Where the EV Revolution Should Start: With FedEx, UPS and Wal-Mart

Jim Motavalli

Jim Motavalli | Jul 08, 2011

FedEx eStar and eCell trucks. It's moving, but slowly. (FedEx photo)Think about it, the logical place for huge electric and plug-in hybrid vehicle fleets is in big corporate motor pools, and especially FedEx and UPS, the big delivery guys. It's a no-brainer, really, since these companies operate vast central garages that could easily recharge many vehicles, and also have many short-haul routes that would work for plug-ins with a range limited to 100 miles.
In fact, they have made some strong moves in this direction, but it hasn't achieved liftoff. Late in June, FedEx said it was doubling its fleet of battery vehicles. That's great, but FedEx still will have only 43 electric delivery trucks worldwide. The big news that day was that FedEx is adding a whopping 4,000 Mercedes Sprinter vans, burning clean diesel.

UPS is in the same boat. It has a fleet of 69,000 delivery trucks, with 2,022 green ones (including natural gas vehicles) last time I checked. It has 380 hybrid electrics. And battery trucks, with significantly lower operating costs (particularly with $4 gas) are a tiny fraction of those.

It's head scratching, until you realize that electric trucks have a price premium that often totals $30,000. We may see more natural gas trucks on the road in the next few years, because a) natural gas is very cheap; and b) converting a conventional truck to run on natural gas isn't that expensive.

A UPS natural gas truck. That technology is moving faster than EVs. (UPS photo)Mike Britt, UPS' chief alternative fuel engineer, told me that alternative fuel vehicles don't make economic sense for the company without federal or state subsidies. "We want to offer support and help to get these vehicles to the point where economies of scale bring the cost of the equipment down," he said. "And that's why we need the federal programs to help us by accelerating adoption of the technologies and reducing costs."
They're not moving without government largesse. When $1.4 million in subsidies were available through the California Air Resources Board, UPS bought 50 battery trucks. That's the way it goes.

At FedEx, I talked to Keshav Sondhi, manager of asset management for FedEx Global Vehicles. He had an interesting solution to this stalemate. FedEx is working with suppliers to get them to reduce EV range. That's right, cut it down from 100 miles to approximately 50 so the vehicles will be more affordable (but still capable of handling shorter delivery routes).

"Many of our routes do not require a 100-mile battery," he said, "but the market has evolved to make that the standard. We're trying push for 50-mile range, because why should we haul a heavy 100-mile battery around places like Manhattan when we could easily get by with a cheaper, less capable one? We are serious about economizing, but so far the reception has been rather cold."

But isn't the customer always right? Auto and truck makers should be flexible on this, because anything that lowers the cost of battery EVs is worth considering. Right now, battery power costs approximately $800 per kilowatt hour. A delivery truck 100-mile battery is 80 kilowatt hours--and maybe $40,000. A 40-kilowatt-hour pack cuts that in half, and dramatically cuts the cost of the truck.

According to Sondhi, another obstacle is the utility companies that loudly proclaim how pro-EV they are. "When our electric use spikes, we are hit with demand charges that negate any savings from using electric vehicles," he said. "EVs should be exempt from these charges, but there is a lot of red tape."

Wal-Mart's prototype diesel hybrid big rig. (Wal-Mart photo)And, of course, you can't just add a lot of big plug-in trucks to the grid without overloading the local transformer. FedEx is working with General Electric and Columbia University to figure out how to ease heavy EV charging.
It would be great to see a big truck user like Wal-Mart making the big switch to green transportation. This week, Wal-Mart said it had collaborated with Daimler to develop a diesel hybrid big rig (with electric drive on a second axle). The truck is to Wal-Mart spec, and it's the type the company uses to haul goods across the country. Now it has to go beyond the prototype stage and actually build these things. In bulk. Isn't that what Wal-Mart is all about, anyway?

The Environmental Defense Fund is one of the green groups pushing the big companies to green their transportation fleets. In this video from 2008, EDF talks about its work with FedEx to create the next-gen delivery vehicle. It took a lot of pushing to get where we are today:

Get the Car Talk Newsletter