Green Last-Mile Delivery Start-Ups Spark Surge in Electric LCVs

A race has begun to meet the explosion of demand from last-mile delivery start-up companies wanting to switch to BEVs for urban environments.

While sustainability concerns are often cited, the move makes great commercial sense for companies whose vehicles clock up huge mileage in short space of time. As Emissions Analytics’ study showed, the vehicles will quickly pay back the extra CO2 emitted in making the battery pack while providing short-term ownership with virtually zero maintenance costs.

Now several European and US delivery start-ups are racing to serve the growing market, Reuters reports. Companies like of Germany's Liefergrun, the UK's Zedify and Packfleet, and New York-based DutchX are tapping into retailers' need to hit environmental, social and corporate governance (ESG) and emission-reduction targets. Collectively, zero-emission delivery startups have raised around $1Bn so far, according to Pitchbook and data collected by Reuters.

They hope to grab market share during the long lead times while industry leaders are still gearing up. For instance, FedEx targets 2040 for its zero-emission delivery fleet; Deutsche Post DHL Group says 60% of its delivery fleet will be electric by 2030, the same year that Amazon plans to have 100,000 Rivian electric trucks in service. United Parcel Service expects 40% of its delivery vehicles to run on alternative fuel by 2025.

Using their own routing technology for urban and suburban deliveries, these small but rapidly growing start-ups must scale up while also keeping prices low in a competitive market, which could also make them acquisition targets.

“Nobody wants to pay more for sustainable delivery,” said Niklas Tauch, CEO of Berlin-based Liefergrun, which delivers in big cities across Germany and Austria and lists fashion retailers H&M, Inditex and Hello Fresh among its customers. H&M, the world's second-largest fashion retailer, said it is scaling up a number of zero-emission delivery initiatives “through a variety of partnerships like the one... with Liefergrun.”

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_  and Threads