GM plans electric van for business users in bid to pre-empt Tesla: Sources

General Motors had said it plans to introduce at least 20 new all-electric vehicles by 2023, in a variety of body styles including sedans, trucks and
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GM is joining a growing list of carmakers planning EVs for the same segment which includes customers such as Amazon.com Inc and United Parcel Service Inc, as per sources. (File photo used for representational purpose only).
GM is joining a growing list of carmakers planning EVs for the same segment which includes customers such as Amazon.com Inc and United Parcel Service Inc, as per sources. (File photo used for representational purpose only).

General Motors Co is developing an electric van aimed at business users, joining a growing list of carmakers planning EVs for the same segment which includes customers such as Amazon.com Inc and United Parcel Service Inc, five people familiar with the plans told Reuters.

That multibillion-dollar strategy could enable GM, Ford Motor Co and at least two EV startups to build and deliver more electric vehicles at a time when consumer demand for battery-powered models is still a small fraction of overall industry sales, while targeting a potentially lucrative market segment that Tesla Inc has yet to address.

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GM's plan to develop an electric van has not previously been reported. The No. 1 US automaker did not confirm the van, but has said it plans to introduce at least 20 new all-electric vehicles by 2023, in a variety of body styles including sedans, trucks and crossovers.

Also Read : GM to work closely with battery maker CATL in its China EV push

Suppliers familiar with such plans at GM and Ford told Reuters the Detroit automakers, which count trucks and commercial vehicles among their most profitable businesses, "don't want to leave the door open for Tesla" as they did in consumer passenger cars.

Scott Phillippi, UPS senior director of fleet maintenance and engineering, said the package delivery firm believes electric vans have the potential to disrupt the commercial market.

"It's going to be similar to what the Model 3 has done for the consumer market," Phillippi said, referring to Tesla's small near-luxury electric sedan. "Now all of a sudden, we're off to the races."

FILE PHOTO: The GM logo is seen at the General Motors plant in Sao Jose dos Campos, Brazil, January 22, 2019. REUTERS/Roosevelt Cassio/Files (REUTERS)
FILE PHOTO: The GM logo is seen at the General Motors plant in Sao Jose dos Campos, Brazil, January 22, 2019. REUTERS/Roosevelt Cassio/Files (REUTERS)

The GM van – code-named BV1 – is due to start production in late 2021, the sources said. It is believed the BV1 van will share some components with GM's future electric pickups and SUVs, including the automaker's new Ultium advanced battery system. It is expected to be assembled alongside the electric trucks at GM's Detroit-Hamtramck plant.

GM is considering whether to offer the electric van through its traditional truck brands - Chevrolet and GMC - or market it under a different brand such as Maven, the sources said. GM's first electric pickup truck, due in late 2021, will be sold by GMC dealers under the Hummer brand.

In a statement, GM said it is "committed to an all-electric future and is implementing a multi-segment, scalable EV strategy to get there. At this time, we do not have any announcements to make regarding electric commercial vehicles."

Also Read : GM should emerge from coronavirus with permanently lower costs, says CEO

The GM electric van project is aimed at an important segment of the emerging EV market – commercial delivery vehicles. For established players, this is a hugely profitable business segment driven by cost of ownership, not fancy tech or star power. It is also a segment in which Tesla and its high-profile CEO, Elon Musk, lack an entry to compete for sales and CO2 credits, which allow automakers to offset the sale of non-electric vehicles including high-margin pickups and SUVs.

"Buyers of commercial vans want reliability and not necessarily a flashy brand name," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. "The reduced maintenance and fuel use of electric vehicles become very attractive to a business customer, where the current limitations of EVs make the price premium less attractive to individual consumers."

(File photo used for representational purpose only). (REUTERS)
(File photo used for representational purpose only). (REUTERS)

In February, Ford said it would introduce an electric version of its Transit van for model year 2022. "The most critical bet we will be making over the next several years will be our commercial vehicles," Ford's chief operating officer, Jim Farley, told Reuters at the time.

Ford also is an investor in Michigan-based startup Rivian, which is scheduled to begin building the first of 100,000 mid-size electric vans for Amazon next year.

Amazon rival UPS has commissioned 10,000 mid-size electric vans from British startup Arrival, which is backed by Korea's Hyundai Motor Co and its sister company Kia Motors Corp.

The combined value of the Amazon and UPS contracts with Rivian and Arrival is estimated at $4 billion or more.

And more players in the segments will likely follow, including Daimler AG, Volkswagen AG and Fiat Chrysler Automobiles NV, said Samit Ghosh, chief executive of the Americas for consulting and engineering firm umlaut.

"The delivery vans is a volume not to be underestimated," he said. "I would not just call it a niche segment."

First Published Date: 04 Jun 2020, 17:18 PM IST
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