BANBURY, England (Reuters) – Electric van and bus maker Arrival is battling the global pandemic like other UK firms, but not for lack of business.
The arrival is answering four to five times the number of inquiries from potential customers compared to a year ago, as e-commerce during the pandemic and changes in emissions regulations have driven demand, said President Avinash Rugoobur.
“All over the world, the mindset has changed and people understand that the future is electric,” Rugoobur said. “So now it’s a question of how we get there.”
At Arrival’s R&D center in Banbury, northwest London, executives from a major British retail group waited patiently to tour the startup’s test van, which will begin production in 2022.
A surge in interest in Arrival followed Britain’s call in November for a ban on new fossil fuel vehicles by 2030, and was further aided by new US President Joe Biden’s declared interest in electrification.
Tightening CO2 emissions targets in Europe and China have been combined with improved battery technology to provide greater range at lower costs, giving commercial electric vehicles (EVs) their moment in the sun after years of waiting.
“People talk about a tipping point for commercial electric vehicles, but I think we’re there already,” said Luke Wake, vice president of maintenance and engineering for United Parcel Service Inc, which ordered up to 10,000 trucks from Arrival and owns a stake. at startup.
Feverish investor interest in finding the next Tesla Inc and bringing it to market through Special Purpose Acquisition Companies (SPACs) has included electric vehicle commercial startups such as Canoo Inc and Arrival, which will go public later this year. month through a merger with CIIG Merger Corp.
Additionally, the coronavirus pandemic has increased the need for vans to deliver products to consumers at home.
Startups like Rivian, Volta Trucks, and traditional manufacturers Daimler AG, Ford Motor Co, and General Motors Co have models available or in the works. Rivian will begin manufacturing vans for Amazon.com Inc later this year.
Because batteries remain expensive, commercial electric vehicles carry a higher tag price than diesel or gasoline equivalents – a tough sell for many cost-conscious companies.
But thanks to lightweight materials and tailoring battery packs to customers’ outreach needs, Arrival’s Rugoobur said that’s about to change: At some ranges, their trucks will cost less than a diesel equivalent.
“If Arrival can make those vehicles at the price equivalent of a diesel truck, the total cost of ownership is so in its favor that it becomes a competitive advantage,” said David Wyatt, an analyst at research firm IDTechEx.
‘IT WILL HAPPEN FAST’
Fleet operators are also facing increasing scrutiny on sustainability from retail customers, who feel the same pressure from consumers, said Volta Trucks CEO Rob Fowler.
“If you look at the logistics operators, they are in the middle and under pressure from all sides,” he said.
Stockholm-based Volta Trucks, which also operates in the UK, is developing a 16-ton electric truck, to be produced in 2022, for urban freight distribution routes. The batteries are heavy, so the body of the Volta Zero is made from a lightweight hemp-based compound and its shorter routes to the city center require fewer battery cells.
Volta Trucks has an order book of $ 260 million and its largest public order to date is for 1,000 trucks from French refrigerated truck firm Petit Forestier.
Higher upfront costs, challenges associated with charging multiple vehicles simultaneously, and a shortage of available models mean that relatively few commercial electric vehicles are still in service.
But Simon Webber, a portfolio manager at Schroders, which has about $ 650 billion in assets under management, said that the arrival of more electric vehicles on the market and the fall in battery costs will change that.
“It’s going to happen fast,” Webber said. “Because the average life of those vehicles is shorter, they turn faster than passenger cars, they electrify faster.”
Leading energy consultancy Wood Mackenzie said the commercial electric vehicle market will grow rapidly from a low base today to global sales of 3 million units by 2025 and 9 million by 2030, led by buses and light trucks.
Based on discussions with manufacturers, “We see commercial electric vehicles coming in a big way, in a big way,” said Tom Jensen, CEO of battery maker FREYR, which will be made public through a merger with a SPAC, Alussa. Energy Acquisition Corp.
‘EVEN MORE EXPENSIVE’
Electric vehicle manufacturers say that while commercial electric vehicles have a higher tag price, over their lifetime their “total cost of ownership” is lower as electricity is cheaper than diesel and electric motors require less frequent repairs due to fewer moving parts.
The British arm of parcel delivery company DPD, a unit of France’s La Poste, was an early adopter and its 732 electric vehicles account for almost 10% of its fleet, most of them e-NV200 pickup trucks from Nissan Motor Co Ltd or Volkswagen eTGE trucks. AG MAN unit.
In 2020, the pandemic brought DPD volumes to a daily record 2 million packages during the peak holiday season and the company will purchase an additional 500 electric trucks in 2021.
Olly Craughan, DPD UK’s head of corporate social responsibility, said that a Mercedes-Benz Sprinter diesel unit costs around 25,000 pounds ($ 34,572), but an electric version costs up to 45,000 pounds.
“It’s even more expensive, but the gap is closing,” Craughan said. “If you can run them longer than diesel vehicles, that’s where you will get the most benefit.”
DPD will be testing a Volta Zero later this year and has spoken with Arrival regularly, Craughan said.
By 2025, battery prices are expected to fall enough to give electric vehicles price parity with fossil fuel vehicles.
But Arrival’s Rugoobur said that some of the startup’s production models will already outperform diesel engines in price, with the help of a lightweight and strong thermoplastic composite body that offsets heavy batteries, and includes basic self-driving features to reduce costly package depot accidents.
“If we can bring that price down to an acceptable level that you can scale it to, it will allow us to make bigger commitments like Arrival,” said Wake of UPS.
Reporting by Nick Carey in Banbury, England; Additional reporting from Kate Abnett in London; Editing by Ben Klayman and Matthew Lewis