Scaring legacy automakers into finally producing electric cargo vans is like pulling teeth.
By Wolf Richter for WOLF STREET.
EV startup Canoo, which went public via merger with a SPAC in December 2020, and whose shares then promptly spiked and collapsed, and which said in its Q1 earnings report that it might not have enough dough to continue “as a going concern,” and which became one of the stars of my Imploded Stocks column, and which has yet to deliver any EVs, well, it announced today that it had inked a deal for Walmart to purchase 4,500 electric delivery vans someday.
Details have not been disclosed, and as is the case in all these deals of future purchases of a large number of electric delivery vans that don’t yet exist, there is lots of wriggle room in it for both parties, as is the case with the Walmart-GM BrightDrop deal, the Amazon-Rivian deal, the Amazon-Stellantis deal, the Amazon-GM BrightDrop deal, the UPS-Arrival deal, the FedEx-GM BrightDrop deal, or any of the others.
Canoo shares [GOEV] spiked by a phenomenally glorious 110% this morning, and by the close gave up half of that spike, and are up 53%. That 80% spike or 100% spike or whatever earlier was a huge deal in the headlines everywhere this morning. But shares were just $2.38 yesterday, and so the huge spike today was only to $5.00 this morning, and now back to $3.63. The shares are still down 84% from the intraday peak in December 2020. And today’s jump was just a little uptick in the collapse (data via YCharts):
Whatever will come of this order from Walmart, and whether or not Canoo has even enough cash to ramp up production to manufacture these vans, to Walmart this is irrelevant.
What Walmart wants is a lot of competition in the electric van space, and it wants to motivate the legacy van makers – Ford are you getting the hint? – to get on the ball and start producing top-notch electric vans that were designed from a blank sheet as electric vans, and with Walmart specs in mind.
Scaring legacy automakers into finally producing electric cargo vans is like pulling teeth.
It makes sense for Walmart, Amazon, UPS, and FedEx to throw their weight around in the development of EVs for urban delivery of packages. The legacy automakers have refused to build them until the giants started making deals with a bunch of startups, threatening to steal that business.
These huge delivery companies really really want to put electric vans into their urban delivery fleets because electric propulsion systems are ideally suited for urban delivery, where routes are generally below 100 miles a day, and there is no range anxiety. Vehicles can be charged up overnight at the warehouse, and electric motors are so much more efficient particularly in stop-and-go traffic, than ICE vehicles, which turn somewhere between 70% to 100% (at idle) of the energy they use into waste heat. Electric vans can capture some of the braking energy (otherwise waste heat) with regenerative braking that charges the battery every time the vehicle is slowed. And maintenance costs are lower than on ICE vans.
Every one of these massive companies that do urban deliveries wants electric vans – and have been wanting them for years and have been ordering them for years. And they’re just not forthcoming.
Another problem that needs to be shaken up: Ford.
Ford, the dominant player in the US delivery van business with its Transit van series, dropped the ball on EV vans. It focused its EV energies on the F-150 Lightening and the Mustang Mach-E. And so it doesn’t have a blank-sheet electric van model.
What it has come out with are last-minute-designed electric conversions of its ICE vans – putting the electric components into a vehicle designed for ICE components, and that’s never a good solution. And that’s the number one market leader in ICE vans.
GM is finally coming out with a blank-sheet electric delivery van under its BrightDrop division.
Ram, which builds the popular ProMaster delivery van, is coming out with an electric van. But with Ram now being a brand of Stellantis, this electric van will be based on a Fiat van.
Walmart and FedEx made deals with GM’s BrightDrop.
Walmart also made a deal with GM’s BrightDrop to “reserve” 5,000 electric delivery vans, which it expects to go into service in 2023, according to BrightDrop.
FedEx had put in a reservation for 500 BrightDrop vans and received the first five prototypes in December last year for testing. In January, it then put in an order for an additional 2,000 vans.
FedEx said that it hopes electric vans will make up half of all of its van purchases by 2025, and 100% by 2030. The numbers in this business are just huge: FedEx’s fleet of electric vans may eventually reach 250,000 vehicles, it said.
UPS made a deal with Arrival.
UPS put in an order with UK-based EV startup Arrival for 10,000 electric delivery vans, with the option to purchase 10,000 more vans. The order is subject to cancellation at any time, and without penalty, like so many of these types of orders. The deal was announced in early 2020. UPS also invested an “undisclosed amount” in Arrival.
UPS, during its earnings call on February 1, 2022, said that it will “purchase” 425 Arrival vans in 2022, and beyond testing some prototypes, still doesn’t operate any of the vans.
Following the hype-and-hoopla announcement of the UPS deal, Arrival announced later in 2020 that it would merge with a SPAC in the US. The merger was completed in March 2021, with shares trading on the Nasdaq, where they promptly collapsed by 94% from the hype-and-hoopla high to today’s penny-stock of $1.46 (data via YCharts):
Amazon made deals with Rivian, Fiat, I mean Ram, Daimler, Lion, and whatever.
Amazon invested about $1.3 billion in Rivian for a 20% stake. In a deal announced with great fanfare, Rivian was supposed to build 100,000 vans for Amazon through 2030, to Amazon’s specs, and Rivian was supposed to start delivering them in 2021.
And then nothing happened, and in May 2022, there were reports of further delays because Rivian was suing a supplier over pricing issues or whatever. Beyond the prototypes for testing, there are still no vans.
However, Rivian is building and delivering high-dollar pickup trucks, and they’re out there, and I have seen a few of them already. But they’re not for Amazon.
Now there are reports that Rivian is planning layoffs that could reach 5% of its workforce, according to sources cited by Bloomberg. These are nonmanufacturing roles that will be eliminated as the company wants to trim its workforce after overstaffing.
Rivian’s shares [RIVN] have collapsed by 83% from their high in November 2021, and both Amazon and Ford have taken huge write-downs on the gains they’d booked following the Rivian IPO in November 2021 (data via YCharts):
Amazon also ordered “thousands” of electric Ram ProMaster vans, Stellantis said in January 2022, which are based on electric vans from Fiat, with some input from Amazon.
Amazon has also ordered 1,800 electric vans from Daimler for use in Europe. And it ordered electric three-wheelers from Mahindra for use in India.
And from Lion Electric. Amazon ordered up to 2,500 electric trucks from Lion Electric, an EV maker startup in Canada, hopefully for delivery in 2025 or whenever.
Lion Electric announced in November 2020 that it would go public via merger with a SPAC. Weeks after the announcement, the Amazon order was reported and hugely hyped, and the SPAC’s shares spiked to $35.25 by January 15, 2021. By the time the merger with the SPAC was approved and completed in May 2021, shares had already plunged by about half. And today, at $4.37, shares are down 88% from the hype-peak. And Amazon still hasn’t gotten any electric delivery trucks (data via YCharts):
Twisting arms of the legacy van makers.
Legacy automakers still face huge problems with their supply chains for ICE models where they’ve had well-established supply chains. Production was hit mostly by shortages of specific semiconductors. Now they’re trying to build new supply chains for EVs, which is even worse. There are long waiting lists for their passenger EVs. Electric cargo vans are not the top priority. And for Ford, which dominates the ICE cargo van business, electric cargo vans are just an afterthought.
So it makes sense for the delivery giants Amazon, Walmart, UPS, and FedEx to fire up some startups, though they have even bigger problems trying to set up complex supply chains, in addition to all the other problems they have, such as running out of cash. But that’s the only way the giants have to twist the arms of legacy van makers into finally producing EV vans.
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