FedEx, the U.S. delivery giant, has tabbed more than $2 billion in a carbon neutral plan that will convert its entire parcel pickup and delivery fleet to electric vehicles by 2040, among other initiatives.
The company will gradually replace its existing fleet to make half of its global pickup and delivery vehicle purchases electric by 2025, rising to all purchases from 2030.
FedEx is hoping to receive its first vehicles in late 2021, according to the announcement.
Electric vehicles have no tailpipe emissions, and their broad corporate adoption could cut prices in the sector by helping to move electric vehicles to larger-scale use. Investors and shareholders, for their part, are demanding greater compliance with environmental standards from corporates.
The new van will be one of the first products to come out of a new logistics and delivery business for General Motors, the largest American automaker.
According to the company’s announcement, the van will be powered by an Ultium battery platform and will have a range of up to 250 miles on a full charge. It will be able to recoup 170 miles of range per hour via D.C. fast charging.
FedEx’s announcement comes as automakers and delivery companies are increasingly pivoting to electric vehicles. The market is set to become increasingly competitive in the coming years.
FedEx rival Amazon.com Inc. has invested in Rivian Automotive and has a deal to buy 100,000 of its delivery trucks. The company also previously pledged to become carbon neutral by 2040 and called on other competitors last September to set similar targets.
Another FedEx rival, United Parcel Service, has ordered 10,000 vans from UK-based Arrival Ltd and tested Waymo self-driving vehicles to carry packages.
In addition to Tesla betting high on the market’s dominance, General Motors also announced that it would end all sales of gas-powered vehicles by 2035 and invest $27 billion in electric and autonomous vehicles over the next five years.
The FedEx plan also holds ambitions in research and development. The company plans to give Yale University $100 million for the construction of the Yale Center for Natural Carbon Capture.
“We have a responsibility to take bold action in addressing climate challenges,” said Fred Smith, FedEx Chairman and a 1966 graduate of Yale, who launched the company in 1971.
The facility will research carbon sequestration and identify methods to remove and store excess carbon to offset greenhouse gas emissions.
Carbon capture is the process of trapping the greenhouse gas at its emission source and storing it so that it is not emitted into the atmosphere. It can be used to capture emissions from factories or even from the air.
“While we’ve made great strides in reducing our environmental impact, we have to do more,” FedEx Chief Sustainability Officer Mitch Jackson said in a statement.
FedEx, which operates the world’s largest cargo airline, further announced that it would continue to invest in alternative fuels to fuel consumption and emissions in its aircraft. It is also planning to offer carbon-neutral shipping and sustainable packaging solutions.