UPS to buy 10,000 electric trucks from U.K. startup Arrival

UPS is investing in Arrival, a U.K.-based electric truck manufacturer, and plans to buy at least 10,000 battery-powered delivery trucks worth $440 million over the next five years.

Why it matters: UPS is transforming its global logistics business to keep up with exploding e-commerce and increased urbanization — and the fallout from those trends like worsening congestion and climate change.

• The purchase represents 10% of UPS' current fleet of 100,000 package delivery trucks in the U.S.
• It more than doubles UPS' worldwide fleet of roughly 10,000 alternative fuel vehicles.

What's happening: UPS said it would take an undisclosed minority stake in Arrival, a company virtually unknown in the U.S. until recently.

• Arrival has been quietly developing its EV skateboard platform since 2015, emerging last October as a potential rival to another buzzy electric truck manufacturer, Michigan-based Rivian.
• UPS has an option to buy another 10,000 trucks by 2023, for a total order worth nearly $1 billion, Arrival said.
• The two companies plan to collaborate on the design and production of future trucks designed to UPS' specifications.
• Earlier this month, Hyundai and Kia also announced a $110 million investment in Arrival and said they, too, would work together on purpose-built EVs, especially for Europe, where stricter environmental regulations are kicking in.

How it works: Arrival designed its electric vehicles from the ground up to match the cost of gasoline or diesel trucks.

• It uses lightweight materials and a modular EV base, which incorporates the battery pack, electric motor and driveline components.
• The company says its EVs provide a range of up to 300 miles for planned routes and a 50% reduction in the total cost of ownership of traditional trucks.
• The company’s "autonomous-ready" platform is outfitted with sensors and advanced driver assistance systems with the ultimate goal of full autonomy.

The big picture: UPS' interest in Arrival is part of a broader sustainability effort.

• In recent years, the company has invested more than $1 billion to deploy about 10,000 alternative-fuel vehicles and infrastructure globally, including electric, hybrid, ethanol, natural gas and propane trucks.
• It is expanding the use of route optimization and navigation software to reduce fuel consumption and emissions.
• In London, UPS is testing smart-grid technology and energy storage batteries to charge an entire fleet of 170 electric trucks simultaneously overnight.
• The company is collaborating with cities on innovative last-mile delivery systems like cargo e-bikes in dense urban areas.

Go deeper: Waymo pilot with UPS hints at future autonomous truck plan