February 22, 2018

UPS to deploy electric delivery cars at cost parity to diesel, gas powered units

Ground-floor design to narrow gap between electric and conventional powered trucks.

By DC Velocity Staff

UPS Inc. said today it will deploy 50 electrically powered package cars by year's end that will be comparable in acquisition costs to conventionally fueled trucks without any subsidies for electric vehicle investment, a move the transport and logistics giant said could be a breakthrough in large scale truck fleet adoption of electric vehicles.

Electrically powered vehicles are typically more expensive than those powered by diesel fuel or gasoline, and rely on some form of government subsidy to narrow the price differential and create incentives for purchase. Atlanta-based UPS said it has reached subsidy-free parity by working with Workhorse Group Inc., a Loveland, Ohio-based manufacturer of electric vehicles, to design and build a prototype from the ground up. The two companies said they have spent four years on the effort.

The 50 vehicles will be utilized in densely populated urban areas like Los Angeles, Atlanta, and Dallas, and operate with a range of about 100 miles between charges, UPS said. Depending on the success of the initial deployment, UPS will expand use of the vehicles during 2019. UPS has about 35,000 diesel or gasoline trucks that are comparable in size to the electric vehicles, and travel about the same number of miles in similar conditions.

UPS Spokeswoman Kristin Petrella said the company believes an electric vehicle can be built that incorporates the current advantages of the familiar brown package car with the cost-saving features that come with using an electric drive train. An electrically powered drive train requires fewer moving parts while taking up less engine space, and uses composite body materials that are lighter weight and more flexible in cabin and cargo area design, Petrella said. "All of these innovations will lead to production efficiency and reduced cost," she said.

Economies of scale will be the key factor in achieving cost levels equal to that of traditionally powered vehicles, according to Petrella. "We cannot achieve the targeted vehicle cost without volume. Likewise, we cannot commit to volume unless we can close in on cost parity with traditionally fueled vehicles," she said. "We believe production runs of (about) 1,000 units at a time will hit that sweet spot."

UPS will also face challenges to ensure its facilities have the electrical capacity to power a fleet of large magnitude, Petrella said. "We are working with local utilities to assess those situations and develop deployment plans," she said.

Petrella declined to disclose hard data illustrating the cost differentials between the two package car designs.

Workhorse has claimed the UPS vehicles provide a nearly 400 percent fuel efficiency improvement and a superior driving experience through more advanced ergonomic design.

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