US Postal Service announces $9.6 billion investment in new fleet of electric vehicles while operating at a loss

The U.S. Postal Service announced on Tuesday billions of dollars in new spending to move from gas-powered mail trucks to new electric vehicles over the next five years, furthering President Biden’s green agenda.

The Postal Service said in a news release that it will spend a total of $9.6 billion on next-generation mail delivery trucks, of which at least 66,000 will be battery electric vehicles. This funding includes $3 billion from the Inflation Reduction Act, which allocates $369 billion to climate and energy policies from Biden’s Build Back Better plan.

“The $3 billion provided by Congress has significantly reduced the risk associated with accelerating the implementation of a nationwide infrastructure needed to electrify our delivery fleet,” said Postmaster General Louis DeJoy.

The Postal Service said new electric vehicles will begin to replace its aging delivery fleet of more than 220,000 mail trucks. The funding will also be spent on the construction of tens of thousands of charging stations. The agency hopes all newly purchased mail delivery trucks will be electric by 2026.

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The U.S. Postal Service Next-Generation Delivery Vehicle is on display at the Consumer Electronics Show on January 5, 2022, in Las Vegas. (Photo: PATRICK T. FALLON/AFP via Getty Images/Getty Images)

“While most of the electric vehicle funding will continue to come from Postal Service revenues, we are grateful for the confidence that Congress and the Administration have placed in us to build and purchase what has the potential to become the largest fleet of electric vehicles in the country,” said Dejoy.

The White House celebrated the announcement as significant progress towards Biden’s goal of having half of all new sales electrified by 2030.

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United States postal worker getting into mail delivery truck

A United States Postal Service employee gets out of a Grumman Longevity Vehicle. (LightRocket / Getty Images via Paul Weaver/SOPA Images/Getty Images)

“We appreciate the US Postal Service,” John Podesta, senior adviser to President Biden, said in a statement. “The USPS plan leverages the $3 billion provided by the Inflation Reduction Act to meet its target of purchasing 100% electric delivery vehicles by 2026, puts the postal fleet on the electrification route, significantly reduces networked vehicles, and puts the USPS at the forefront of the clean transportation revolution. “

The $9.6 billion investment in electric vehicles came as the Postal Service continued to run at a loss. The agency reported an adjusted loss of $473 million for fiscal year 2022 in November, following the $57 billion one-time non-cash benefit to net income from the Postal Service Reform Act.

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United States Postal Service Postmaster General Louis DeJoy. (via AP by Graeme Jennings/Pool)

The Postal Service reported a 1.9% increase in overall revenue over last year, with growth attributed to price increases for First Class Mail and a rebound in marketing mail revenue after the pandemic. Total mail volume delivered decreased by 1.6 billion pieces, or 1.2%.

The Postal Service’s distressing financial situation has led to numerous bailouts from Congress over the years. Officials said modernizing the mail delivery fleet would lead to cost reductions in the long run.

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“The core focus of our modernization efforts is to reduce inefficient transportation and improve distribution operations, resulting in far less air cargo and far fewer truck trips,” DeJoy said. “Combined with our significant commitment to electrification of our delivery vehicles, the Postal Service will be at the forefront of our nation’s green initiatives.”

The next generation of mail trucks is expected to start delivering mail in late 2023. The vehicles are manufactured by Oshkosh Defense.

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