Amazon opens new centre TorontoIn a deal that seems in-keeping with its preference for economies of scale and vertical integration, Amazon has announced an intention to buy tens of thousands of electric vans for its last-mile operations.

In a speech given last week as part of a commitment by Amazon to “Net Zero Carbon”, Jeff Bezos outlined “the order of 100,000 electric delivery vehicles from Rivian, the largest order ever of electric delivery vehicles, with vans starting to deliver packages to customers in 2021. Amazon plans to have 10,000 of the new electric vehicles on the road as early as 2022 and all 100,000 vehicles on the road by 2030 – saving 4 million metric tons of carbon per year by 2030.”

Rivian is an electric vehicle engineering company based in Silicon Valley, Surrey and Normal Illinois; with the latter being the location of a former Mitsubishi car assembly plant that it has recently bought. Although it has not commenced mass production of any product, Rivian has launched two ‘advanced prototypes’, both of which are SUVs.

Amazon already has a close relationship with Rivian. Last year Rivian raised $700m in an investment round that was “led by Amazon”. Jeff Wilke, a senior Amazon manager, commented that “We’re inspired by Rivian’s vision for the future of electric transportation.” This suggests that Amazon has been thinking about the electrification of its last-mile delivery fleet for some time. In turn, that suggests that Amazon has plans to create an exceptionally large delivery fleet, comparable to that of FedEx and UPS in the US. The move also reflects Amazon’s appetite for vertical integration, the Seattle giant once again looking to control its own suppliers. 

It does not appear that Amazon has plans in the short-term to buy Rivian, with the electric vehicle staying independent and having relationships with other large companies including Ford. However, it seems that Amazon is trying to ensure it still dominates at least part of its own supplier base, something which can be seen in its positioning in warehouse robotics or air freight.

The purchase of such an enormous fleet, assuming it is successful, also points to a huge shift towards the electrification of part of road freight.  

Source: Transport Intelligence, September 24, 2019

Author: Thomas Cullen

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