In a significant development, the U.S. Postal Service (USPS) stated, it will award a multibillion-dollar, ten-year contract agreement to Oshkosh Defense to manufacture a new generation of postal delivery vehicles.
Under the initial $482 million investment, Oshkosh Defense, a unit of Oshkosh Corp, will finalize the production design, testing and vehicle tooling required prior to production. The cost per vehicle was not disclosed.
The contract, which could be worth more than $6 billion in total, allows for delivery of between 50,000 and 165,000 of the vehicles across 10 years; the fleet of vehicles will be a mix of internal combustion-powered and battery-electric vehicles.
Previously, Oshkosh had teamed up with Ford Motor Co on its proposal, for an earlier prototype that was based on a Transit van.
Ford declined comment.
Oshkosh declined to say what role, if any, Ford played in winning the contract.
In an interview, Oshkosh Defense’s president John Bryant said, the winning vehicle “is not a Ford Transit … but is a purpose-built vehicle.”
On average, the current fleet of gas-guzzling USPS delivery vehicles are nearly 30 years old.
According to a 2020 audit report, USPS spent $5,000 alone per delivery vehicle on annual maintenance costs.
“This is just light years ahead of the existing vehicle,” said Bryant.
With the news reaching the market, Oshkosh’s shares closed 6.1% higher.
According to Michael Shlisky, an analyst with Colliers Securities Workhorse’s loss of the contract is “really bad news for recent Workhorse investors.”
From 2015 USPS had begun planning to replace its current fleet, said Bryant while adding, internal combustion versions could be retrofitted later with battery electric vehicles.
Most delivery vehicles lack modern safety features available in commercial cars. The new vehicles will have higher carrying capacity and will be able to accommodate higher package volumes.
Last month, U.S. President Joe Biden vowed to replace the U.S. government’s fleet of roughly 650,000 vehicles with electric models.