Last-mile delivery and the electric vehicles it will take to fuel it will require a jump start from public money that should be included in the next infrastructure package, according to parcel delivery giant UPS (NYSE: UPS).
Speaking on a panel hosted by the U.S. Chamber of Commerce on Tuesday, Thomas Jensen, the company’s senior government relations executive, pointed out that while electrification has been touted extensively by the Biden administration, there have been few details on how the administration plans to pay for it.
However, Jensen said, “without question, the federal government is going to have to lead, and they’re going to have to lead as it relates to incentives and grants to encourage” electric vehicle infrastructure, he said.
Jensen noted as an example certain UPS properties that allow non-UPS vehicles to use their natural gas facilities for fueling.
“The reason we did that was because we received incentives from the state and local government to put that fueling infrastructure on our property and to make it available to others. So clearly, to prime the pump we need that federal help, but also public help on the state and local level as well.”
The panel, which included engine and vehicle manufacturers, also discussed how public funding could improve the availability of alternative fuels that are helping power last-mile electric vehicles, including batteries, hydrogen fuel cells and liquefied natural gas.
“In terms of Congress, I think they should use all the policy mechanisms that are at hand, whether that be tax credits, grants, cooperative research agreements, infrastructure development — all of that will be necessary to achieve the goal of net zero [carbon emissions] by 2050,” said Amy Adams, vice president of fuel cell and hydrogen technologies at Cummins Inc. (NYSE: CMI).
Adams pointed to the significant investments in alternative fuels and electrification that other countries like China and those in Europe are already planning. “Our concern is we don’t want the U.S. to miss the opportunity to be a leader in this technology. It would also be great for the U.S. to have a national hydrogen strategy like so many of these other countries. It definitely needs public and private industry working together.”
Duane Hughes, CEO of Workhorse Group (NASDAQ: WKHS), a medium-duty truck manufacturer specializing in electric vehicles, wants to see lawmakers include safety incentives as well.
“We need to keep both residents and drivers safe and injury-free,” Hughes said during the panel discussion. “We want to make required lane departure warning technology, collision avoidance systems — the things that help keep residents and drivers safe. Making these systems required — phased in over time — will bring benefits to the stakeholders while doing so on an even playing field among participants.”
Jensen said that while UPS operates the largest private alternative fuel vehicle fleet in the country — more than 12,400 vehicles — the company is also investing in heavy-duty electric trucks: A standing order of 150 heavy-duty Tesla tractors are expected to be delivered next year. Those vehicles will work within the long-haul portion of UPS delivery.
“But on final mile, the economics have to work from local operators, or folks aren’t going to be interested in it,” he said.
“The way things are changing and the way we’re doing business as individual consumers, any kind of an edge or efficiencies are super important for final-mile delivery companies, whether it be UPS or our competitors. We do think there are policy opportunities to help stimulate this kind of development.”
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