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A Race to Become the Tesla of Delivery Trucks and Vans

A business like Workhorse Group, which employs 130 people and had sales of less than $1 million in the first nine months of the year, would not normally attract much attention on Wall Street.

But these are not normal times.

Workhorse is aiming to make electric delivery vans. Its stock has risen nearly sevenfold this year, and it is not alone. Several of its competitors started trading on the stock market this year and have seen their share prices rocket up.

Because of the success of Tesla and its electric cars, many investors have become convinced that electric vehicles are no fad, and that a real transition away from internal combustion engines is well underway.

At least a dozen companies trying to make electric vehicles or related technology have gone public in the last year, often by merging with special purpose acquisition companies, or SPACs. Also known as blank-check companies, they consist of little more than a stock listing and investor cash.

These publicly traded newcomers include Hyliion Holdings, valued at more than $2 billion. It is trying to develop electric propulsion systems for semi trucks. Lordstown Motors, in which Workhorse has a stake, is working on an electric commercial pickup truck, and has a market capitalization of about $3 billion.

Arrival, based in London, plans to make electric delivery vans and buses. Hyundai and Kia, the Korean automakers, have invested about $120 million in the company. UPS, which has also invested, committed in January to buying 10,000 of the company’s vans. Arrival has announced plans to merge with a SPAC and is expected to begin trading in the first quarter of 2021.

Of course, there’s no guarantee of success for any of these electric-truck makers. Competition will be stiff, including from traditional automakers that have manufacturing expertise and established relationships with big fleet operators. Ford, Mercedes-Benz, General Motors and Fiat Chrysler are all planning to sell electric vans and trucks.

“Not all players are going to make it, but there’s super-duper hype right now,” said Gregory Lewis, an analyst at BTIG Research. “There is this generational transition to electric that’s going to happen, and there’s potential for explosive growth, so there’s a lot of excitement.”

In addition to the 10,000 trucks from Arrival, UPS has ordered 1,000 from Workhorse.

About 350,000 delivery trucks are sold annually in the United States, and the market is expanding as the delivery business grows.

Many delivery vans typically travel 100 miles or less in a day, so they don’t need large battery packs that can power a vehicle for 300 miles before needing a recharge. Electric fleets can recharge at depots overnight, so the availability of public charging stations is not a concern. And fleet owners are willing to pay more for an electric vehicle, Mr. Pritchard said, because they typically look at how much vehicles will cost to own and operate over 15 to 20 years.

Powering vehicles with electricity is less expensive than filling them up with diesel or gasoline, especially for trucks that often get only five or six miles per gallon, Mr. Pritchard said. Maintenance costs are also lower — no oil changes are needed.

“Stop-start driving just grinds up your transmission, but electric vehicles don’t have transmissions,” he said.

A fleet operator might spend about $300,000 to own and operate a diesel truck over 20 years, but the cost of owning an electric truck may be less than half that, according to Workhorse.

By Neal E. Boudette

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