Have you ever been cruising on a highway
and wondered where the heck are all those trucks going?
There's a behind the scenes world of logistics
that makes virtually everything
in our modern lives possible.
Not only do we take it for granted,
we're completely oblivious to its environmental cost,
but thanks to a handful of companies,
there's a hidden revolution happening
that as it turns out,
is perfectly suited to delivering a cleaner future.
For years, online ordering and rapid home delivery
have been booming
and thanks to the pandemic,
this trend has evolved into a way of life.
But what actually happens when I click
that tempting button to buy, let's say,
an old school real hard cover book?
For mighty Amazon,
which tends to capture the lion's share of all book sales,
they're trucked along with other books
to one of several Amazon inbound fulfillment centers.
Now the book is an Amazon's massive fulfillment network.
Copies then journey along the so-called "middle mile"
and can be redistributed to any of the hundreds
of smaller warehouses or nodes,
closer to customers in major population centers.
The last step is the so-called "last mile",
how it gets to a buyer's home.
The book might be sent to an Amazon delivery station
and put in the back of a Mercedes Sprinter van
and dropped off by Amazon itself
at the customer's front door.
This system, while it's a marvel of modern day logistics,
still relies mostly on
traditional combustion engine vehicles
for middle and last mile delivery.
As demand for rush delivery rises,
so does the number of gas guzzling trucks
hustling between warehouses.
Environmentally, it's one of the biggest issues there is
and you know, the quicker that the globe can
sort of decarbonize transportation,
the better it's gonna be.
So, if you look at
total greenhouse gas emissions in the U.S.,
about 28% of that is transportation
and of that chunk, of the 28%,
about a quarter of it come from medium
and heavy duty trucks.
So, middle mile and sort of long haul trucking.
If you really wanna move the needle on carbon emissions,
this is a really good place to look.
So, how do we solve this growing emissions problem
and still satisfy our addiction to same-day delivery?
As it turns out,
the size, shape,
and predictable limited range of these vehicles
makes them the perfect candidate for a solution.
I'm Dakota Semler.
I'm the CEO and co-founder of XOS Trucks.
So, we are a manufacturer of commercial electric vehicles.
We manufacture trucks that are in the class five size
all the way up to class eight
regional haul tractors
and those are things like the UPS
or FedEx step vans that you see
delivering packages every day.
We actually started this
because we were fleet operators ourselves.
We had a fleet of medium duty vehicles
and we saw how challenging it was becoming
to operate diesel vehicles.
The technology exists
to convert last mile fleets from diesel to electric.
Batteries and the prices of those batteries
have fallen dramatically in the last 10 years
and any routes that are around 200 miles or less
are really ready to make that transition.
So, XOS is trying to perfect the frame of the car.
They call it the chassis.
So, this is everything sort of underpinning the car,
the electric motors,
the battery pack,
all the battery software and cooling and technology
and kind of the brains of the car, if you will
and then, the business model is basically to sell that
and let the end consumer dictate what goes on top.
Our platform, we call the X platform.
UPS is using an X platform
with a parcel delivery van body on top of it.
Loomis, who operates an armored car fleet,
uses the same exact X platform,
but with an armored body on top of it.
XOS is currently making their modular battery packs
here in Los Angeles
and the packs can be customized for specific applications,
but while one big problem,
vehicle cost,
is improving, as battery prices continue to fall,
there's still another major hurdle at the other end.
The best way to describe the current state
of charting infrastructure in the U.S. is anemic.
These companies don't want to build chargers
unless there are electric vehicles.
People don't wanna buy electric vehicles
unless there's chargers.
That's a big problem for the personal EV space,
where range anxiety is often cited as
a roadblock to mass adoption,
but when it comes to delivery,
there's a much simpler solution.
When you think about last mile vehicles,
they're not operating in different bases of operation.
They actually returned to the same depot every single night
where they do their charging.
XOS actually has a division helping fleets
install that charging infrastructure.
These fleets will actually bring their vehicles
back to the yard.
They charge them overnight
and then, by the time morning rolls around
for their next shift,
those vehicles are fully charged,
ready to go with the infrastructure that's onsite.
With pilot programs up and running
with delivery giants UPS, FedEx and Amazon,
XOS is quickly becoming a major contender
in the electrification game,
but there's another enormous part of this puzzle,
which may end up eliminating more than just gasoline.
So, I'm Gautam Narang.
I'm the co-founder and CEO of Gatik.
At Gatik, we do autonomous vehicles
for the middle mile segment of the supply chain.
Again, middle mile is one step back from last mile,
trucking that goes from one factory or warehouse to another.
The middle mile is evolving at a rapid pace
and with the pandemic,
the middle mile segment of the supply chain
was put into high gear.
The prominence and the significance
of the middle mile is only gonna grow in the coming years.
So, Gatik's a really interesting company.
What they're doing is trying to both
make middle mile delivery autonomous and electric.
So, they're trying to move the ball in two ways here
and what's really interesting with them
is they focus specifically on certain sector of users,
namely large companies that have very fixed routes.
Just as the predictable routes
of shipping and delivery
make electrification easier,
they make autonomy a lot easier, too.
If your trucks are going the same way every single time,
like Gatik's,
that's a much easier puzzle for an AI to navigate.
So, what they do,
they find the route they need to run
and they agonize over it for four to six weeks,
just mapping it inside and out,
figuring out where all the trouble spots might be
and coding their vehicles to deal with it
and often,
they're not taking the most direct route.
They're taking the safest route.
They're taking the route that's most predictable
in terms of traffic.
There's a common understanding in the industry that
unprotected left turns and doing multiple lane changes
are some of the most trickiest problems in the EV space.
With middle mile, frankly,
you can avoid all of that.
You can take three right turns to make a left turn,
you know, a bag of potatoes won't care.
Gatik's ultimate goal is to provide
a cheaper, cleaner alternative
to the middle mile of today,
by saving money on gas and maintenance by electric motors
and saving money on well,
drivers, by going autonomous.
They've already sold some major players on their vision
and scoring Walmart as a customer
bodes well for the future.
Startups like Gatik and XOS
are betting that the delivery industry is ready
for a full on high-tech refit.
In a sector where only about 1% of vehicles
have been electrified,
that's a lot of potential for change.
The usual suspects are where you're gonna
see adoption come first, you know,
the larger, more stable companies.
So, Walmart, Amazon,
UPS, FedEx, et cetera.
I think you'll see them experimenting with it more
and the more routes
that they can get it to make sense on,
the faster adoption's gonna be.
And as the technology matures
and batteries continue to get cheaper,
there's another huge category of vehicles
that's right for this kind of an upgrade.
So, the Biden administration has been super aggressive
about a pledge to
electrify the entire federal vehicle fleet,
which is just under 700,000 vehicles.
What's interesting is the federal fleet is both
really old and really inefficient.
The average age of these cars and trucks
is about 14 years
and the average cost is about a dollar a mile.
When you add up fuel and maintenance and depreciation,
which are the three big ones,
it's a good place to look
if you're looking to get carbon
out of the transportation system.
While the most exciting
and flashy developments in the world of electric vehicles
are usually around personal EVs,
the more impactful transition
is happening behind the scenes.
So, the next time you order something online
and it effortlessly appears on your doorstep,
your package might've made
at least some of its hidden journey
without consuming an ounce of gasoline.