Arc’s $160M tugboat deal shows how electrifying big boats is the right choice

Arc boats has announced a deal with Curtin Maritime to build 8 electric “ship assist” tugboats, meant for moving large cargo ships in and out of port. But the big takeaway is that nobody’s doing it because of grants or subsidies, but rather because it just makes economic sense.

We at Electrek have covered Arc before, but if you remember them it would probably be from their Arc One, Arc Sport or Arc Coast consumer models. It’s a fairly young company, founded in just 2021, and staffed by several former SpaceX, Tesla and Rivian engineers.

But Arc hasn’t just done consumer boats, earlier this year it unveiled that it was working on an electric tug for the Port of Los Angeles, which is now in service as the “Aaron P”. That boat is all-electric with 600hp, and is classified as a “truckable tug,” which means it can be transferred inland on a truck if so needed.

But now Arc has its sights set higher, and it’s building a tug (or, well, 8 of them) with ten times the power, made to move giant cargo ships in and out of America’s biggest port, or wherever else they’re needed.

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The new tug is classified as a “ship assist” tug, which are the boats that control giant cargo ships in port. Since precise maneuvering isn’t really the forté of these giant ships, small but powerful tugboats are used to get them where they need to be inside a port complex.

To accomplish this task, Arc’s tug will have 4,000hp worth of electric propulsion onboard, along with a 6MWh battery, sized to be able to handle the average job these tugs are called on to do.

However, the boat is technically a hybrid – it has an onboard diesel generator to provide backup power if needed, whether for a particularly heavy day or for some sort of oceangoing operation that might be a little further off shore than its typical fare. But it’s been designed to be electric first, and to have megawatt charging capability to help fill those batteries back up from shore power inbetween jobs. (Arc is planning to install MCS chargers at the Port of LA)

And, even if the boat were never plugged in, it would still offer big benefits. A smaller diesel engine operating as a generator can work in a more optimal part of the powerband, and battery power can be used to power onboard electricity loads when the ship is idling, which tugboats spend a lot of their time doing. And the lack of exhaust stacks means 360º visibility for the captain.

Further, electric motors offer more precise control. Many large ships already use electric motors for this reason, and for their higher efficiency, though that is not something that has made it way to too many tugboats yet.

The 8 tugs are being designed and built alongside Curtin Maritime, which has been in the tugboat business for 28 years. The design of the ship itself and the shipbuilding effort will be done by Curtin, on the West Coast of the US, and Arc will provide its expertise with electric powertrains.

Electrification makes sense ‘from a purely spreadsheet level’

Arc says that the agreement it’s signed with Curtin, for 8 tugboats at $20 million each, represents an inflection point for the industry. While there have been a number of other electric tugs, ferries, and so on, most of them are the result of grants, government partnerships or the like – whereas this deal is between two profit-seeking companies who simply decided that electrified equipment offers a better value proposition, all things considered.

Reliability and maintenance is also an important consideration for a tugboat. The tug needs to be the most reliable boat around, the one that others rely on when things go south. And any time spent doing maintenance means lost revenue and more stress on every other boat that is relying on you. Arc says that the electric powertrain should help to maximize uptime.

All of this makes a compelling economic argument, even without taking into account any grants or awards to encourage electrification (Arc is not relying on any of these, but isn’t saying it won’t apply for them if it qualifies for any)

Of course, in addition to the savings and capabilities of the boat, we should consider that diesel engines do actually benefit from tremendous subsidies in terms of the unpriced negative externalities they cause for the world around them.

These boats can carry tens of thousands of gallons of diesel in their tanks, and when that gets burned, it makes its way into the atmosphere causing climate change and into your lungs causing health issues. Then, when people who live near ports have higher incidence of lung problems (or basically any other health problem), those health bills aren’t paid by polluters that caused them. That’s a subsidy, and globally it runs on the order of $7 trillion per year for all fossil fuels as a whole.

Thankfully, the shipping industry is starting to clean up its act, and governments are starting to regulate the heavy diesel engines involved. This does add cost to the diesel engines, making them more expensive, while battery costs have continued coming down.

All this has led to a moment where Arc says the unsubsidized cost of its tugboat is similar to the cost of a diesel boat. But that diesel boat price benefits from the subsidy of ignored pollution costs, and electric still wins out as the better option.

So while the environmental benefits of this are clear, Arc says it can make this case at the purely spreadsheet level. And they’ll have a chance to prove it when it hits the water next year.

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