U.S. Postal Service (USPS) will get engines and accessories for delivery vehicles built by Oskhosh Defense from Ford Motor Company (NYSE: F). Ford will also provide other services like transmissions to facilitate the USPS in advancing its postal services. 

USPS is looking to buy a blend of electric & gasoline-powered Postal Service vehicles. USPS will get electric batteries, internal combustion engines, and other components from Ford for these vehicles. Ford will also supply the transmissions that are built-in Michigan to the USPS. Although Ford announced this development, it didn’t reveal the financial terms.

The Deal

In February, a sister firm of Oshkosh Corp, Oshkosh Defense, successfully acquired a contract worth $6 billion. The delivery vehicles will be assembled in Spartanburg, South Carolina, according to Oshkosh.

The Bottlenecks

Workhorse, who also tried to acquire the contract, has filed a lawsuit. According to Workhorse, an electric-vehicle budding startup, USPS’s Postmaster General Louis DeJoy has committed to converting only 10 percent of the total fleet to electric vehicles. 

Ford has said that it would provide powertrain components for either electric or gas models. It’s the first time in three decades that USPS will change its fleet by utilizing The Next Generation Delivery Vehicle (NGDV). USPS currently carries its operations through Grumman Long Life Vehicles that were built between 1987 to 1994. These Vehicles carry a life of 24 years. According to a new contract, around 50,000 to 165,000 NGDVs will be purchased by USPS over ten years.

The Production

In its press release, Oshkosh said that it could develop numerous vehicles. However, to the Securities & Exchange Commission, Oshkosh admitted that it neither has much experience nor money to deliver more NGDVs. Oshkosh is going to hire more than 1000 people to carry out its operations at its Spartanburg facility. The Production is going to kickstart in 2023.