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USPS Postal Truck — The Crucible of Electrification?

Mar 25, 2021 | Innovation

A few weeks ago, the U.S. government outlined a plan to replace its fleet of cars and trucks with electric vehicles assembled in the U.S., part of a new “Buy America” initiative. Using the government’s purchasing power to buy zero-emissions vehicles would help speed the transition away from gasoline-powered cars and ultimately lead to 1 million new jobs in the American automobile industry.

According to the General Services Administration (GSA), the U.S. government owned 645,000 vehicles that were driven 4.5 billion miles and consumed 375 million gallons of gasoline and diesel fuel in 2019. About 35% of those vehicles were operated by the U.S. Postal Service.

One analyst, cited by The New York Times, Syracuse University economist David Popp, discounted the notion of creating 1 million new auto manufacturing jobs, saying he found it difficult to believe that auto manufacturing would double in size. His commentary reveals the sort of shortsightedness you get from unimaginative people: “You can’t do that with auto emissions regulations. You can’t do that with government procurement.”

Apparently, Popp has forgotten that one person can disrupt an entire automotive sector. Dissatisfied with the electric vehicle status quo, Tesla Motors CEO Elon Musk established a new standard for EVs when he announced in 2006 that Tesla, a small Silicon Valley startup, would start producing a luxury electric sports car that could go more than 200 miles on a single charge. The government had similarly demonstrated that it could revolutionize industries with new regulations like it did when it ushered in ATSC 1.0 in 1996, thereby kickstarting the HDTV revolution.

Tesla’s growing clout, best illustrated by the launch of the dual-motor Tesla Model S P90D in 2015 featuring a “ludicrous mode” that vaulted the 4,841-pound car from 0 to 60 mph in just 2.8 seconds, forced the automotive industry to follow suit. Atherton Research analyst Jeb Su noted that Tesla sold more vehicles than Mercedes-Benz for the first time in the July-September 2018 quarter.

Among the more notable EV launches was the Nissan LEAF in 2010, of which nearly half a million have been sold worldwide. But the credit for igniting the move towards electrification goes to the Toyota Prius, which was released in Japan in 1997 but did not arrive in the U.S. until 2000. The Prius was beaten to the market by Honda, whose 1999 Insight became the first hybrid sold in the U.S. since the early 1900s. Both of these vehicles offered strictly electrically assisted gas engines and were not “plug-in hybrid electric vehicles” (PHEV).

GM began selling its Chevy Bolt EV in California in December 2016, followed by a nationwide U.S. and Canadian launch in 2017. The Audi e-tron entered the market in March 2019. Volvo followed suit in October 2019 with the XC40 Recharge. With the sedan/SUV market adequately addressed, manufacturers turned their attention to trucks.

One of the first out of the lift gates was Tesla, which showed a prototype Tesla Semi truck in November 2017 with a promised 2019 delivery date. At the same event, Musk introduced a new Tesla Roadster that he claimed would be able to reach 60 miles per hour in 1.9 seconds and travel 620 miles before needing to recharge. Neither the Tesla Semi nor the Roadster has yet to ship, with the Semi expected to be available in 2021 and the Roadster in 2022.

EV rival Rivian debuted an electric pickup truck in November 2018 and promptly landed a $500 million investment from Ford in April 2019. Its configurator promises deliveries in January 2022. All this EV market activity formed the perfect prelude to the U.S. Postal Service’s impending 2021 decision to begin replacing its aging fleet with modern delivery trucks.

In a surprise move, however, the U.S. Postal Service elected to give the 10-year multi-billion dollar contract to Wisconsin-based Oshkosh Defense. The contract calls for the U.S. Postal Service to order 50,000 to 165,000 new delivery trucks equipped with 360-degree cameras and front- and rear-collision avoidance systems featuring audio-visual warning systems backed by automatic braking.

The newly built fleet will begin to replace the Postal Service’s more than 230,000 existing vehicles, including approximately 190,000 delivery trucks, some that have been in service for 30 or more years.

Unfortunately, according to Postmaster General Louis DeJoy, the agency’s plan calls for just 10% of its new trucks to be electric. Asked why that figure was not 90%, DeJoy responded, “We don’t have the three or four extra billion dollars in our plan right now that it would take to do it.”

Expectations ran high that the U.S. Postal Service would pick a manufacturer that could deliver battery-powered vehicles from the outset. The choices came down to Workhorse — a small truck maker with just 150 employees; a Turkey-based company with a plug-in-hybrid design; and Oshkosh, which proposed a vehicle with a gasoline engine.

Cowen & Company analyst Jeffrey Osborne said he was shocked that Workhorse wasn’t given part of the contract. Workhorse, an Ohio-based company with a factory in Indiana, reported sales of less than $1 million in the first nine months of 2020, compared to Oshkosh Defense’s parent, the Oshkosh Corporation, which had $8.4 billion in revenue in fiscal year 2019.

The decision on the future of America’s postal delivery trucks — one of the world’s largest civilian fleets — was widely viewed as an opportunity to kickstart a major shift toward electrifying commercial and government fleets across the nation, a critical step toward reducing the transportation sector’s large carbon footprint.

Given the U.S. government’s goal of a net-zero-carbon economy by 2050, that target now looks as smoggy as a “check is in the mail” promise.

Michael Tchong

Michael Tchong

Founder, Author, Adjunct Professor, Futurist

Michael Tchong is a distinguished analyst renowned for his expertise in scrutinizing and dissecting societal, cultural, and technological trends. His invaluable insights serve as a cornerstone for guiding businesses and organizations towards more informed decisions regarding their products, services, and innovation strategies.
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