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Senior Analyst – UK
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With a background in computational biology, Rueben Scriven joined Interact Analysis two years ago and leads the warehouse automation and on-highway commercial vehicle research areas. Rueben has spoken at some of the leading industry events and moderated several panel discussions on the topic of commercial vehicle electrification. He’s also appeared on CNBC to provide insight on the global electric bus market.

  • UPS orders 10,000 electric trucks from UK-based start-up Arrival making it the second largest pre-order of electric trucks in Europe and North America behind Amazon’s recent order of 100,000 Rivian electric vans.
  • This comes less than a month after Hyundai and Kia invested $110 million in Arrival which coincided with its emergence from stealth mode.
  • Failure to anticipate the ramp in demand poses a serious threat to incumbent commercial vehicle manufacturers.

On the 29th January, UPS announced that it planned to order  10,000 electric trucks from UK-based start-up Arrival, which is the second largest confirmed order of electric trucks in Europe and North America behind Rivian’s deal to supply 100,000 vehicles to Amazon. Due to their size and duty-cycle, last mile delivery trucks are extremely well suited for electrification and the total cost of ownership (TCO) of electric trucks is now below that of an ICE equivalent model; not least when operating within a low emission zone which further improves the economics for electric vehicles. 

With cost benefits of using electric trucks for last-mile delivery, it’s no surprise that the market is booming. Between 2019 and 2025, we forecast just under 2 million electric light-duty trucks will be registered across Europe and North America. The number of orders Rivian, Arrival, Chanje and Workhorse have already received accounts for more than 6% of the total forecast volume, not to mention the deals they will win during the forecast period. Table 1 shows some of the largest EV fleet operators in Europe and North America and the OEMs they’ve partnered with.

Risky Business? 

Some may argue that purchasing 10,000 vehicles from a company that’s just emerged from stealth mode is a risky move. While there’s some truth to the argument, Arrival already has the financial backing from Hyundai and Kia Motors. The same is true for Rivian which received a capital injection of $500 million from Ford Motors and an additional investment of more than $400 million from Amazon.  

Both Arrival and Rivian have built their vehicles from the ground up which significantly improves the efficiency compared to using an existing vehicle architecture and replacing the diesel drivetrain with an electric one. What’s more, it’s not just the vehicle which has been built from the ground up; the entire manufacturing process has been redesigned. Arrival, for example, will use what they describe as ‘micro-factories’ to build the vehicles which take less than three months to set up using flexible automation such as collaborative and mobile robotics as opposed to rigid conveyor systems and mechanical robotics.  

However, it’s not just a cost issue. The electric delivery trucks offered by the likes of Mercedes-Benz, VW and Ford have either not been released yet or are only being offered in limited numbers. While Renault and Nissan have been selling electric commercial vehicles for some years now, their production capacity is still limited; Nissan, for example, has a production capacity of 6,000 units per year for its e-nv200 model. The incumbent vehicle manufacturers may well be a safer choice but if they don’t have the production capacity, they’ll miss out on these large orders.  

Final thoughts 

Incumbent OEMs have been hesitant to increase production capacity, waiting instead for the demand to increase overtime. The problem with this chicken-and-egg strategy is that it fails to recognise the speed at which the market is growing. In 2018, the largest order for electric trucks in EMEA and the Americas to date was placed by Ambev for the delivery of 1,600 electric trucks in Brazil. The following year, Amazon placed an order for 100,000 vehicles, almost 60x bigger.  

Failure to anticipate the ramp in demand poses a serious threat to incumbent commercial vehicle manufacturers. The likes of UPS and Amazon will want to standardize their fleets and if Arrival and Rivian can maintain a good relationship with their customers, it will become increasingly difficult to displace them.  

Posted by Rueben Scriven

Graduating from Durham University with a first-class degree in Biochemistry, Rueben is leveraging his background in science and computer modelling by joining our growing analyst team.