THERE ARE APPROXIMATELY 90 million commercial freight vehicles on the roads of the world’s main economies and almost all of these are diesel powered. In 2018, according to figures from research company IDTechEx, these trucks produced nearly 2,000 tonnes of CO2, roughly five per cent of global CO2 emissions. The most common type of van on the road is the medium van class, which includes the hugely popular Ford Transit and E-series vans (which have racked up an all-time total of 16 million sales) and the Volkswagen Transporter (12 million).
The pandemic has accelerated a series of trends that will only increase these numbers, according to William Grimsey, former chief executive of Wickes and Iceland, and author of The Grimsey Review into the high street. He predicts the high street will change into pedestrianised entertainment and social spaces, while shopping is focused online. “By 2050, there will not be cars inside towns and there will be a move away from the big out-of-town shopping centres, so we should start planning for it now,” he says. “We won’t need car parks, but we will need mobility and delivery centres. Delivery vans and buses will become central to our economy.”
Arrival is building electric vehicles to meet the needs of this new economy. It aims to reinvent the bus and the delivery van on a modular, customisable platform that it claims will be lighter and cheaper than existing models, with an off-the-shelf price similar to fossil-fuel equivalents. With a combination of new materials and cloud-based monitoring software to reduce running and maintenance costs, it aims to destroy the economic case for buying a diesel-powered commercial vehicle. So far, the company has racked up $1.2 billion (around £870 million) in orders, with the goal of building 10,000 vehicles in 2021, its first year of production. UPS begins on-the-road trials of its two-tonne payload van this summer, while First Bus – one of the UK’s largest bus companies – is already trialling its single-decker electric bus on some routes.
“Vans are the fastest-growing category in the automotive industry in general, and the simplest to understand,” says Arrival founder Denis Sverdlov. “People choose passenger cars on many, many different criteria – the brand, the interior, the servicing. But commercial vehicles, they buy based on function and price. It’s a very rational decision. For a startup like us, instead of trying to convince millions of people who buy new cars quite rarely that your vehicle is the best, go to the commercial vehicles and solve their problems, and you have a market.”
Most manufacturers – including Tesla, Daimler, Volkswagen and Volvo – are also working on producing electric commercial vehicles. But Ford’s E-Transit, launching in 2022, will sell for an estimated £36,000 excluding VAT. The current price for the diesel version is £20,950 excluding VAT.
“Commercial vehicle buyers are very conservative and they’re all low-margin businesses, so they count money,” Sverdlov says. “Our value proposition for them is to say you don’t need to pay more per vehicle for being electric, and you get 50 per cent savings on your personal cost. The inflection point starts when the economics start to work.”
To bring the costs of an electric vehicle down, the first thing Arrival has to do, he says, is to break the rule of economies of scale. “Otherwise you need to get into the business of investments in factories and waiting until you start to produce 300,000 vehicles to become profitable, and we couldn’t afford to do that.”
But economies of scale are at the heart of the way most companies have been building vehicles for 100-odd years – think Henry Ford’s assembly line. The traditional way of building electric vehicles, explains David Wyatt, electric vehicle analyst for IDTechEx, is to use the same production lines and put electric motors and batteries in an existing chassis. “This just doesn’t optimise the strengths of an electric vehicle, but the bosses of legacy automotive companies are happier working on combustion engines and they still see improving combustion engines as the answer,” he says.