Bryan Hansel has little trouble convincing potential customers that his electric delivery trucks are street-ready. It’s the suppliers that challenge him.
“I’ve had to sell harder to my supply chain partners than to our customers,” the CEO of Smith Electric Vehicles U.S. says. “That’s because they’ve been burned before.”
Nearly all his suppliers also sell parts or equipment to makers of hybrid or electric vehicles that fell short of sales and production forecasts, he said.
“Electronic chip sets, there’s a shortage. High voltage connectors, there’s a shortage,” Hansel said. Most of the batteries that power the Smith Newton are made in Asia. “We’d love to buy batteries in the U.S., but there’s limited capacity here.”
That’s because demand has been low until now, he said. “The constraint isn’t raw capacity, but belief that any given company has a need” that’s sustainable.
With steady orders and big-name customers such as Staples and Frito-Lay, Hansel said Smith Electric is starting to win the confidence of suppliers and customers.
“We’ve never missed a month, so they’re taking our forecasts seriously,” Hansel said. Smith isn’t trying to plug in an entire industry at once. Smith Electric’s sales and production numbers are extremely low compared to diesel truck makers.
“We’ve been extremely conservative. It hasn’t been a market that’s easy to predict,” Hansel said.
Freshly charged by the $15 million acquisition of its British parent company in January and a $58 million stock sale this month, Smith Electric plans to expand this year.
As the economic recovery spurs companies to replace older commercial vehicles, Hansel hopes to put more electric delivery trucks on urban streets.
Federal grants also provided a boost — the company received a $32 million Department of Energy grant last year, and President Obama spoke at its headquarters.
Now, higher fuel prices are generating more interest and “a lot of noise at the front desk,” he said. “The energy we’ve sensed in the last 90 days is transformational.”
That energy is zinging through the auto industry, as General Motors rolls out the Volt, an electric car with a secondary gasoline engine, and Nissan its all-electric battery-powered Leaf. Toyota’s hybrid sales passed the 3 million mark this month.
Smith has an advantage in the market for commercial delivery trucks that the makers of all-electric cars don’t enjoy: thousands of vehicles racking up miles in everyday freight-hauling jobs in Europe, and a growing number in service in the U.S.
The company offers the only battery-powered medium-duty delivery truck, the 16,000-pound to 26,500-pound gross vehicle weight Newton, available in the U.S. It’s GVW ratings put the Newton in the Class 5 and 6 and lower Class 7 bracket.
Smith Electric Vehicles U.S. began making trucks in 2009, but its former parent, Smith Electric Vehicles U.K., started building trucks in the 1920s. Its vehicles, which include a range of lighter trucks and vans, are used by CEVA Logistics, DHL, TNT Express, Royal Mail and retailers Sainsbury’s, TK Maxx and AG Barr.
“If you’re on the streets of London in the early morning hours, electric vehicles are everywhere,” Hansel said. He’d like to say the same about U.S. cities, where Smith Electric’s battery-powered trucks are competing with electric-diesel hybrids from manufacturers such as Freightliner, Kenworth, Peterbilt, Navistar and Mack Trucks, as well as conventional trucks. Freightliner recently rolled out its 1,000th hybrid M2 106 truck.
All-electric trucks have two key selling points: zero emissions and fuel savings. Hansel said the annual cost of charging a plug-in Smith Newton can be as much as 75 percent less than the cost of fueling a conventional delivery truck. That’s a bigger savings than most hybrid truck manufacturers promise. They also have low maintenance costs compared with conventional trucks, Hansel said.
But any electrification of the urban U.S. delivery fleet will be an evolution, not a revolution. “We’ve got a very small group of customers by design,” Hansel said. “The EV supply chain is very immature. You’ve got to bring trucks on at a pace.”
Smith Electric has ramped up production to about 40 trucks a month — a “solid” production number, Hansel said — at its plant in Kansas City, where it has headquarters. Now the company is looking to add new plants, as demand grows.
Hansel hopes to eventually have 20 regional manufacturing sites across the nation in urban markets large enough to support demand for commercial EVs.
“I definitely believe decentralized manufacturing is the way to do this,” Hansel said. “Localization creates consumer awareness and adds value to our customers.”
Building trucks in the markets where they will be used is also cheaper, cuts into distribution costs and makes it easier to maintain close relations with customers.
The truck maker looks for customers that operate hundreds or thousands of delivery trucks on regular defined or highly local routes, such as food service and retail companies, beverage fleets, and local distribution and warehousing operators.
“We’re focused on depot-based logistics, any environment where a delivery truck comes back to same spot every night,” Hansel said Frito-Lay has ordered more than 170 trucks, and Staples has more than 40 in service. Other customers include Coca-Cola, Pacific Gas & Electric and communications giant AT&T.
“We don’t talk to small fleets and individual buyers, because we can’t handle them,” Hansel said.
Contact William B. Cassidy at firstname.lastname@example.org.