The Key to Winning the Red-Hot Electric Delivery Van Race

Online shopping has exploded in recent years. And as more people shop online, we want our purchases to arrive faster than ever, creating challenges for the logistics companies delivering all those packages. Pitney Bowes estimates global parcel volume will most likely reach 256 billion by 2027, with an 8.5% cumulative annual growth rate from 2022-2027.

This massive e-commerce growth has led to an emergence of auto manufacturers – both incumbents and start-ups alike – diversifying their product portfolios with electric delivery vans in a race to decarbonize last-mile deliveries and win market share.

Three key factors are driving this.

First, the obvious: the impact of non-electrified last-mile delivery vehicles on greenhouse gas (GHG) emissions. Medium- and heavy-duty vehicles make up more than 20% of emissions from the transportation sector, which is the largest contributor of GHG emissions in the U.S., despite comprising fewer than 5% of vehicles on the road.

Second, studies have shown that consumers are becoming increasingly conscious of the environmental issues relating to CO2 emissions. They are beginning to want – and expect – that the products they buy and how they arrive at their doorstep pose no cost to the planet.

And lastly, there are operational savings to be had from switching to an electric vehicle. For commercial-fleet owners, those economic benefits can be significant to the bottom line.

As a result, the companies that are driven by e-commerce, such as Walmart and FedEx, have committed to being carbon neutral by 2040, with a focus on electrifying their vehicle operations. This puts increased pressure on fleet managers to find an electric-vehicle supplier that can produce vehicles quickly and at scale – and on the manufacturers to deliver for these customers.

However, ongoing global supply-chain issues are contributing to fleets’ challenges in acquiring electric vehicles and doing so on short notice.

The pandemic caused severe supply-chain problems around the world and every part of the global market was impacted, especially automotive. In 2021 the semiconductor shortage reportedly cost the global automotive industry an estimated $210 billion in lost revenues and this shortage was just one of many challenges impacting the industry.

Other issues including steel shortages, labor shortages and a rise in container shipping prices also affected the global supply chain. As a result, many automotive manufacturers had no choice but to reduce production. Shoppers in the market for consumer and commercial vehicles found it difficult to locate what they needed – something that was almost unheard of in the pre-pandemic world.

Fleet managers have come to realize that some of these supply-chain challenges could go unresolved for a long period of time. Labor shortages show no sign of being alleviated, and geopolitical tensions and trade disputes also look set to continue.

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How was this possible? We operate with the best of both worlds – a start-up within an incumbent – which allows us to move at start-up speed, while leveraging GM’s expertise and resources in manufacturing, supply chain, safety and reliability.

It’s this type of ingenuity and agility that will succeed in today’s red-hot market. The company that can capitalize on speed and scalability will have an outsized advantage in the race to decarbonize delivery.  

Steve Hornyak (pictured, above left) is the chief commercial officer at BrightDrop, General Motors’ e-delivery subsidiary.