When you think of electric vehicles, you might think first of a Tesla. But a more financially rewarding use of the technology could be the vans that deliver your online shopping, reports The Wall Street Journal (Jan. 23, 2021).
Until recently, such unassuming vehicles occupied an easily ignored niche within the multitrillion-dollar automotive industry. That is changing fast. Rivian just raised $2.65 billion to fund its rollout of EVs, including a delivery vehicle for Amazon.com, which holds a stake in the startup. And GM just created a new company, BrightDrop, to focus on selling EVs to the delivery market. It expects to ship 500 units to its launch partner, FedEx, this year.
Electric vans are at the confluence of two big trends. One is the rise of e-commerce at the expense of bricks-and-mortar retail, to which the pandemic has given a boost. The other trend is vehicle electrification. The likes of UPS, DHL and FedEx have all committed to reducing their carbon emissions and need electric delivery trucks to do it. So has Amazon, which ordered 100,000 electric vans from Rivian, the first of them due later this year.
Logistics operators and small contractors are focused on careful cost calculations, including over the lifetime of their vehicles, as we illustrate in Example S2 of Supplement 5 (Sustainability in the Supply Chain). That increases the attractions of EVs, which tend to have low running and maintenance expenses. One reason such calculations are possible is that vans don’t typically need the long driving ranges required of passenger cars. Vans are often driven around cities for predictable distances and can be recharged overnight at depots.
Another advantage of EVs, as Tesla has shown, is the facility with which software can be integrated into their overwhelmingly electronic systems. Unlike Tesla fans, van owners stand to benefit financially from this advantage. Logistics is a data business. The more tools for cost-efficient routing, driving, loading and the like that manufacturers can offer fleet owners, the more business they will attract.
Classroom discussion questions:
- What are the advantages and disadvantages of electric vans?
- Why are retailers like Amazon investing in these vans?