UPS buying 10,000 electric delivery vans, will test Waymo self-driving vehicles next month

By Lisa Baertlein

LOS ANGELES (Reuters) - United Parcel Service Inc on Wednesday expanded its efforts to cut emissions and delivery costs with separate deals to order 10,000 electric delivery trucks from UK-based Arrival Ltd and test Waymo self-driving vehicles to carry packages.

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 ordered 100,000 electric vans from Rivian, a Michigan startup partially funded by the world's largest online retailer.

UPS said a six-month test run with Waymo, the self-driving unit of Google parent Alphabet Inc, would start 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," said Juan Perez, chief information and engineering officer at UPS.

Financial terms were not disclosed for either deal.

Amazon's growing delivery network is putting pressure on UPS and rival FedEx Corp, which are racing to squeeze more profits from surging e-commerce deliveries that are upending their business models.

Electric vehicles have no tailpipe emissions - which is critical as more cities worldwide crack down on pollution 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 would not replace the driver on the affected route.

That driver will still make the scheduled daily UPS Store stop.

For Waymo, UPS counts as 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. It also has extended a deal with vehicle retail chain AutoNation Inc 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.

Executives from Arrival and UPS said the trucks had a modular "skateboard platform" that allows users to customize vehicles with swappable parts that reduce production and maintenance costs.

(Reporting by Lisa Baertlein in Culver City, California; Additional reporting by Joseph White in Detroit; Editing by Peter Cooney and Tom Brown)