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Sunday September 13, 2020 |Notes

Electric delivery vehicles will change ecommerce delivery economics

Electric vehicles yet to be deployed for significant commercial usage, much unlike the personal car market. That will change in the near future, and that timeline has been pushed forward as a result of the pandemic and the surge in ecommerce spending. The incentives are increased, and big-tech interest and investment has followed.

UPS has ordered 10,000 vans from UK startup Arrival Ltd - the majority for the U.S. market - in which UPS also owns a minority stake. Arrival is working on self-driving technology, which is one reason why UPS is supporting the company, UPS’s Phillippi said.

The company has also reserved 125 of Tesla's long-awaited Semi big rigs, 50 electric trucks from Workhorse Group Inc WKHS.O - with an option for 950 more - and is testing electric trucks with California startup Xos.

Tesla’s Semi was due to go into production in 2019, but is now slated for 2021. Tesla did not respond to requests for comment.

Amazon ordered 100,000 electric vans last year from startup Rivian Automotive LLC - in which it has invested - and ordered 1,800 more from Daimler AG's DAIGn.DE Mercedes-Benz car and vans division for its European fleet last month.

Uber recently announced a plan to move its entire fleet to electric vehicles by 2030. It won't be an easy task and yet it seems likely be happen because of the economic incentives. Uber has planned to spend $800 million to incentivize drives to change to elective vehicles. It's undoubtedly worth more than that to Uber.

Anticipating this, Uber says it has earmarked $800 million to help its drivers transition to electric vehicles. In a deal with General Motors, Uber drivers can get employee pricing on new Chevy Bolts (on top of an $8,500 rebate offered to all buyers). Uber is also launching additional incentives for drivers to electrify, such as getting paid an extra dollar for each ride they give in an electric car (in Canada and the US only)

In the long run, Uber must significantly lower the costs of transportation in order to turn a profit and they are pushing to make it happen. The economics will completely change at a certain breaking point and it's the same for ecommerce fulfillment.

Ecommerce fulfillment is seeing significant investment because the stakes are high. Rather than utilizing trucks that get 6-8 mpg, electric trucks may achieve over 200 miles per gallon with the ability for ongoing fleetwide software upgrades. The solutions are coming soon and will significantly alter the economics of ecommerce fulfillment.

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