GM’s BrightDrop E-Commerce Startup on Pace to Deliver First EVs to FedEx

General Motors is positioning its new BrightDrop e-commerce fulfillment startup as a “greener and more efficient platform for commercial customers to deliver the things we want, while delivering better cities,” Travis Katz, the subsidiary’s president-CEO, told a Bank of America virtual investor conference Monday. With e-commerce demand soaring, “consumers are increasingly saying they want their packages delivered without harming the environment,” said Katz, a former Trip.com and News Corp. executive.

Global e-commerce generated $4 trillion in 2020 revenue, up nearly 27% year on year and nearly three times the volume of 2015, said Katz. “Not only are we ordering more and more online, we want our deliveries to arrive faster than ever,” and in a manner that doesn’t worsen traffic congestion or CO2 emissions, he said. GM launched BrightDrop in January as “a true ecosystem of all-electric, first-to-last mile solutions, from e-pallets to electric vehicles to software and services,” he said.

BrightDrop solutions will “allow delivery and logistics companies to move everything more efficiently, driving down costs while reducing harmful emissions in our cities and congestion on our streets,” said Katz. BrightDrop’s business proposition is “to help businesses lower costs and maximize productivity, improve employee safety and freight security, all while supporting their overall sustainability goals,” he said. “These solutions are going to help bring us closer to a world with zero emissions, zero crashes and zero congestion.”

One of BrightDrop’s linchpins is the EP1, a “propulsion-assisted connected electric pallet” that was developed to move goods over short distances, like from the sorting aisle to the van, or from the van to a residential doorstep, said Katz. It can move more than 200 pounds of cargo, “helping to reduce package touch points, delivery costs as well as physical strain on delivery teams,” he said.

In a test BrightDrop ran last year with FedEx, “they were able to deliver 25% more packages per day using the EP1 for package delivery,” said Katz. “In a world where we are fast approaching 100 million packages delivered every day in the U.S., a 25% improvement in efficiency is game changing.” The U.S. domestic parcel market is expected to grow to 101 million packages a day by 2022, with e-commerce “contributing 86% of total U.S. market growth," said FedEx executives on a quarterly call last week (see 2103190006).

The EV600, another critical BrightDrop component, is GM’s “first electric light commercial vehicle” that was “purpose-built for delivery,” said Katz. It’s built on GM’s Ultium EV battery platform “and is targeted to have a range of 250 miles on a full charge,” he said. “Not only is it a cleaner vehicle, it’s also significantly cheaper. We estimate that the EV600 will save fleet owners nearly $7,000 per year compared to a traditional diesel, making the decision to upgrade pretty easy.” The first EV600s “will be hitting the road later this year,” with FedEx to be the first customer, he said.

Software is “at the heart” of the BrightDrop “ecosystem,” said Katz. All components of the service, including its vans and e-pallets, are connected IoT devices, he said. “The built-in connectivity of these devices will allow businesses to have detailed data and insights that will help improve overall operations, including route efficiency and asset utilization.” GM designed the startup “from the ground up to help delivery companies power e-commerce and grow while delivering a more sustainable future,” he said.

An “innovation and growth group” inside GM was studying how to capitalize on “this explosive growth in e-commerce,” said Katz. “The opportunity is massive. Global package delivery alone is expected to be a $300 billion market this year.” GM contacted Katz in late summer “to talk to me about this,” he said. “I could leverage the strength and scale of GM,” but it needed “to be able to move” at the rapid pace of a startup, “and so we stood up BrightDrop as a separate company,” he said.