Oshkosh Defense Wins Contract To Build Next Generation Vehicles For USPS
The United States Postal Service operates about 109,000 vehicles, the vast majority of which are 30 years old. They were supposed to be replaced years ago, but politics and emerging technologies got in the way. Then came COVID to put another damper on things moving forward.
In the meantime, the Postal Service is spending big bucks to keep the old trucks running, patching them together with chewing gum and baling wire to eke a few more miles out them. Trucks.com says the USPS spends about $700 million a year to maintain the fleet, which averages 10 miles per gallon and consumes $500 million a year in gasoline. Also, keep in mind those old trucks spew a lot of pollutants out of their tailpipes as neither snow, nor rain, nor heat, nor gloom of night stay those intrepid couriers from the swift completion of their appointed rounds.
The Winner
On February 23, USPS announced it has awarded a contract to design and build what it calls it Next Generation Delivery Vehicle to Oshkosh Defense, a wholly owned subsidiary of Oshkosh Corporation whose primary business is building rugged heavy duty vehicles for the military and emergency service providers. In a press release, the company describes the agreement as an “indefinite delivery, indefinite quantity” contract.
It calls for the purchase of between 50,000 and 160,000 vehicles over 10 years. The first of them will not be delivered until 2023, as the final design has yet to finalized. The company has not said where it will build the vehicles. John Pfeifer, who will become CEO of Oshkosh in April, tells Oshkosh Northwestern News, “When you talk about building 50,000 to 165,000 units over a long period of time — this is a contract in the multi-billions — you kind of need a standalone facility to be able to do work like that. You can’t just stuff it into an existing facility.”
The NGDVs will be significantly more modern than the old delivery vehicles we are used to seeing crisscrossing America on a daily basis. They will have a lower hood and larger front windshield to help drivers see pedestrians, bicyclists, and obstacles better. They will be air conditioned and equipped with multiple exterior cameras for a 360º view around the exterior. They will also have modern safety technologies like a collision avoidance system and automatic braking.
Gas & Electric
The new vehicles will be powered both by low emission gasoline engines and by batteries, but there is no word yet on what the mix will be. This is a huge disappointment to EV advocates, who had hoped the new delivery trucks would be battery electrics that would help America shrug off its love affair with the internal combustion engine.
“We’ve been working on electrification for a long time,” Pfeifer said, noting his company had developed a fully electric aerial work platform for the construction industry as well as a prototype of an electric concrete mixer. He added that the ratio between electric vehicles and internal combustion engine vehicles has yet to be determined. It is up to the Postal Service to decide. “That’s why you have a need for low-emission internal combustion engines for some applications. I’m guessing that electrified product will grow over time, but electrification will be a big, big part of this fleet that we deliver over the next 10 years.”
My colleague Jennifer Sensiba will be along shortly with a story about why continuing to use gasoline engines makes sense and she is right. There are certain cases where the unavailability of charging equipment or the need to cover routes that exceed the range of an electric vehicle require a conventional powertrain. But this decision does not seem to fit well with President Biden’s recent pledge to buy only electric vehicles for the US government going forward. Oshkosh says the vehicles fitted with gasoline engines initially can be converted to batteries later, so there is that.
Yes, equipping the USPS with electrics would require a lot of time and money to install charging infrastructure. And it would require a re-orienting of the mindset of managers and postal workers. But it would send a powerful signal to the nation that the era of fossil fuels is waning while the era of electric vehicles has arrived. It would require the sorts of investments in supply chains and battery manufacturing that would drive cost reductions for electric vehicles in all market segments.
On September 12, 1962, President Kennedy laid out the reasons why America was embarking on the mission of putting a human being on the moon. “We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win.”
Robbie Diamond, the CEO of nonprofit Securing America’s Future Energy, said in a statement reported by The Verge, “It’s disappointing that today’s announcement does not immediately commit to electrifying one of our nation’s largest vehicle fleets. This contract is a golden opportunity to stimulate the domestic EV market and supply chain, and a commitment to electrifying the [postal fleet] would provide a clear incentive for further domestic EV industry development along the entire supply chain, from minerals to markets.”
This could have been a “moon shot moment” for the United States. As Jennifer will tell you, there may be good and sufficient reasons to use gasoline engines in some of the vehicles, but the announcement is a bit underwhelming. The existing fleet is 30 years old. If the new fleet has a useful life of 30 years, that will mean the USPS will still be pottering around in gasoline powered trucks in 2050 and beyond. That’s hardly an example of seizing the moment and doing what is hard for the good of the country and the world. It seems more like taking the easy way out at a time when the easy way may move us all further down the highway to a cataclysmic climate disturbance.
The Loser
The big loser in all this is Workhorse, the all electric startup that was considered a leading contender to win the contract. After the announcement, its share price plummeted, causing the stock exchange to suspend trading several times. At the end of the day, Workhorse was worth half what it was worth when the market opened on Tuesday. What its future is now is unclear. It is getting a 10% royalty from Lordstown Motors because Lordstown is building electric vehicles that are based on Workhorse’s intellectual property. The Workhorse N-Gen electric delivery van seems to have been purposely designed with the needs of the USPS in mind.
The prototypes Workhorse submitted to the USPS also failed to meet expectations. According to a report by the Detroit News, short seller Fuzzy Panda Research claimed last year that Workhorse destroyed its chances of landing the much-anticipated contract after its design and manufacturing led to numerous critical failures in the prototype USPS trucks.
In any event, the news of the new contract must have leaked before the press found out about it. Shares in Workhorse began a slow downward slide beginning on February 5 before tanking completely on the 22nd.
Politics Rears Its Ugly Head
This is a huge contract that may represent the single largest vehicle purchase in history. No doubt, the politicking behind the scenes over the past 5 years has been fierce. One suspects that a defense contractor like Oshkosh may have a more robust lobbying effort in place than startup Workhorse.
But what about the Built in America pledge by President Biden? Where will Oshkosh get its batteries for the electric trucks it plans to build for the postal service? US battery suppliers aren’t found on every street corner. Remember what we said about Workhorse shares beginning to slide on February 5? In a press release dated February 4, Oshkosh announced it was investing $25 million in Texas-based Microvast, which it refers to as a “global provider of next-generation battery technologies for commercial and specialty electric vehicles. This relationship bolsters Oshkosh’s existing technology strategy to increase the development of advanced products that support the current and future needs of customers.”
“Our strategic investment in Microvast is an excellent addition to Oshkosh’s electrification focus and established partnerships,” said John Pfeifer in that statement. “These partnerships, combined with Oshkosh’s highly-capable product development team, support our expanding leadership with technology-enabled products for the markets we serve.”
Oshkosh makes a $25 million investment in a battery company few have ever heard of on February 4. On February 5, shares of Workhorse begin declining. Do you believe in coincidences? No, neither do we. I wonder if Martha Stewart would have anything to say about that timing. Will have to ask her next time we are in the same room.
Half A Loaf Is Better Than None?
America is getting a new fleet of postal delivery vehicles. It’s about time. Some of them will be battery electrics. That’s good. Still, the feeling around CleanTechnica’s vast global headquarters overlooking Tampa Bay is that this announcement could have been so much more.
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