UPS partners with Workhorse to build electric delivery vans

DETROIT (Reuters) - United Parcel Service Inc UPS.N said on Thursday it is partnering with truck maker Workhorse Group Inc WKHS.O to build electric delivery vans that could replace tens of thousands of vehicles in the package delivery company's fleet.

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The two companies said the first 50 vans will have a range of 100 miles (160 km) and will be delivered in 2018.

Atlanta-based UPS said it has approximately 35,000 diesel or gasoline trucks currently in service in urban and suburban areas that are comparable in size and run on routes comparable to the new vehicle’s range.

“We see this vehicle as being a game changer in the electric truck arena,” Carlton Rose, UPS’ president for global fleet maintenance and engineering told Reuters. “It’s also an industry first because the acquisition cost is comparable to gas and diesel.”

The Workhorse delivery vehicles will cost about the same as conventional trucks, but have a lower cost of ownership because they are cheaper to run on a per-mile basis.

Vehicle manufacturers such as Daimler AG DAIGn.DE and Navistar International Corp NAV.N, plus a host of new entrants, are racing to overcome the challenges of substituting batteries for diesel engines in delivery vehicles as regulators crack down on carbon dioxide and soot pollution.

Daimler said last fall UPS will be the first U.S. commercial customer for its new battery-powered eCanter truck, and the automaker will expand production as cheaper, longer-range batteries become available within two to three years.

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And U.S. truck leasing and rental company Ryder System Inc R.N said in November it would order 125 all-electric delivery vans from Chanje, whose main investor is FDG Electric Vehicles Ltd 0729.HK.

Loveland, Ohio-based Workhorse has already sold around 300 delivery vehicles to UPS and has been testing package deliveries with drones for the company.

UPS’ Rose said the vans would be lightweight, which will help boost their range and will have fast-charging capability.

Workhorse is already testing its lightweight N-Gen model, which has a carbon composite frame, in California and Ohio for an unnamed customer.

That vehicle weighs 5,500 lbs (2,495 kg) when empty - 5,000 lbs lighter than comparable vehicles.

Cutting high costs associated with last-mile delivery as ecommerce has grown is a major priority for Inc AMZN.O, which runs its own delivery service in some cities and has leased cargo planes to reduce expenses.

Reporting by Nick Carey; Editing by Lisa Shumaker