The future of a number of commercial electric truck startups looking to invest through blank check IPOs rests largely in the hands of a small group of large companies, notably UPS, FedEx, DHL and Amazon.
With every freight forwarder having tens of thousands of vehicles in their global fleet, an order from a parcel delivery giant can set a start-up on its way to production scale, profitability, and serve as a marketing tool to win orders from other major customers.
“Everyone is looking for their golden ticket,” said Steven Merkt, President of Transportation Solutions at sensor, connector and electronic component manufacturer TE Connectivity Ltd, who works with all startups and provides technical feedback on designs. “If you don’t have scaling, you get squeezed out pretty quickly.”
Investors have poured billions of dollars into electric vehicle startups in the hunt for the “next Tesla,” with mixed results. Unlike Tesla, which has been ahead of traditional automakers for years, commercial vehicle startups are racing against time as big manufacturers like Ford begin to bring competing products to market and others like Volkswagen add to their electric offerings.
Some startups already have their golden ticket. Arrival, which went public through a merger with a Special Purpose Acquisition Company (SPAC), already has an order for up to 10,000 vans from UPS, for which an option for a further 10,000 has been agreed. Chanje has an order for 1,000 vans from FedEx in California, while Rivian has an order to build 100,000 vans for Amazon.
Others, like Xos, are nearby. Xos, which goes public through a merger with blank check company NextGen Acquisition Corp, is testing electric vans with both UPS and Amazon. Some, like Canoo Inc, experienced turbulence as they refined their strategies.
Thore Meurer, European Senior Fleet Director at DHL Express at Deutsche Post AG, said: “The time window is closing.”
Meurer said DHL has been speaking to UK Arrival for years and will try out some of its test models. In the US market, DHL has announced that it will buy 89 electric vans from Lighting eMotors, which went public through a SPAC merger.
According to Meurer, DHL Express is also talking to two Asian startups about electric vans for Europe, but the company wants 14,000 electric vans in its European fleet by 2030 and is determined to get started. In April, DHL ordered 100 E-Ducato electric transporters from Stellantis, a manufacturer with a long tradition, to deliver parcels in Europe.
“If another startup with a van comes onto the market in two years, they will have no more chance,” said Meurer. “By then, every big player will have an electric van on the market.”
The electric test vehicle Arrival in the striking brown livery of UPS is popular with the drivers of the parcel delivery giant in the London borough of Kentish Town. During a demonstration of the van by Luke Wake, UPS Vice President of Maintenance and Engineering, several drivers asked, “When can we drive one?”
The Van Arrival is the result of years of work by UPS to integrate electric vehicles into its fleet. The Kentish Town depot is still home to some old former diesel trucks that UPS converted into electric vehicles.
“We converted hundreds of our existing vehicles to electric to see how they fit in,” says Wake, “and to revitalize a market that didn’t exist yet.”
Working with a startup like Arrival has opened up a wealth of opportunities for UPS, including self-driving delivery truck features that can reduce costly depot accidents, Wake said.
The delivery truck’s battery allows UPS to add automatic driver doors and LED lights in the back to help drivers find parcels faster. Such functions can save seconds per delivery, which quickly adds up as UPS delivers around two billion packages annually.
The UPS contract made Arrival popular, and the startup highlighted that relationship when it announced last month that it will also develop an electric car for Uber.
“You always have to close a gap in trust,” says Carl-Magnus Norden, founder of Volta Trucks based in Stockholm, which developed an electric truck for inner-city delivery to companies and ordered 1,000 trucks from a French refrigerated vehicle manufacturer Petit Forestier. “So someone like Petit Forestier is important to us.”
While most startups are looking for that golden ticket order, Electric Last Mile Inc (ELMS) is tapping U.S. dealer networks to achieve economies of scale and has pre-orders for 45,000 small electric vans due to launch this year.
CEO James Taylor said that speed is paramount as automotive giants like Ford focus on electric utility vehicles. Ford sells most of the commercial vehicles in the US and European markets and will launch an electric transit van in 2023. ELMS is counting on it to succeed, because no one has yet planned to produce such a small van in the USA: “We have at least a short runway on which we have no competition,” said Taylor.
In April of this year, UK grocery delivery company Ocado announced that it was Invest £ 10 million in Oxbotica for autonomous vehicle solutions and develops a range of vehicles that are integrated into the Ocado Smart Platform.
As mentioned above, Arrival secured a deal with Uber build up a fleet of electric cars for its “Clean Air Plan” in London in May. The electric car manufacturer will develop vehicles that are “specially designed for ride-hailing” and go into production in 2023. The investment will also help boost Arrival’s van business.
The competition for dominance developing market for electric vehicles Companies place their hopes on diametrically opposed approaches in production, just as the leading delivery companies parallel to the most efficient, cost-effective and environmentally friendly solution for the increasing number of last mile deliveries their customers are demanding.
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