Ford and GM’s real battle is over electric vans

  • Ford and GM go head to head with electric vehicles for mainstream buyers.
  • But perhaps their real battle will happen with electric delivery trucks.
  • The two made news this week – and are vying for more market share.

As Ford and GM go head-to-head in the multibillion-dollar shift to electric propulsion, the balance of their rivalry may rest not on high-profile rides like the F-150 Lightning and Hummer EV, but on the humble truck.

While adoption in the consumer market is creeping up, the commercial space may be a safer bet in the near term, industry experts say.

“Public attention tends to focus quite a bit on the passenger vehicle market,” said Ryan Gallentine, director of electrification transportation policy at Advanced Energy Economy. “But the electrification of the commercial vehicle market,” he said, “I think is underestimated.”

Ford and GM know it, and they are racing to respond to growing demand from retail, e-commerce and delivery giants looking to electrify their massive fleets. That demand could provide a $370 billion commercial market opportunity by 2030, according to Guidehouse Insights.

In the past week, both automakers made commercial announcements about EVs—Ford with its Ford Pro delivery unit and GM with its first-mile and last-mile subsidiary, BrightDrop. The moves further the companies’ ambitions to lead in an increasingly promising – and central – delivery space.

That has prompted these companies to pick up the pace. “BrightDrop was the fastest vehicle we produced in GM’s history,” GM’s SVP of strategy and innovation Alan Wexler said at a Barclays conference this month.

The stakes are high

“It’s not surprising that this first mile, last mile is a growth sector for automakers,” says Gallentine. “Obviously the political drivers here are big.”

The commercial space has successfully tackled many roadblocks to electrification, such as fleet management, infrastructure and ownership costs. Now, government support through incentives has bolstered EV momentum, and as a result, companies looking for electric fleets will only demand more.

BrightDrop has already landed some of the largest customers in the area, with 25,000 combined orders from FedEx, Walmart and Merchants Fleet. It is bolstering its software business and predicts $5 billion in revenue by 2025.

Ford Pro’s progress has also been steady, and the company is bullish. “In the commercial business, we have the front row,” the division’s CEO Ted Cannis said at a JPMorgan conference in August.

Ford and GM can’t just fight each other for this market. Other target customers, such as UPS and Amazon, have deals with startups Arrival and Rivian, respectively, but their fleets will require multiple vehicle suppliers, and hundreds of other fleets have yet to claim.

“There are several startups playing in this space,” Gallentine said. “It’s, who’s going to be the fastest to market? Who’s going to be able to get these business contracts signed soon enough?”

How electric van manufacturers plan to fix this

Ford and GM’s inherent advantages over competitors include name recognition, robust supply bases and ample resources.

“We’ve seen over the decades how strong brand loyalty is in the commercial vehicle segment,” said AutoPacific analyst Robby DeGraff. “Drivers with fleets of older Ford E-Series vans have in recent years upgraded to the Transit and are likely to further upgrade to the electric E-Transit.”

“If an operator, such as a catering company, has had great success with their dozen gasoline-powered Chevrolet Express vans, I would expect them to be much more interested in replacing them with a variety of new products from BrightDrop.”

But, DeGraff noted, this kind of change can shake one’s loyalties. “Commercial buyers may start cross-shopping more than they ever have before, moving away from their favorite choices for a rival, especially if there is a clear advantage.”

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