Amazon Just Supercharged the Market for Electric Delivery Vehicles

As part of Amazon’s commitment to fight climate change, on September 19, the company announced an industry-changing purchase of 100,000 electric delivery vans from EV startup Rivian. To put this figure into perspective with other competitor parcel delivery companies, Guidehouse Insights estimates that FedEx has roughly 3,500 EVs in its fleet—most recently adding 1,000 electric delivery vans in late 2018 from the California-based company Chanje Energy. UPS is working with Xos Trucks and Workhorse to design and deploy fully electric delivery trucks, including an ongoing pilot in London that also uses smart grid technology for intelligent charging. The company has an estimated 1,500-2,000 electric and hybrid delivery vehicles in its fleet across North America and Europe, most notably purchasing 1,000 electric delivery vans from Workhorse in mid-2018.

Amazon’s Announcement Is Part of Industrywide Trend 

While FedEx and UPS currently have relatively small fleets of EVs, both companies are developing bold long-term electrification plans for their delivery vehicles. Both are also playing a key role with other logistics companies in pushing automotive manufacturers and suppliers to produce more electrified commercial vehicles.

FedEx has a stated target of improving fleet vehicle fuel efficiency by 50% by 2025 (compared with 2005 baseline). UPS has invested over $1 billion globally since 2009 in both alternative fuel and advanced technology vehicles as well as fueling stations. UPS also placed a pre-order for 125 Tesla semitrucks; the largest order to date. The US Postal Service (USPS) is soliciting bids to replace its aging mail truck fleet with 180,000 new vehicles—two of the five finalists, Workhorse and Mahindra, are offering electric delivery trucks. If the USPS does choose an electric option, it would become one of the largest EV fleets in the world. Another leading player in the market is the Ingka Group—the parent company of IKEA. In 2018, the company announced an initiative to fully decarbonize its entire delivery fleet by 2025. IKEA aims to deliver all goods by EV at its New York, Los Angeles, Paris, Amsterdam, and Shanghai stores by the end of 2020 (IKEA hit its goal in Shanghai in January 2019). 

Market Impacts Are Far Reaching

Electric delivery vehicles are anticipated to significantly reduce diesel fuel sales and create entirely new businesses in vehicle manufacturing and charging infrastructure. Electric buses, for example, are already reducing oil demand by 270,000 barrels per day. 

Amazon’s procurement of 100,000 EVs dwarfs its shipping competitors and has propelled the company into a leading player in the transition to electric delivery vehicles—assuming it can execute on its timeline (full rollout aiming to be completed by 2024). Guidehouse Insights recently forecast electric-trucks to grow from 1% of all commercial vehicles used for logistics in 2019 to 3.5% by 2030. Between Amazon’s surprise announcement and an enormous potential order from USPS, these rates are expected to expand significantly in upcoming forecasts.