The U.S. Postal Service has placed its first official order for its next-generation delivery vehicle (NGDV) with Oshkosh Defense, it announced Thursday. That order, for 50,000 vehicles, includes 10,019 battery-electric vehicles, up from an original estimate of 5,000 vehicles.
“We are pleased to be moving forward with this much needed investment in our fleet,” Postmaster General and CEO Louis DeJoy said in a statement. “Since I came on board a year and a half ago, we have continuously evaluated and adjusted our vehicle purchase strategy based on our future network initiatives, ongoing review of BEV application to our operational strategy, and our financial outlook as we undertake our ongoing implementation of the Delivering for America plan.”
DeJoy said the Postal Service has determined that there are enough specific delivery routes where electric vehicles will fit, allowing for the increase in the order mix.
“Today’s order demonstrates, as we have said all along, that the Postal Service is fully committed to the inclusion of electric vehicles as a significant part of our delivery fleet even though the investment will cost more than an internal combustion engine vehicle,” he said.
The initial order is for $2.98 billion, with the first vehicles expected to enter route service in late 2023.
The NGDV has been immersed in criticism since the initial proposals for the vehicles to replace the Postal Service’s Long Life Delivery Vehicles began in 2015. The bidding process for the contract included several bidders, which could ultimately be valued at close to $6 billion when all the vehicles are built. The initial contract is for $482 million. In the end, Oshkosh Truck Corp.’s Oshkosh Defense division (NYSE: OSK) won the contract, announced in February 2021, besting Workhorse Group (NASDAQ: WKHS), which was proposing a fully electric vehicle. Oshkosh didn’t commit to an all-electric fleet but said it could build BEVs should the Postal Service require them.
Oshkosh Corp. CEO John Pfeifer, speaking on a Q2 2021 analyst call last April, said his company was prepared and fully capable of producing electric vehicles for the Postal Service.
“We can do 100% electric vehicles from day one,” Pfeifer said. “If the U.S. Postal Service came to us tomorrow and said, ‘We’ve got the funding to do 100% electric from 2023,’ we can do it.”
After losing the contract, Workhorse filed a complaint with the U.S. Court of Federal Claims in Washington alleging it was discriminated against in the selection process. The company wanted the court to reopen the bidding process. Ultimately, Workhorse dropped its complaint, and Oshkosh is moving forward with the initial design and retooling of a South Carolina factory to build the vehicles.
Even that last part has brought complaints, as the United Auto Workers wants the vehicles to be built in Wisconsin at a union facility rather than in South Carolina.
Just this month, a Postal Service spokesperson told The Associated Press that the initial vehicle order would include 5,000 BEVs. That angered many activists, who had hoped the agency would make a more aggressive push into zero-emission electric vehicles, and thereby help fulfill a Biden administration executive order to purchase 100% zero-emission light-duty vehicles by 2027.
“An alternative analysis shows that USPS leadership would save the agency billions in avoided fuel and maintenance costs over the life of the fleet by electrifying the next-generation delivery vehicle,” Ben Prochazka, executive director of the Electrification Coalition, said in a statement at the time. “Despite those findings, Postmaster DeJoy has decided to embrace outdated technology and unstable gas prices. Instead of delivering huge benefits to public health, national security, and efforts to combat climate emissions, Postmaster DeJoy and the USPS board of governors seem determined to miss their EV moment.”
On Feb. 23, the Postal Service concluded the final regulatory hurdle to set in motion delivery of what could ultimately be 165,000 vehicles from Oshkosh Truck Corp. over 10 years. The vehicles will replace the agency’s current long-life vehicles, many of which have been in service for 30 years or more and do not include modern driver amenities, including air conditioning.
Watch: Building electric vehicles
The Postal Service has completed an evaluation of the contract — which calls for a mix of at least 10% battery electric vehicles (BEVs) — as required by the National Environmental Protection Act. That evaluation, which measured potential environmental impacts of the NGDV program, concluded that the agency would follow its “proposed action” regarding deployment of the vehicles. The evaluation included a look at an entirely internal combustion engine fleet, an entirely BEV fleet and a mix of the two power sources.
In his Thursday statement, DeJoy reiterated the Postal Service’s commitment to an electric fleet, which could reach a 70% threshold once the full NGDV contract is fulfilled but cautioned that cost remains a factor.
“As we have also stated repeatedly, we must make fiscally prudent decisions in the needed introduction of a new vehicle fleet,” he said. “We will continue to look for opportunities to increase the electrification of our delivery fleet in a responsible manner, consistent with our operating strategy, the deployment of appropriate infrastructure and our financial condition, which we expect to continue to improve as we pursue our plan.”