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Startups with electric vans in race to deliver ‘golden ticket’ investment

The future of a group of commercial electric van start-ups seeking investment through blank check IPOs rests largely in the hands of a small group of large companies, notably UPS, FedEx, DHL and Amazon.The

Because each carrier has tens of thousands of vehicles in its global fleet, an order from a parcel delivery giant can launch a start-up towards production scale and profitability and serve as a marketing tool to win orders from other major customers.

“Everyone is looking for their golden ticket,” said Steven Merkt, president of transportation solutions at sensor, connector and electronic components maker TE Connectivity Ltd, who works with all startups and provides technical feedback on designs.

“If you don’t have a shell, you get squeezed out pretty quickly.” On the hunt for the “next Tesla,” investors have poured billions of dollars into electric vehicle startups, with mixed results.

Unlike Tesla, which for years had an advantage over traditional automakers, commercial electric vehicle startups are racing against the clock as major manufacturers like Ford start to market competing products and others like Volkswagen expand their electric offerings.

Some startups already have their golden ticket. Arrival, which went public through a merger with a Special Purpose Acquisition Company (SPAC), already has an order for up to 10,000 vans from UPS, which has also closed an option for an additional 10,000.

Chanje has an order for 1,000 FedEx vans in California, while Rivian has an order to build 100,000 vans for Amazon. Others, like Xos, are close by.

Xos, which is going public through a merger with blank check company NextGen Acquisition Corp, is testing electric vans with both UPS and Amazon. Some, like Canoo Inc, have faced turmoil as they refine their strategies.

Thore Meurer, European Senior Fleet Director at Deutsche Post AG unit DHL Express, said: “The opportunity is closing.” Meurer said DHL has been in talks with UK Arrival for years and will try out some of its test models.

In the US market, DHL has announced the purchase of 89 electric vans from Lighting eMotors, which went public through a SPAC merger.

Meurer says DHL Express is also in talks with two Asian startups about electric vans for Europe, but the company aims to have 14,000 electric vans in its European fleet by 2030 and is eager to get started.

In April, DHL ordered 100 E-Ducato electric vans from Stellantis, an established manufacturer, to deliver parcels in Europe. “If in two years another startup comes on the market with a van, there is no chance for them anymore,” said Meurer.

“By that time every major player will have an electric van on the market.” The Arrival’s electric test bus, decked out in UPS’s striking brown livery, is popular with drivers at the parcel delivery giant’s facility in London’s Kentish Town.

During a demonstration of the van by Luke Wake, UPS Vice President of Maintenance and Engineering, several drivers asked, “When can we get in it?” The Arrival bus is the result of years of work by UPS to include electric vehicles in its fleet.

The Kentish Town depot is still home to some old former diesel trucks that UPS has converted into electric vehicles.

“We’ve converted hundreds of our pre-existing vehicles to electric to see how they fit in,” Wake says, “and to boost a market that didn’t exist before.

” Working with a startup like Arrival has opened up a wealth of opportunities for UPS, including self-driving features on the van that can reduce costly accidents at depots, Wake said.

With the van’s battery pack, UPS can add automatic driver doors and LED rear lighting to help drivers find packages faster. Such features can save seconds per delivery, quickly adding up to UPS delivering approximately two billion packages annually.

The UPS order put Arrival on the map, and the startup emphasized that relationship when it announced last month that it was also developing an electric car for Uber.

“You always have a confidence gap to bridge,” said Carl-Magnus Norden, founder of Stockholm-based Volta Trucks, which is developing an electric truck for deliveries to inner-city businesses and has an order for 1,000 trucks from French refrigerated truck company Petit Forestier.

“So someone like Petit Forestier is important to us.” While most startups are seeking gold ticket ordering, Electric Last Mile Inc (ELMS) uses US dealer networks as a way to build scale and has pre-orders for 45,000 small electric vans it will launch this year.

Chief executive James Taylor said speed is paramount as auto giants like Ford focus on electric commercial vehicles.

Ford sells the most commercial vehicles in the US and European markets and will launch an electric Transit van in 2023.

ELMS is betting it can make it, because so far no one else plans to make a van this small in the United States: “

At least we have a short runway where we have no competition,” Taylor said. In April this year, UK grocery delivery company Ocado announced it was investing £10million in Oxbotica for autonomous vehicle solutions, developing a range of vehicles integrated into the Ocado Smart Platform.

As mentioned above, Arrival signed a deal in May with Uber to create a fleet of electric cars for its ‘Clean Air Plan’ in London, the electric car company will design vehicles “specifically designed for ride-hailing” that will enter production in 2023.The investment will also help to fuel Arrival’s van business.

The competition to dominate the developing electric vehicle market is causing companies to pin their hopes are taking diametrically opposed approaches to production, just as the leading delivery companies compete in parallel for the most efficient, cost-effective and environmentally friendly solution for the increasing number of last-mile deliveries their customers demand.