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The Street
The Street
Business
Tony Owusu

Biden EVs Push Could Derail $11.3B Postal Service Truck Contract

President Joe Biden's push to combat climate change is a wildcard that could turn fortunes around of otherwise unknown companies operating in the clean energy space for better or worse.

But that political involvement can lead to complications and headaches for the "winners" of government contracts.

Enter Oshkosh Corp (OSK).

The specialty vehicle manufacturer could be in limbo after the Biden administration urged the United States Postal Service to reevaluate its plans to electrify only 10% of its fleet of 225,000  vehicles. 

"The Postal Service’s proposal as currently crafted represents a crucial lost opportunity to more rapidly reduce the carbon footprint of one of the largest government fleets in the world,” Vicki Arroyo, the Environmental Protection Agency's associate administrator for policy wrote in a letter to the Postal Service, according to the Washington Post

The White House is looking to pause and reevaluate the USPS contract which could have a total value of $11.3 billion over 10 years. 

The letter crystalizes the influence the executive branch has on decisions like this and how much company's in the electric power and green energy space stand to gain, and maybe even fail, with democrats in the White House. 

Oshkosh's USPS Deal

Last year, the USPS awarded Oshkosh Corp a 10-year contract with an initial $482 million investment to finalize the production design and construction of between 50,000 and 165,000 of the next generation of the service's iconic right-hand-drive mail and package delivery vehicles. 

But the contract called for the vehicles to be equipped with either fuel-efficient internal combustion engines or battery electric powertrains.  

Transportation is the single largest source of greenhouse gas emissions in the U.S.

Even with the recent push into electric vehicles, only 4% of U.S. vehicle purchases in 2021 were EVs, including plug-in hybrid models. 

Oshkosh Caught in the Middle 

Over the past week environmentalists and California's top air quality regulator have called on the EPA to block the Postal Service from moving forward with that contract. 

“While we can understand why some who are not responsible for the financial sustainability of the Postal Service might prefer that the Postal Service acquire more electric vehicles, the law requires the Postal Service to be self-sufficient,” USPS spokeswoman Kimberly Frum said in a statement to the Post. 

Oshkosh trucks are expected to burn about 110 million gallons of gasoline a year, just an 18% drop in fuel consumption compared to the current model and environmental group have questioned the USPS claim that the electric Oshkosh trucks could travel 70 miles per charge. 

Most of the delivery vans on the market have a single charge range of well over 100 miles. 

Transforming the U.S. Fleet

Part of the pushback against Biden and this contract is due to the the President's pledge to transform the country's entire fleet of 645,000 vehicles into electric vehicles. 

Of that 645,000, more than 220,000 are post office vehicles. 

Also complicating matters is the Biden administration's current beef with Tesla (TSLA), the United States' most prominent EV maker. 

A change.org petition has garnered more than 38,800 signatures since it debuted over the weekend.

"The White House and the Biden Administration have intentionally been trying to ignore Tesla's hard work while propping up GM and others as 'EV Leaders," according to the petition. "They have snubbed Tesla on behalf of UAW citing that the EV events were for UAW."

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