Walmart is locked in a titanic struggle with Amazon to survive in the fiercely competitive world of online retailing. To do that, it needs to find ways to lower its delivery costs while slashing the amount of time it takes to get products into the hands of customers as soon as possible after an order is placed. This week, it announced it has signed a deal with Canoo, the southern California electric vehicle startup, to purchase 4500 of its battery-electric Lifestyle Delivery Vehicles. The electric vans will be used for last mile deliveries to customers.
Canoo wouldn’t share the financial terms of the deal. However, a spokesperson disclosed that these are binding pre-orders, beginning with Canoo’s branded “Lifestyle Delivery Vehicle.” Under the agreement, Walmart has an option to buy 10,000 units, according to TechCrunch. Earlier this year, Canoo warned that it may not have enough money to stay in business, so while neither company is talking about the dollars involved in the deal, it seems a safe bet that the Walmart order may be a bit of a lifeline for the struggling company.
The announcement comes about 8 months after Canoo announced plans to establish its headquarters and an advanced manufacturing industrialized facility in Bentonville, Arkansas, which is where Walmart has its headquarters. Its first manufacturing facility, which is not yet up and running, is located in Pryor, Oklahoma. Walmart has a history of encouraging suppliers to locate in its hometown.
“We’re encouraged that by being located in close proximity to the Canoo headquarters, we have the advantage to collaborate and innovate in real-time as well as the opportunity to aid in the creation of manufacturing and technology jobs here in our home state of Arkansas,” David Guggina, senior vice president of innovation and automation, Walmart US, said in a statement.
The Canoo LDV
Canoo’s LDV is built on a multi-purpose platform architecture that integrates the motors, battery module, and other driving components. Canoo CEO Tony Aquila, who is also an investor in the company, previously told TechCrunch the customizable vehicles, which have about 120 cubic feet of cargo space, are ergonomic, roomy, and more cost efficient than other delivery vans on the market today thanks to a steer-by-wire technology that reduces moving parts and cabin intrusion. Drivers inside the vehicle will immediately notice the lack of a traditional steering column and a large windshield that provides expansive views.
Walmart will begin use some pre-production EVs to deliver online orders in the Dallas-Fort Worth metro area. Canoo will use this as a test-bed to refine and finalize vehicle configuration in the coming weeks. The Lifestyle Delivery Vehicle, or LDV, is expected to go into production in the fourth quarter of 2022 and be on the road in 2023, according to Canoo. The Canoo LDVs will be used by Walmart workers to deliver online orders. The EVs may also be used for Walmart GoLocal, the retailer’s delivery-as-a-service business, according to the companies.
The Walmart Delivery Ecosystem
Canoo is just one potential piece of Walmart’s increasingly complex delivery system that leverages independent contractors, its own employees, and third party delivery services, as well as more futuristic tech like autonomous vehicles and drones to respond to consumer demands for immediate access to goods. Walmart has pilot programs with Gatik to use autonomous box trucks to deliver goods from its fulfillment centers to its neighborhood stores. The retail giant is also working with drone companies Zipline and DroneUp. The company says it can now reach 80% of the US population with same day delivery “on a growing assortment of items.”
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