Electric delivery vans set to take off in the US

UPS, Amazon, FedEx and more are investing billions to build out EV delivery fleets.
By Maria Gallucci

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An electric prototype of a brown UPS delivery van
A prototype of Arrival's electric delivery van for UPS is displayed inside the British startup's facility in England. (Arrival)

A parade of delivery vehicles rumbles through the streets every day, carrying bags and boxes of clothes, groceries and diapers directly to our doorsteps. Vans and trucks burning fossil fuels are fulfilling the nation’s rising demand for online shopping — and they’re bringing noise, noxious fumes and planet-warming gases into neighborhoods across the country.

In response, automakers and logistics giants are accelerating efforts to electrify commercial vehicles, which have lagged behind passenger cars when it comes to replacing polluting engines with emissions-free batteries.

Among the latest contenders vying to clean up fleets is Arrival.

The British startup is partnering with UPS, which has placed an order for 10,000 of the company’s electric delivery vans. Arrival plans to start producing the vehicles later this year in the United Kingdom and the United States. The two companies are collaborating to design vans for drivers making dozens of daily stops, who are hauling ever-growing volumes of goods, said Avinash Rugoobur, Arrival’s president.

I spoke with Rugoobur recently from inside of one of Arrival’s prototype vans, which rolled into New York City last week. The tall, snub-nosed vehicle came by cargo ship from England to the port of Charleston, South Carolina, where it hitched a ride on a northbound truck. The delivery van itself, which has a right-hand steering wheel, isn’t approved to drive on any roads just yet.

Standing in the back of the van, in the narrow aisle between two empty shelves, Rugoobur held up a slim black box: one of Arrival’s battery modules, which contain LG Chem’s lithium-ion cells. Modules beneath the floorboard, connected like Lego bricks, have a combined capacity of 111 kilowatt-hours — enough to travel about 180 miles on a single charge. Up front, a large touchscreen has replaced the dashboard, allowing drivers to track their routes and monitor the batteries’ charge levels.

A boxy white electric delivery van with its back doors open
Arrival's electric van prototype on display in New York City on March 8, 2022 (Maria Gallucci/Canary Media)

Knocking on the white van’s walls produces a hollow sound. Instead of steel or aluminum, the vehicle body is made of thermoplastic and glass fibers, which are woven together like fabric and shaped using a high-pressure vacuum mold. We’ve driven trucks over this thing, and it just pops back up,” Rugoobur said while passing around a sample of the feather-light material.

The plastic panels are part of Arrival’s broader strategy to build vehicles inside 300,000-square-foot microfactories,” rather than sprawling automotive assembly plants. Compact vacuum molds will replace the large, expensive machines used to stamp and paint metal auto parts. Multitasking robots should allow Arrival to produce relatively low volumes of highly customizable vans, buses and cars at facilities located close to where the vehicles will circulate.

Arrival expects to produce 400 to 600 total vans by year’s end at its microfactory in Bicester, England and a second facility being built in Charlotte, North Carolina. A third microfactory planned in South Carolina will start making buses at an unspecified later date.

We know the traditional approach very well, and we’re rethinking the whole thing,” said Rugoobur, who was previously an executive for General Motors’ self-driving subsidiary Cruise. Mike Ableson, CEO of Arrival’s U.S. operations and another former GM executive, nodded in agreement as he peered through the van’s open back door.

A man is shown gesturing toward a boxy black and white electric delivery van
Mike Ableson, CEO of Arrival’s U.S. operations, presents the startup's electric van prototype in New York City on March 8, 2022. (Maria Gallucci/Canary Media)

The race to electrify dirty delivery vans and trucks

While Arrival is taking a unique approach to making EVs, the startup is far from alone in trying to revamp commercial vehicles. At least a dozen companies are working to electrify large cargo vans, box trucks and other types of medium-duty models.

BrightDrop, a division of GM in Detroit, is building battery-powered commercial vans for customers including FedEx and Walmart. Los Angeles–based Xos Trucks is building larger electric trucks for both UPS and FedEx. Rivian, another California startup, is designing and engineering delivery vans, especially for Amazon. The e-commerce giant, which holds an ownership interest of approximately 20 percent in Rivian, has ordered 100,000 electric vans to be delivered through 2024.

Rivian sold its first electric van to Amazon in late 2021 and expects production of the vans to ramp up considerably” between April and June of this year, Rivian CEO RJ Scaringe said last week on a quarterly earnings call.

A boxy, dark-colored electric delivery van is shown on the manufacturing line
An electric delivery van moves through Rivian's manufacturing plant in Normal, Illinois. (Rivian)

Major fleet operators are increasingly embracing electrification for two key reasons. First, consumers are growing more concerned about the environmental toll of shipping goods by land and sea, particularly as e-commerce sales have soared since the beginning of the pandemic, said Ellen Bell, the senior manager for Environmental Defense Fund’s zero-emission vehicle initiative in Chicago.

Transportation accounts for nearly 30 percent of annual U.S. greenhouse gas emissions, more than any other single sector. Medium- and heavy-duty trucks contribute nearly a quarter of those transport-related emissions, along with spewing significant amounts of toxic tailpipe pollution. Some 72 million people live near truck-freight routes across the country, and they’re more likely to be people of color or have lower incomes, according to the U.S. Environmental Protection Agency.

The second reason for the growing interest in electrifying fleets is that the costs of owning and operating battery-powered commercial vehicles are steadily declining, Bell said. That makes it easier for companies to justify investing in new trucks or vans and installing charging plugs in warehouses and parking depots.

The technology is advancing to the point where the business case can be made for certain vehicle classes, and that wasn’t always the case,” she told Canary Media. That is a really clear signal to fleet operators.”

Last year, researchers studied the real-world performance of 13 different battery-powered commercial vehicles over three weeks. They found that the technology is mature enough in four market segments — vans and step vans; medium-duty box trucks; terminal tractors; and heavy-duty regional haul trucks — that it makes sense for fleet operators to invest in those types of vehicles today, according to the North American Council for Freight Efficiency, which led the Run on Less–Electric initiative.

One of the participants in the real-world test was Motiv Power Systems, a company based in the San Francisco Bay Area. Unlike Arrival, which strives to produce virtually every part from scratch, Motiv manufactures the electric powertrain and chassis — the vehicle’s backbone that delivers the power that drives the wheels. The company then works with existing truck builders and auto-part suppliers to assemble battery-powered vans, trucks and buses.

Our customers have been comfortable with this approach,” said Prasad Ramakrishnan, Motiv’s chief operating officer. We’re the only EV player with vehicles on the road within the commercial fleet since 2013.”

A blue delivery van is driving across the Golden Gate Bridge
Motiv Power Systems' electric step van crosses the Golden Gate Bridge in San Francisco. (Motiv)

About 150 Motiv-made vehicles are actively driving today, carrying everything from baked goods and mail to construction equipment and passengers. Last week, Motiv announced that its next generation of all-electric models will use battery technology from Our Next Energy, enabling its vehicles to travel more than 150 miles on a single charge.

Ramakrishnan said that rising demand for cleaner commercial vehicles helped Motiv double its production output in 2021, and the company expects to do the same again this year, though he didn’t provide more specific numbers.

Production delays and EV-charging barriers are slowing rollout

Yet for all the growing demand, several barriers remain to replacing the millions of medium-duty vans and trucks on U.S. roads with cleaner models.

Automakers in recent months have extended production timelines or delayed delivery of vehicles, citing supply-chain constraints, technology concerns and rising costs of materials and components.

Workhorse, an Ohio-based startup, suspended delivery of its flagship electric vans last year and recalled 41 vehicles it had already delivered, explaining that the vans needed additional testing and modification” to comply with federal safety standards. Rivian hoped to produce 300 vans for Amazon by the end of 2021; instead, it delivered a smaller, unspecified number. Those vans are primarily being used to refine software and digital integration with Amazon’s system,” Scaringe said on the earnings call.

Arrival originally projected that it would sell several thousand of its electric delivery vans in 2022, compared to the 400 to 600 vehicles it now hopes to deliver. The startup, which also has a $100 million investment from Hyundai and Kia, has seen its stock price plunge by nearly 90 percent since it started trading shares in March 2021 through a SPAC merger.

We’ve come to realize doing [something] that nobody’s done before is hard,” Ableson, the company’s U.S. CEO, recently told Barron’s. (Arrival’s global CEO and founder is Denis Sverdlov, a Russian tech mogul based in Britain.)

A dark-colored electric UPS delivery van is shown from the rear
A prototype of Arrival's electric delivery van for UPS (Arrival)

As national logistics firms such as UPS and FedEx work to convert their fleets, smaller businesses that operate locally — and represent the majority of U.S. fleet owners — are still uncertain about how to electrify the vehicles they use to haul things like fresh pastries, organic produce or garden supplies, said Bell of Environmental Defense Fund.

They’re the ones that we can’t even talk to yet [about electrifying fleets] because they’re nowhere near replacing a vehicle or figuring out the charging infrastructure,” she said. The federal government’s plan to invest up to $7.5 billion in public EV charging stations would benefit businesses that might not have the parking space or financial capacity to install their own plugs.

Still, if online shopping during the pandemic has exacerbated traffic and tailpipe pollution, it has also drawn more public attention to the need to clean up commercial vehicles, Bell said. In New York City, where Arrival debuted its prototype van, the amount of cargo entering, leaving or passing through the city is projected to grow by 68 percent, to 540 million tons, over the next two decades as people and businesses buy more things.

People can relate to this emissions source — they understand it’s in their neighborhoods, that it has a direct effect on health,” Bell said of delivery vans and trucks. There’s been a confluence of circumstances that shined a light for an audience that might not have seen it before.”

Maria Gallucci is a senior reporter at Canary Media. She covers emerging clean energy technologies and efforts to electrify transportation and decarbonize heavy industry.