By Ben Klayman
DETROIT (Reuters) -General Motors Co said on Monday it is turning to a German parts supplier to make the initial, small production run of its new electric commercial van in a move to get the vehicle quickly into the hands of customer Fedex.
The decision to use Kuka AG to build the EV600 vans is not typical in the industry. But it shows the No. 1 U.S. automaker's desire to stick to a plan to roll out the vehicle in late 2021, said Travis Katz, chief executive of GM's BrightDrop commercial van business.
"We are working alongside Kuka for initial low-volume production to keep up with market demand and remain on track to deliver our first EV600 order later this year," Katz said in a statement to Reuters.
GM announced the BrightDrop commercial van business in January.
"They just want to get them going," Mike Van Boekel, chairman of Unifor Local 88, which represents about 1,500 hourly workers at GM's CAMI assembly plant in Ingersoll, Ontario, that will ultimately build the van, said of the decision to use Kuka. "The orders are coming through so strong."
Kuka declined to comment.
GM said in June it would end production of the Chevrolet Equinox SUV at CAMI next April and begin production of the electric van there in November 2022 before increasing the number of shifts building it to two in 2023 and three in 2024. It also said it was "working with supplier partners" to meet its timetable.
Kuka's production run will number fewer than 500 hand-built models and begin in late October at the supplier's plant in Livonia, Michigan, according to the three sources who asked not to be identified and GM documents.
"It is unusual. They want to show they can do this quickly," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. "However, they don't have the plant (in Canada) ready because they're still building Equinoxes."
GM previously said it would invest $800 million in the Canadian plant for the large van's production.
The electric commercial van business is attractive because governments in China and Europe are pushing companies to slash CO2 emissions, and companies like FedEx (NYSE:FDX), Amazon (NASDAQ:AMZN) and United Parcel Service (NYSE:UPS) have pledged to shift their large delivery fleets to EVs.
In addition, EV leader Tesla (NASDAQ:TSLA) has not cracked the market, and it has become a race for companies like GM, Ford Motor (NYSE:F) Co, Stellantis, Daimler (OTC:DDAIF) and startups Rivian, Arrival and Electric Last Mile Solutions to introduce their EV delivery vans.
GM has estimated the U.S. market for parcel and food delivery vehicles will climb to more than $850 billion by 2025.
In January, GM's shares surged after Chief Executive Mary Barra announced the company's entry to the growing electric delivery vehicle business, with plans to begin shipping the first BrightDrop vans to FedEx later this year. GM said then the first 500 units would be shipped to FedEx by year end, with deliveries to other customers starting in early 2022.
GM's EV600 will use a version of its own Ultium battery system that will power many of its future EVs. It will have a driving range of 250 miles (400 km) between charges.
Last month, GM boosted its spending on electric and autonomous vehicles by about 30% to $35 billion and accelerated plans for two U.S. battery cell plants.