Amazon announced that it has ordered more than 1,800 electric vehicles (EVs) from Mercedes-Benz for its European van delivery fleet this year.
The move to switch to EVs is part of Amazon’s (AMZN) commitment to reduce emissions from the transportation sector, and run net zero carbon businesses by 2040 – a decade ahead of the Paris Agreement goal of 2050. The order represents the largest electric vehicle commitment for Mercedes-Benz vans to date.
More than 1,200 EVs in the order will consist of the newest electric commercial van available at Mercedes-Benz – the eSprinter, a larger model than the manufacturer’s first zero-emission vehicle, the eVito. The eSprinter includes safety features such as electrical parking brake, active brake assist, reverse camera, and blind spot assist. The remaining 600 vehicles will be comprised of the manufacturer’s midsize electric van, the eVito, to give delivery service partners operating in geographies that require a smaller-format vehicle access to a zero-emissions delivery option.
The EVs from this order are scheduled to start making deliveries to customers in 2020, helping to save thousands of metric tons of carbon, Amazon added.
Mercedes-Benz announced it has also joined The Climate Pledge, which calls on signatories to be net zero carbon across their businesses by 2040. The Climate Pledge was co-founded by Amazon and Global Optimism.
“Amazon is adding 1,800 electric delivery vehicles from Mercedes-Benz as part of our journey to build the most sustainable transportation fleet in the world, and we will be moving fast to get these vans on the road this year,” said Amazon CEO Jeff Bezos. “We need continued innovation and partnership from auto manufacturers like Mercedes-Benz to decarbonize the transportation sector and tackle the climate crisis.”
Mercedes-Benz said that by the end of this year, its vehicle portfolio will comprise five fully electric models and more than 20 plug-in hybrids.
The commitments come as demand for EVs is slated to grow in the long-term even as COVID-19 has currently disrupted the electric vehicle market and the whole automotive industry as well. Several countries are encouraging individuals and businesses to transition to EVs to bring down toxic emissions and ensure sustainability.
Cairn Energy Research Advisors estimate that global sales of electric cars will grow 36% in 2021 and will cross 3 million for the first time. The trend has also incentivized other carmakers to tap the growth potential. Earlier this month, General Motors (GM) and EVgo announced a collaboration to add more than 2,700 fast chargers in the US over the next five years, in a move set to help boost widespread use of EVs.
Shares in Amazon have been on a steady winning streak jumping a stellar 84% so far this year, with the $3,725.59 average analyst price target implying almost 10% upside potential is lying ahead in the coming 12 months.
In a bullish note, Loop Capital Markets analyst Anthony Chukumba earlier this month hiked AMZN’s price target to $3,775 from $2,900 and maintained a Buy rating on the stock.
Chukumba is confident that the “pull-forward” of consumer e-commerce adoption in groceries, health and personal care induced by the coronavirus pandemic will boost growth for the company “well beyond” COVID-19. The analyst also increased his target operating margin estimate for US first-party retail sales to 8% from 7%.
Overall, AMZN scores 38 Buy ratings from analysts versus 1 Hold rating adding up to Strong Buy consensus. (See Amazon stock analysis on TipRanks).
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