By Ben Klayman

DETROIT (Reuters) – General Motors Co said on Tuesday its BrightDrop electric commercial vehicle business will add a second delivery van to its lineup in 2023 and has agreed to supply that vehicle to Verizon Communications Inc.

GM said the medium-sized EV410, aimed at a segment that includes grocery, telecommunications and other service providers that require smaller vehicles, will be built starting in the second half of 2023 at the company’s CAMI assembly plant in Canada. The Ingersoll, Ontario, plant will start building the larger EV600 van in November 2022.

“We’re seeing incredible demand for these things,” BrightDrop Chief Executive Travis Katz said in an interview. “There’s right now a supply shortage, frankly, in the market.”

Katz, who joined GM from venture capital firm Redpoint Ventures, said EVs now make more sense financially for commercial customers that are focused on the total cost of vehicle ownership. GM claims the EV600 will save fleet managers $7,000 annually compared with a similar diesel-powered vehicle.

The commercial EV business is attractive because governments in China and Europe are pushing companies to slash CO2 emissions, and companies like FedEx Corp, Amazon.com Inc and United Parcel Service Inc have pledged to shift their large delivery fleets to EVs.

In addition, EV leader Tesla Inc has not cracked the market, and it has become a race for companies like GM, Ford Motor Co, Stellantis NV, Daimler AG and startups Rivian, Arrival and Electric Last Mile Solutions to introduce their EV delivery vans.

In June, GM boosted its planned spending on electric and autonomous vehicles by about 30% to $35 billion and accelerated plans for two U.S. battery cell plants.

GM has estimated the U.S. market for parcel and food delivery vehicles will climb to more than $850 billion by 2025, and Katz pointed out Verizon is one of the largest U.S. fleet operators. GM did not disclose the size of the Verizon order.

The Detroit company is using supplier Kuka AG to build the initial EV600 vans. GM was able to develop that vehicle in 20 months, its fastest-ever timeline, Katz said.

To make way for the EV600, GM plans to end production next April of the Chevrolet Equinox SUV at CAMI.

In January, GM CEO Mary Barra announced the company’s entry to the growing electric delivery vehicle. GM said then the first 500 units of the EV 600 would be shipped to FedEx by year end, with deliveries to other customers starting in early 2022.

Barra also previously said GM would introduce two new commercial vehicles beyond the EV600, including a medium-duty truck and a full-sized van. Katz declined to say what model comes after the EV410.

Both new EV vans will use a version of GM’s Ultium battery system and offer a driving range of 250 miles (400 km) between charges. GM has not disclosed pricing of either van.

(Reporting by Ben Klayman in Detroit; Editing by Matthew Lewis)