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4 January 2023

US Postal Service abrupt turn on EVs triggered by Biden aid

The week before Christmas saw a significant abrupt turn from the second largest car fleet in America with regard to electric vehicles, with the US Postal Service (USPS) agreeing to buy up to 66,000 EVs by 2028.

The USPS is one of those fleets of vehicles that has got older and older without any serious consideration of when it would ever be upgraded and the existing US postmaster general Louis DeJoy said just a year ago that the bulk of any upgrades would not be electric. As recently as February DeJoy was saying that he would place an order for up to 165,000 trucks from Oshkosh Defense in the Postal Service’s first large-scale vehicle purchase in three decades. All but 10,000 of them would be internal combustion engines, he said, because “EVs were too expensive.”

Quite clearly a $3 billion bribe straight out of the Inflation Reduction Act, from Joe Biden, is what has turned things around at the postal service and now the great majority of new vehicles will be EVs – 66,000 out of 106,000 up to 2028 after which all of them will be EVs. There is no detail in the announcement but it seems that Oshkosh is still running the upgrade plus some off the shelf products form car vendors. In late March Oshkosh announced that it had received the first order of 50,000 Next Generation Delivery Vehicles from the USPS valued at $2.98 billion and said that there was a minimum order of 10,019 Battery Electric Vehicles. It looks to us that the 40,000 vehicle difference to the orders placed that day, is the same 40,000 difference between the 106,000 total orders by 2028, and the 66,000 that will be EVs – this suggests there will be no further orders for non-EV USPS vehicles. The vehicles purchased as part of this plan will begin to replace the Postal Service’s aging delivery fleet of over 220,000 vehicles. The only larger US car fleet than that is the US military.

Chances are it was only the inability for Oshkosh to produce acceptable EV designs that gave DeJoy the impression that they would be more expensive (clearly EVs are higher Capex with a far lower Opex and a lower total cost of ownership). In that March order it was said that Oshkosh Defense will manufacture the BEV in its Spartanburg, South Carolina factory.

The original order being placed for mostly gasoline vehicles led to calls for the removal of DeJoy from office from politicians on both sides of the house, but the fact that Biden did not reach for the nuclear option prior to the mid-terms, suggests that he was already happy that the bulk of this order would be switched to EVs.

A press release said that the Postal Service anticipates increasing the quantity of purpose-built Next Generation Delivery Vehicles to a minimum of 60,000 of which at least 45,000 will be battery electric by 2028. NGDV acquisitions delivered in 2026 and thereafter are expected to be 100% electric.

The entire postal network modernization effort will go way beyond simple vehicle changes, and these will be aimed at also producing further carbon emissions reductions through logistics improvements and reduced transportation, with a total investment of $9.6 billion including that $3 billion we mentioned from the Inflation Reduction Act. The plan seems to rely on ICE vehicles only for those which need immediate replacement.

The new vehicles will include features like air conditioning and advanced safety technology and where they are not especially made for it, will favor a domestic manufacturer, but those contracts are not public yet.

Postmaster General Louis DeJoy said in the release, “We have a statutory requirement to deliver mail and packages to 163 million addresses six days a week and to cover our costs in doing so – that is our mission. As I have said in the past, if we can achieve those objectives in a more environmentally responsible way, we will do so.” He certainly has never said those words in public before that we can find.

But he added, “The Postal Service’s vehicle initiative, and I personally, have benefited from the collaborative spirit of John Podesta, Senior Advisor to the President and leader of the Office of Energy Innovation, as well as leaders within the Council on Environmental Quality and the Climate Policy Office. These professionals have demonstrated a real appreciation and understanding for how vehicle electrification can be incorporated into the Postal Service’s mission and transformation, while not distracting from it. In our own way we have all been faithful stewards of how IRA funding and Postal funding will be spent.”