The UPS truck making its annual holiday runs has probably looked the same as long as you can remember: gold and brown box, snub “bubble-front” nose, acrid plume of exhaust. But from FedEx to Purolator, the cargo-van industry is getting an electric facelift—and automaking giant General Motors is betting on Ingersoll, Ont., to be the hub.

That’s the manufacturing home of BrightDrop, a new brand GM launched this year, which it expects could bring in up to US$10 billion by the end of the decade—and one that began with engineers at GM Canada’s CTC Engineering Centers, whose invention of an electric-powered pallet sparked the idea for a whole ecosystem.

For storied GM, a new brand is a fresh chance to stick it to rivals who had counted them out of the cargo game. And for Ingersoll, it’s another chance to prove to GM that the CAMI plant has staying power in the electrified future. It’s the result of a domino effect triggered by two factors: climate change and online shopping.

Businesses typically change out their cargo vans anywhere from every five to 20 years, according to a Pembina Institute study of the Greater Toronto and Hamilton Area of Ontario. But pressure to address climate change and the ever-quickening demand for package delivery suggest that time period may need to speed up. 

That’s where GM and other automakers see an opportunity. Whole fleets of internal combustion vans are all being expanded and replaced with electric vehicles, all over the same short period, as companies and governments that have pledged to reach net-zero emissions in the next 15 years. Based on a model of using electric parcel-delivery vans in the Toronto and Hamilton area, the Pembina Institute estimates that annually, one electric vehicle would reduce greenhouse gases as much as taking 2.6 passenger cars off the road. 

Another reason for the run on delivery vans is probably collecting frost on your doorstep right now: in 2020, Canadians spent $84.4 billion shopping online, up from $57.4 billion in 2018. 

BrightDrop has a somewhat unusual and conceived-in-Canada proposition to address the challenge: modular electric pallets and hand trucks, designed to pop out of the van and speed along a large number of packages at once. At an investor event in October, BrightDrop CEO Travis Katz said its designers spent “hundreds of hours in the field with delivery drivers on real routes, studying the ergonomics of how they move packages,” and FedEx was able to handle 25 per cent more packages in a day using the BrightDrop pallets in a Toronto pilot program.

Delivery is not only in demand, it’s one of the industries best primed for electrification, said Charlotte Argue, senior manager of Fleet Electrification at Ontario-based connected-vehicle company Geotab. Like buses, local government and many passenger cars, they are used for local travel and come back to the same place each night, where they can be charged.

GM isn’t alone in seeing a potential goldmine. California-based Rivian and Quebec-based Lion Electric are both making vans for Amazon. Ford has bet that enterprise customers will adopt electric vehicles faster than the general population. 

But BrightDrop stands out. For one, it’s an underdog: its GMC Savana has long lagged internal-combustion cargo van forerunners like Ford, Mercedes and Ram, said David Whiston, equity strategist for U.S. autos at Morningstar Research Services. GM is also aiming for a battery range that exceeds the rest of the cargo-van industry by between 100 and 200 kilometres. 

“So they decided to go after Ford, but go after Ford on electric,” said Whiston. “I don’t see a reason why they shouldn’t. Even if it fails, at least they tried. This isn’t a crazy side project to try and fail—so be it. If it works out, it looks like a smart move.” 

BrightDrop is markedly not run like a traditional automaker. Spun out of an internal incubator, it is run by Katz, a software entrepreneur who joined from Redpoint Ventures, and was previously a top executive at Myspace in the mid-2000s before co-founding Trip.com. Katz said at the investor day event he’s hiring San Francisco Bay Area-based executives from Lyft, Google and Uber to run BrightDrop as a “separate startup under the GM umbrella.” 

The CAMI plant will make both the EV600 and a new EV410 model that was unveiled at the end of September, although production there won’t start until 2022 and 2023, respectively. While housing a startup is a risk, union leaders hope if BrightDrop succeeds, it will bring a decade of job security to Ingersoll. The plant’s future has been in question since assembly of its longtime product, the Chevrolet Equinox, is moving to Mexico by 2023—a decision that sparked a 2017 strike when it happened to CAMI’s other model, the GMC Terrain. 

The stakes are high, but in a way, that’s fitting. The CAMI plant has a history as skunkworks of sorts, formed as a joint venture with Suzuki in the late 1980s to prepare GM for a “major shakeup” in the future as foreign manufacturers upended traditional assembly. Now, it will take its cues from Silicon Valley.

BrightDrop is a small slice of GM’s ambitions to double its revenue by 2030: the automaker overall expects to make US$90 billion in EV sales annually by then. So far, BrightDrop has delivered 500 vans to FedEx, booked an order of 18,000 vans for Merchants Fleet, has another deal with the telecom Verizon and opened its first dealership in California earlier this month. 

Maddy Ewing, senior analyst at the Pembina Institute, said one of the most challenging things for companies like BrightDrop is that businesses with big depots face a nearly double upfront purchase price on the EVs themselves, plus working out the logistics of charging stations with utility companies, construction permits and charge-tracking apps. 

But Argue said more and more businesses are also suddenly seeing the business case to save on long-term fuel and maintenance costs with something like BrightDrop. It’s the fastest vehicle to market in GM’s history, at 20 months from conception to delivery, a run at a “total greenfield opportunity,” Katz said at the October investor event.

“There’s been a very big change in the interest in EVs,” said Argue, who has been in the EV industry for 12 years.

“I don’t think even people who have been working in the EV industry could have predicted how quickly EVs have come to market.”