USPS Delivery Vehicle Decision Plays Directly Into China’s Hands

As electric vehicles become more prominent in our landscape, there is a huge battle underway for the inside of every electric vehicle. And while it may not seem like an important part of this international technology fight, the recent United States Postal Service’s much-anticipated contract to replace its current fleet of iconic delivery vehicles has become the epicenter.

We all know the current Grumman Long Life Vehicles that deliver our mail every day.  They were in the spotlight a lot in the run-up to the last election. Unfortunately, these symbolic vehicles suffer from a litany of problems and will likely not be missed by those essential postal carriers that drive them. They average just 8 miles per gallon, require maintenance totaling hundreds of millions of dollars per year and burst into flames with alarming frequency: More than 120 have combusted in the last five years.

This new contract offered an opportunity to not only create a more reliable vehicle, but to stimulate the nascent electric vehicle market in the United States by designing and building EV replacements for the inefficient LLVs.

But this golden opportunity was squandered when the USPS chose a contractor that will provide a mix of Internal Combustion Engines, hybrids and EVs.

The decision by the USPS offers a 20th century solution to a 21st century problem. As the global transportation sector evolves, the time for like-for-like ICE replacements has passed.

Aided by governments seeking to decarbonize their economies through electrification, transportation is shifting from its petroleum past to a connected, electric future built on batteries. As a result, there are tremendous strategic and economic benefits for the country that leads this transition.

Unfortunately, the United States and much of the developed world are far behind already. China is comfortably leading the race for electrification, and exerts vast control over every step of the EV supply chain — and the United States is barely in the running. China holds direct or indirect control of 70 percent of the world’s lithium supply. In comparison, the United States has an import dependence of 92 percent.

China also produces 61 percent of the cathodes and 83 percent of the anodes used in batteries, while the United States currently produces hardly  enough to even register. And of the 142 lithium-ion megafactories currently in operation or under construction, 107 are or will be in China. Just nine are planned for the United States.

This dominance takes on an increasing geopolitical importance amid rising China-U.S. tensions on the international stage. In the past, the Chinese government has leveraged its supply chain advantages during diplomatic disputes. In 2010, Beijing halted supplies of rare earth minerals to Japan over the arrest of a trawler captain, and could do so again with the United States.

Building out a robust EV supply chain free from Chinese control is therefore of considerable strategic importance – but doing so quickly and at scale requires strong consumer demand. Electrifying the USPS delivery vehicle fleet, one of the largest fleets in the country, would have created that domestic demand across the entire EV supply chain and boosted our domestic efforts.

While the contract award has passed, there may still be an opportunity to influence the purchasing details.  In a recent House Oversight hearing, Postmaster General Louis DeJoy said the USPS does not have the money available to go beyond electrifying 10 percent of the fleet. Congress can solve that problem by provide USPS funding with a condition to immediately electrify these delivery vehicles, or add it as a condition to $10 billion in COVID-related congressional funding now available to the USPS.

China’s EV leadership hasn’t happened by luck. Guided by its Made In China 2025 strategy, through which Beijing sought to gain greater global authority by consolidating control of emerging industries with considerable economic and strategic potential, the Chinese government has identified and backed champion companies to lead this EV transition such as BYD and CATL, which now account for one-third of the global battery market between them. It is worth pointing out that CATL is barely 10 years old.

The lack of vision demonstrated by not fully electrifying our newest and biggest government vehicle fleet is a huge mistake that will cost U.S. consumers in the long run. It means we are ceding ground to China on one of our biggest efforts to improving our climate, making us dependent on its domestic policy for the materials, components and vehicles that will power our economy for decades to come.

Robbie Diamond is President and CEO of Securing America’s Future Energy, a nonpartisan nonprofit that advocates for advancing tomorrow’s transportation technologies — such as electric vehicles, micromobility and self-driving cars — as an energy security priority.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.