Focus: Pandemic e-commerce surge spurs race for 'Tesla-like' electric delivery vans

FDG Electric Vehicles

09/09/2020 11:00

By Nick Carey
    Sept 9 (Reuters) - 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  UPS.N 
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 Inc  TSLA.O  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 Inc  AMZN.O , 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. 
    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. Arrival is working on self-driving technology,
which is one reason why UPS is supporting the company, UPS's
Phillippi said.  urn:newsml:reuters.com:*:nL1N29Y26G
    The company has also reserved 125 of Tesla's long-awaited
Semi big rigs, 50 electric trucks from Workhorse Group Inc
 WKHS.O  - with an option for 950 more - and is testing electric
trucks with California startup Xos.  urn:newsml:reuters.com:*:nL1N2G306T
    Tesla's Semi was due to go into production in 2019, but is
now slated for 2021. Tesla did not respond to requests for
comment.    
    Amazon ordered 100,000 electric vans last year from startup
Rivian Automotive LLC - in which it has invested - and ordered
1,800 more from Daimler AG's  DAIGn.DE  Mercedes-Benz car and
vans division for its European fleet last month.  urn:newsml:reuters.com:*:nL2N26A0WH
 urn:newsml:reuters.com:*:nL1N2FT2AY
    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 Motor Co
 F.N   and General Motors Co  GM.N  to get electric trucks into
production.  urn:newsml:reuters.com:*:nL1N2FL0MR
    Startup Xos Trucks, for example, has begun low-volume
production of vans with Mexican auto supplier Metalsa  MSDC.UL ,
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 Inc, 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.  urn:newsml:reuters.com:*:nL1N2E22C0    
    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 Corp  FDX.N 
ordered 1,000 Chanje vans. But Chanje had to pause while its
battery supplier, China's Contemporary Amperex Technology (CATL)
 300750.SZ , 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 Ltd  0729.HK , 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.
      

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 (Reporting by Nick Carey in Davenport, Iowa
Editing by Matthew Lewis)
 ((nick.carey@thomsonreuters.com; +1 312 636 8837;))