Why General Motors’ New Commercial EV Brand Will Be a Headache for Ford — and a Dire Threat for Start-Ups

General Motors (NYSE:GM) said that it is launching a new electric commercial-vehicle business, called BrightDrop, that will provide a complete set of software-connected electric vehicles (EVs) to customers. And it has already landed FedEx (NYSE:FDX) as its first big customer. 

While tiny EV start-ups have captured the attention of auto investors in recent months, GM’s news is a big reminder that the old automakers can play this game, too. And some, like GM, are positioning themselves to be leaders as the world transitions to electric vehicles.

BrightDrop is just one piece of GM’s emerging EV plan, but it could be a big one in time. Here’s what we know.

A BrightDrop EV600, an electric package-delivery truck, with FedEx logos and branding.

A BrightDrop EV600, a product of GM’s new electric commercial-vehicle brand, which has already won business from FedEx. Image source: General Motors.

What is GM’s new BrightDrop brand?

For several years now, GM has quietly been building expertise in telematics and fleet-management software, and (less quietly) in EVs and advanced mobility solutions. 

CEO Mary Barra said that BrightDrop is one way to bring all of that together in a business that (GM hopes) will turn into something big. 

“BrightDrop offers a smarter way to deliver goods and services,” said Barra, who summed it up as a “one-stop-shop solution for commercial customers to move goods in a better, more sustainable way.”

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The brand will launch with three products that GM developed with input from its commercial customers, including FedEx: 

  • The BrightDrop EP1 is an electric pallet-mover for use in warehouses and shipping facilities, and to help delivery drivers move heavy packages (up to 200 pounds) from a truck to a customer’s door. 
  • The BrightDrop EV600 is a battery-electric commercial van built on GM’s new Ultium EV architecture. It’ll have a range of up to 250 miles, more than 600 cubic feet of cargo space, and will accept DC fast-charging up to 120 kilowatts. 
  • BrightDrop’s cloud-based software platform, which will allow fleet operators to track and monitor their vehicles (including the EP1) and perform over-the-air updates as needed. 

GM said that FedEx has completed a pilot program with the EP1, in which it found that its couriers could safely handle about 25% more packages per day using the device.

A worker with an EP1, which resembles a filing cabinet on wheels.

The BrightDrop EP1, an electric package-mover. Image source: General Motors.

FedEx will also be the first customer to receive the EV600, with deliveries beginning by the end of the year. More customers will be able to order the truck starting early in 2022, GM said. 

BrightDrop will be led by Travis Katz, who joins GM from venture capital firm Redpoint Ventures. While it isn’t yet a global brand (for now, BrightDrop will operate only in the U.S. and Canada), it could expand to other markets in time. 

What does this mean for investors?

BrightDrop is a signal that GM plans to compete aggressively for commercial-fleet business as it transitions to EVs. Its chief rival in the U.S. and Canada will almost certainly be Ford Motor Company (NYSE:F), which has already announced battery-electric versions of its huge-selling F-150 pickup and Transit commercial van. Ford will also have software solutions for fleet operators when those vehicles launch next year. 

For GM, it’ll be an incremental addition to revenue and a way to defend (and maybe expand) its share of the North American commercial-vehicle market. For Ford, it’ll be the competition that it no doubt has been expecting.

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And for investors in small companies like Workhorse Group (NASDAQ:WKHS) that have been hoping to take pieces of that pie, it should be a sobering message.  


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/01/12/general-motors-challenges-ford-and-workhorse-with/

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