Arc expands into commercial marine amid electric boat growth

Electric boat manufacturer Arc Boat is expanding into commercial marine, creating new opportunities for asset-based financing as electric boat adoption increases. The Los Angeles-based startup is developing electric propulsion systems it expects to replace combustion engines across marine applications, Chief Executive Mitch Lee told Auto Finance News . “We believe that every vessel in the future will be electrically powered." — Mitch Lee, chief executive, Arc Boat As Arc moves into commercial and defense markets, the financing structure for those units looks much different than the financing structure for retail units, Lee said. Commercial vessels get financing based on expected cash flows, with financing during the construction stage followed by long-term funding tied to asset performance and revenue generation, compared to consumer purchases, which only serve a recreational purpose, he added. Changing boat sales, financing dynamics Near-term demand for boat financing remains under pressure, although Arc continues to target high-income buyers, limiting exposure to marine lending that traditionally targets a mix of consumers, Lee said. “We see that a meaningful percent of our customers are not actually financing those; they're paying cash for them.” “We try to make [the financing] process as easy as possible,” Lee said. “It's certainly available, and there's interest and a lot of enthusiasm for the electric transition. To date, that has not been a meaningful concern or headwind for us as a business.” Lower interest rates and a focus on premium buyers represent potential tailwinds and help support demand at larger OEMs, fellow marine manufacturer Brunswick CEO David Foulkes said during a presentation at the Raymond James Institutional Investor Conference on March 3 in Orlando. “Most of our customers tend to be on the somewhat wealthier end of [the economy], and you'll see improving confidence in segment and sentiment in that area,” he said. EV market growth Meanwhile, the global electric boat market is projected to grow 66.2% by 2030, according to market research firm Future Market Insights . The EV market growth creates opportunities for specialty lenders and infrastructure-focused investors as marine financing evolves beyond retail lending amid a slowdown in traditional marine sales, with Arc raising a total of $210 million through investors such as Eclipse Ventures , a16z , Menlo Ventures , Lowercarbon Capital , Necessary Ventures and Offline Ventures ., according to a March 19 Arc release. Still, U.S. boat registrations fell 18% year over year in February, following a 10% YoY decline in January, according to a March 24 BMO Capital Markets report. Core powerboat registrations also dropped 13% YoY. Affordability remains the primary challenge for consumers, with higher interest rates and fuel costs weighing on demand, according to the BMO note. Dealer inventory was also elevated in some segments in February, with new inventory up about 3% YoY. Marine market size supports financing growth Despite near-term softness, the marine sector presents a large, recurring financing opportunity. Brunswick, for one, reported $5.4 billion in 2025 net sales, up 2.4% YoY and $442 million in free cash flow, up 55.5% YoY, according to the company’s Feb. 13 10-K filing with the SEC . The company and its subsidiaries also continue to invest in electric propulsion, signaling long-term industry transition. The company also generated $2.2 billion in propulsion sales, up 5% YoY, and $1.2 billion in parts and accessories, up 4.9% YoY, with about 60% of earnings from recurring revenue streams, according to the filing. As electric boats scale and commercial demand grows, financing should follow and the market should expand, despite affordability pressures continuing to weigh on consumer lending and asset-based financing, Lee said. “As long as the options exist,” he said, “I’m confident that this industry will go electric quickly.” Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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Arc targets commercial marine financing amid electric boat market expansion

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