Amp Sees Gold in Government Subsidized Electric Step Vans

Amp's step van is a conversion on three existing chassis. (Amp graphic)

They’re ubiquitous in the landscape: the blue, red and white FedEx and brown UPS delivery vans making house calls; the Frito-Lay and Coca-Cola trucks making local deliveries. Most of them are diesels, of course, but a small number are now battery powered, from Smith Electric Vehicles and others.

Quick Payback

The economics of short-haul battery electric delivery is looking increasingly favorable to fleet managers, especially in states and cities that provide lucrative subsidies of $50,000 or more for replacing polluters with zero emission. And that’s the reason Cleveland-based Amp Electric Vehicles, which had concentrated on SUVs, is now making a big bet on converting widely used medium-duty Class 5 delivery vans with a 19,500-pound gross vehicle weight rating.

CEO Steve Burns, in an exclusive interview with PlugInCars.com, said the company plans to convert as many as 1,000 of these package delivery vans in its first year after receiving validation through third-party durability testing. “There is a fairly small market for new vehicles—10,000 to 15,000 a year,” Burns said, “but 300,000 vans suitable for a $75,000 repowering. That’s where we think the market is. With the incentives, companies can pay back the conversion cost in one or two years.” Amp’s offering will be a kit that fits Navistar, Workhorse and Freightliner chassis.

Amp CEO Steve Burns in New York with an electric Chevy Equinox. (Jim Motavalli photo)

Burns said that the durability testing now underway, by TRC, will “simulate 20 years of bumps. It’s the last step before production. Assuming the van passes durability, we have customers ready to buy it.”

100 Miles a Charge

Amp hopes to be building its first vans in a month, Burns said. He added that conversions are ideal for delivery vans on fixed routes that never exceed 65 miles a day—there’s no range anxiety, because the daily mileage fits comfortably into the van’s 100-mile-per-charge capability. Smith Electric, which recently announced a new factory in Chicago that will double as a service center, is also getting into step vans in a big way.

Amp, which has been in search of high-volume programs, had been working directly with Navistar on electrifying that company’s van chassis. A prototype was delivered to Navistar last September. “It was a big deal for little Amp,” Burns said. But Navistar ran into major financial problems and killed its electric vehicle division just as that deal was moving forward. Good things came of that, however, because Amp started approaching customers directly and found ready buyers.

Some companies, including Smith, have been hindered by battery supplier A123’s bankruptcy, but Amp says it’s less vulnerable to business reversals. Amp buys only commonly used cells from various Chinese suppliers (intended for electric bikes) and makes its own 100-kilowatt-hour packs and software. Amp’s drivetrain uses two electric motors, producing 250 kilowatts, which it claims can accelerate the van faster than its original diesel.

Big Orders Ahead?

Burns said he’s anticipating some of the largest orders for commercial electrics ever, from some of the biggest fleet operators—he declined to name them, but said they were the usual suspects. Geography matters here—it’s no accident that Smith is building a plant in Chicago, because that city offers $50,000 to $60,000 subsidies for commercial electric vehicles. Other lucrative territories are the states of New York (where Smith also has a factory) and California.

In Chicago, Mayor Rahm Emanuel started what the Chicago Sun Times calls a “death to diesels” voucher program “to reward private sector companies that agree to convert their pollution-belching fleets of diesel trucks to cleaner electric vehicles.” The vouchers are available in all six Chicagoland counties, with the amount of the subsidy depending on battery size, but covering roughly 60 percent of the difference between the cost of cheap diesel and a more expensive battery electric.

Lucrative State Rebates

In New York, federal funds administered by the state allow incentives of up to $20,000 per vehicle, and that was a factor in Smith’s decision to build a factory in the Bronx. California’s vouchers, between $6,000 and $55,000, are administered by the California Air Resources Board.

There are other players in this space, including Via Motors, which showcased new customers Pacific Gas & Electric and Verizon at the recent Detroit Auto Show. Via’s plug-in hybrid technology is certainly welcome in this space, but because it’s not zero emission, some of the lucrative rebates are lower. “The key here is getting to that payback,” Burns said.