Logistics Giants Face These Hurdles in Switching to Electric Fleets

• EV van maker Workhorse reveals order for 15 of its W56 battery-electric vans from FedEx, slated for delivery later this year.

• The last-mile delivery vans, powered by a 210-kWh battery, offer a range of 150 miles, with FedEx currently experimenting with models from different manufacturers.

• Logistics companies and retailers with last-mile delivery operations still face high prices for battery-electric step vans, most of them in six-figure territory, while also needing to invest in their own charging infrastructure.

At one point a decade ago it seemed that logistics would be among the first major industries to switch to all-electric fleets, especially when it comes to last mile delivery. But progress in this field has come in fits and starts, with a vast cloud of startups orbiting larger auto manufacturer-backed efforts while painting an optimistic picture for investors.

A decade later, that vast cloud of startups has been whittled down to a handful that have finally managed to reach production, and even fewer are seeing anything we'd comfortably call mass production.

But the chances of smaller startups in carving out a slice of the EV van segment haven't faded entirely even by this point in time, as logistics giants experiment with different models. However, seeing massive orders for battery-electric vans is still exceedingly rare.

Ohio-based Workhorse, which got its start nearly 20 years ago, has recently received an order for 15 of its W56 vans from Federal Express.

Engineered from the start as a last-mile step van, the W56 is offered in a choice of 178- and 208-inch wheelbases, with an internal capacity of over 1000 cubic feet.

The vans offer a range of up to 150 miles thanks to a 210-kWh battery, which is usually enough for one daily shift typically covered by FedEx vans in their geographic area, with regenerative brakes helping boost that range. (And its front fascia will remind some of the classic Skoda 1203 minivan).

The debut of the W56 in the spring of 2023, in many ways, marked a new chapter for the company, which has seen plenty of ups and down over the past few years, including a licensing agreement for a design what would eventually become the ill-fated Lordstown Endurance.

With the arrival of the W56, Workhorse is trying to make a new name for itself now that the first few waves of EV startups have faded in the rearview mirror. Having made it this far, the company now seeks to gain the interest of retailers and logistics companies, at a time when the fuel economy of delivery trucks still rests at 7 mpg.

"Our ability to build complete vehicles differentiates us from our competitors and enables us to quickly fulfill orders," said Rick Dauch, Workhorse CEO.

FedEx has plans to decarbonize its fleet by 2040, a date that's not quite around the corner. So it might be a while before even 25% of its fleet is composed of battery-electric models. And Workhorse is far from its largest supplier of electric vans, as BrightDrop has now provided well over 100 of its vans to FedEx.

But EV startups aren't the only ones in this equation facing steep hurdles. The prices of electric vans of this type are still far north of the prices of comparable internal-combustion models, deep into six-figure territory, which tends to explain the sizes of EV van orders.

Modest cargo ranges still require large batteries, as in Workhorse's model, which has a battery roughly the size of the GMC Hummer's. And that is not a cheap truck.

Charging infrastructure remains another hurdle for fleets that requires plenty of investment, and doesn't offer cheap shortcuts.

The uncertainties of the early pandemic era, along with their supply shortages, have effectively set back electric van producers by several years, as battery and component prices have soared amid surging consumer interest and supplier bottlenecks.

And even those EV startups that somehow survived the pandemic-era battery and chip crunch were by no means guaranteed to approach the production phase unscathed, as Arrival has shown.

Just how logistics companies can afford to buy even small fleets of electric vans—while also spending money on their charging infrastructure—is another hot topic, as different states offer different incentives for BEV van purchases.

And few of them are particularly generous at the moment, busy wrangling with the consumer side of the EV market and growing charging station demands.

In the past half decade we've heard logistics executives lament the absence of strong federal incentives for large purchases of battery-electric vans. It is one thing to want zero-emission fleets, and quite another to quickly transform even a few local fleets in one state into an all-EV operation.

Overall, we cannot say today that most logistics giants and big retailers with delivery operations are making progress toward a significant number of last-mile electric fleets by 2030, simply because 2025 is around the corner and these efforts mostly remain of a somewhat sporadic nature.

Should the government encourage EV van adoption by logistics giants, or is this an issue that should be solved by market forces? Let us know what you think in the comments below.