Delivery fleet operators face regulatory pressure in California and other states to buy electric vehicles, but a surge in package deliveries thanks to coronavirus lockdowns has major firms itching to switch to electric right now.
And they want far more than just battery-powered versions of diesel- or gas-guzzling trucks and vans.
Fleet operators such as United Parcel Service Inc hunger for computers on wheels that can harvest data and upgrade safety or autonomous features overnight to save money and boost profit.
“For us, it’s not just about making the wheels turn with a zero-emission vehicle,” said Scott Phillippi, UPS’s senior director of fleet maintenance and engineering, who envisions “Tesla-like” vehicles in the company’s vast fleet. “It’s about an integrated-technology vehicle — and that’s really what we’re pushing for.”
With its ability to send wireless upgrades and fixes to customers’ electric cars, Tesla is seen as a bellwether for electrification. Major companies like UPS want to harness that power to bring cost-saving, autonomous or safety measures to their fleets in real time.
If, for instance, a manufacturer developed a feature to prevent a truck from bumping into a loading dock, UPS could have it in tens of thousands of vehicles overnight to prevent expensive dents, Phillippi said.
UPS, Amazon.com, and other e-commerce delivery companies are both creating and shaping the emerging market for electric vans and trucks. Economics and competitive advantages created by data will drive the market for electric commercial vehicles.
Demand for electric commercial vehicles is accelerating in part because battery range, long a concern for fleets, has improved dramatically, while battery costs have fallen.
While demand is soaring, supply is still virtually non-existent and production has been beset by delays.
“Ultimately, there’s no trucks available yet,” Phillippi said. “We’re just waiting for vehicles to show up.”
The pressure is rising for manufacturers to deliver. Startups such as Rivian and Arrival are racing with larger, established vehicle makers including Daimler, Ford and General Motors to get electric trucks into production.
Startup Xos Trucks, for example, has begun low-volume production of vans with Mexican auto supplier Metalsa, a part-owner and strategic partner, using a “modular” battery approach where battery packs are added based on a customer’s range needs.
Xos Trucks Chief Executive Dakota Semler recounts the recent reaction of a customer when told their vehicles would be delivered in 2021.
“They said, ‘What do I have to do get it by the end of this year?'” Semler said.
‘Actively raising capital’
The years-long journey of one electric delivery vehicle startup, California-based Chanje Energy, shows the challenges vehicle makers and their customers face creating a new industry on the fly.
California’s decision in June to require commercial truck manufacturers to sell a rising number of zero-emission vehicles, starting in 2024, drew attention to the market.
But Bryan Hansel, Chanje’s CEO, said California’s mandate made little difference. The surge in e-commerce delivery caused by the coronavirus pandemic had already caused fleet operators to zero in on the 50 miles per gallon (80 km per gallon) equivalent his vans offer versus the 6 to 8 mpg averaged by conventional diesel trucks.
Back in 2018, package delivery company FedEx ordered 1,000 Chanje vans. But Chanje had to pause while its battery supplier, China’s Contemporary Amperex Technology, updated its batteries’ energy density.
That boosted the range of Chanje’s vehicles to 150 miles from 100 miles. Its 2021 model should have a range of 200 miles, Hansel said, making it capable of handling 90% of U.S. last-mile delivery routes — the “last-mile” of e-commerce where drivers drop off packages at individual consumers’ doors is typically the most expensive.
Chanje had to tackle other problems.
Like other fleet operators, FedEx is not a fueling company — conventional fleets send vehicles to gas stations to fill up — so it lacked chargers for a large fleet. So Chanje became an energy services company, building out overhead charging stations at 20 FedEx depots across California to charge all 1,000 vans it will deliver in the first half of 2021.
Chanje also has stepped up its software and electronics capability. After drivers reported the vehicles would roll backward if they took their foot off the accelerator on a hill, Chanje spent four weeks rewriting the code with a software fix. Then, according to Hansel, the company “just flashed it over the wire to every truck we’ve ever built.”
Chanje’s vans are assembled in China by FDG Electric Vehicles, currently its main investor.
“But we are actively in the market raising capital because the capital markets seem to be very interested in the EV space right now,” Hansel said.
The many players
Below are some of the major orders and automakers’ projects under way to bring more electric delivery vans and trucks to market:
— Ford is working on an electric version of its popular Transit van. Ford will roll out an all-electric version of the van for North America in model year 2022, mirroring the timetable for launching a similar model for the European market in 2022.
— General Motors is developing an electric van for business users. The GM van — code-named BV1 — which is due to start production in late 2021.
— Amazon ordered 100,000 electric vans last year from startup Rivian — in which it has invested. The first of those vans is due for delivery in 2021 and a Rivian spokeswoman said production will begin on schedule.
— Amazon also ordered 1,800 delivery vans last month from Daimler’s Mercedes-Benz car and vans division for its European fleet. The first of those vans will be delivered by the end of this year.
— Electric truck maker Nikola and CNH Industrial truck unit Iveco are due to start producing a jointly developed electric big rig in 2021. Nikola is also working on a hydrogen fuel cell model that should begin production in 2023.
— Tesla is still working on its long-awaited Semi, a big rig it claims will have a range of up to 500 miles (805 km). Production of the Semi was originally slated to begin in 2019, but has been moved back to 2021. Tesla had a large number of pre-orders for the Semi from customers like UPS.
— UPS has ordered 10,000 vans from UK startup Arrival Ltd — the majority for the U.S. market — in which UPS also owns a minority stake. UPS said it expects to take delivery of “small numbers” of Arrival vehicles beginning in 2021, with larger-scale production beginning in 2022.
— Navistar International will launch an electric school bus by the end of this year, with electric trucks following at an undisclosed point after that. Gary Horvat, vice president of eMobility at Navistar, said the truck maker is “getting a lot of requests from all across the country and all the industries we support” about electric trucks, with e-commerce also spurring demand.
— Deutsche Post DHL Group’s StreetScooter electric vehicle unit plans to deploy its zero-emission delivery van across the United States as soon as 2022.
— Electric delivery vehicle startup Chanje Energy Inc will deliver 1,000 electric vans to package delivery company FedEx in California in the first half of 2021. Chanje’s vans are assembled in China by FDG Electric Vehicles, currently its main investor.
— Workhorse Group is due to start production in the fourth quarter of its electric delivery trucks at a rate of 100 vehicles per month. Chief Financial Officer Steve Schrader said that number will rise to 200 vehicles per month in 2021. UPS has ordered 50 electric trucks from Workhorse, with an option for 950 more. Workhorse is also among the bidders for a U.S. Postal Service contract to replace its fleet of delivery vans.
— Michigan-based specialty vehicle company Shyft Group recently announced it would launch production of electric delivery trucks in 2021 with a production capacity of up to 5,000 units per year. The company says it already has orders from “two leading parcel delivery companies,” but declined to name them.
— Startup Bollinger Motors, which has yet to produce any vehicles, announced last month it will start producing electric delivery vans in 2022.