By Lisa Baertlein
LOS ANGELES (Reuters) - United Parcel Service Inc (NYSE:UPS) on Wednesday said it is ordering 10,000 electric delivery trucks from the UK-based Arrival Ltd and teaming with self-driving startup Waymo as package carriers work to cut costs and tail pipe pollution.
The UPS/Arrival partnership includes a minority investment from the world's biggest package delivery firm and lands four months after customer-turned-rival Amazon.com Inc (NASDAQ:AMZN) ordered 100,000 electric vans from Rivian, a Michigan startup partially funded by the world's largest online retailer.
Its six-month test with Waymo, the self-driving unit of Google parent Alphabet (NASDAQ:GOOGL) Inc, starts next month. UPS will pay Waymo to use autonomous Chrysler Pacifica minivans to shuttle packages from Phoenix UPS stores to a nearby sorting center several times a day, starting with one route.
The Arrival and Waymo projects "will help us continue to push the envelope on technology and new delivery models that can complement the way our drivers work," Juan Perez, chief information and engineering officer at UPS, said.
Amazon's growing delivery network is piling pressure on UPS and rival FedEx Corp (NYSE:FDX), which are racing to squeeze more profits from surging e-commerce deliveries that are upending their business models.
Electric vehicles have no tailpipe pollution - which is critical as more cities worldwide crack down on emissions from idling delivery vehicles. Broad corporate adoption of electric vehicles could cut sticker prices and make them cheaper to operate and maintain than fossil fuel-burning vehicles. Eventually, removing human drivers might cut costs further.
Perez said the Waymo test will not replace the driver on the affected route. That driver will still make the scheduled daily UPS Store stop.
For Waymo, the deal with UPS is the latest in a series of moves to expand use of its robotic "Waymo Driver" system beyond robo-taxis. Waymo recently expanded testing of its autonomous trucks and vans to Texas and New Mexico. Waymo also has extended a deal with vehicle retail chain AutoNation Inc (NYSE:AN) to deliver parts to Phoenix area stores. AutoNation in turn services Waymo vehicles.
Atlanta-based UPS plans to take ownership of all 10,000 Arrival zero-emission electric vehicles by 2025. The first trucks should hit streets in Paris, London and undisclosed U.S. cities in the second half of this year.
The Arrival trucks have a modular design that promises to be cheaper to build, maintain and customize.
Vehicle components are swappable and designed to be changed in 15 minutes or less. For example, left and right headlights are the same and can be installed in any size truck, "almost like putting Legos together," said Scott Phillippi, senior director of automotive maintenance and engineering at UPS.
The trucks also have "advanced driver-assistance systems" including collision avoidance and features that could one day enable UPS, which already deploys self-driving tugs that transport large packages in some facilities, to run more automated vehicles in its depots.