who can afford the sleek, powerful vessels that Arc Boats designs and builds.

After spending more than $300,000 on a luxury cruiser called the Arc One a few years ago, Coon is shelling out another $258,000 to become the first customer to get the Arc Sport, a model designed for popular water-based pastimes like wakeboarding and waterskiing.

It’s something Coon wouldn’t have considered buying just a few years ago after renting gas boats and sailing on friends’ gas boats and hearing about all the hassles involved in maintaining them, as well as the cost of fueling vessels that typically get only a few miles per gallon.

“I always thought the best boat was someone else’s because they can be a nightmare,” Coon, 54, said in an interview from Austin, Texas, where he oversees the development of a lakeside community. “But that’s not the case anymore. These guys have managed to make an electric boat down to the last detail that’s really fun to use.”

Arc Boats CEO Mitch Lee is also a lifelong nerd. He grew up in San Jose, California, the birthplace of Silicon Valley, where he began trading the foreign exchange markets when he was just 8 years old. After studying mechanical engineering at Northwestern University, Lee built a personal finance app called Penny, which he sold in 2018 to Credit Karma, now owned by Intuit.

The deal helped Lee raise the money to launch Arc Boats in Southern California with Ryan Cook, a friend he met at Northwestern. The electrification of boats has been on Lee’s mind since Tesla launched its first car — the Roadster — in 2008, and he wondered if the technology would ever work on the boats he grew to love as the son of parents who loved waterskiing.

The success of Tesla’s growing lineup of vehicles and electric cars made by other automakers has ultimately created a supply chain of batteries and other parts needed to electrify boats. Arc Boats, founded in 2021, now employs more than 100 people, including former engineers who worked for Elon Musk at two of his flagship companies: Tesla and rocket maker SpaceX.

After selling only a handful of Arc One luxury cruisers, Lee plans to ramp up production to sell hundreds of the Arc Sport model across the United States each year.

In addition to its home state of California, Arc Boats is targeting other areas of the country that love water sports, such as Texas, Idaho, Minnesota, Michigan and other areas of the country that have a lot of lakes and want to have fun on them. The first Arc Sport is expected to be delivered to Coon before the end of the year.

“There’s a lot of excitement about a product like this because it solves all the major problems that gas-powered boat owners have today,” said Lee, 35, as he piloted an Arc Sport on the San Joaquin River near Bethel Island, Calif. “It’s quieter. It’s a lot more reliable. It’s a lot cheaper to operate. You’re not inhaling fumes from the back of the boat. And we’re doing an interview on a boat where all you hear is the sound of water.”

Other boat builders are trying to get rid of combustion engines and fuel tanks that can easily cost $300 to $600 to fill for a day of cruising on a lake or river, and are making similar arguments. Some, like Sweden’s Candela and another California startup, Navier, are selling electric-powered hydrofoil boats that probably wouldn’t work as well for waterskiing or wakeboarding.

A variety of other electric boats, in a range of different styles, are manufactured by a list of others including Vision Marine, Ingenity, RS Electric, Duffy Boats and Rand Boats.

Compared to electric cars, the electric boat market is a drop in the bucket. Global sales of electric boats were just $5 billion in 2021, and even with steady double-digit annual growth, they are only expected to reach about $17 billion by 2031, according to Allied Market Research. In contrast, global sales of electric automobiles topped $250 billion last year.

Lee is trying to steer Arc Boats in the same direction that Tesla did after barely cracking the car market during its formative years. Much like Tesla’s vehicles, the Arc Sport will be equipped with a variety of technologies that will make the boat a sort of floating computer.

The boat is equipped with display screens, sensors, Wi-Fi, a hydraulic system to raise and lower the roof, a 226-kilowatt battery and software that can be updated over the air. Lee envisions that these software updates will allow Arc Sport owners to benefit from upgrades as technology improves and it may be possible for the boat to dock autonomously.

The Arc Sport’s high price tag also echoes that of the Tesla Roadster, which sells for between $80,000 and $125,000. Tesla now sells sedans in the $40,000 range, with ambitions to lower the price even further.

“Over time, we hope our technology will become less expensive,” Lee said of the Arc Sport as he prepared to show off the boat’s 500-horsepower engine. “There’s a lot of tailwinds here.”