Amazon [AMZN] is set to accelerate the electrification of transportation fleets following a partnership with ABB [ABB]. News of the tie-up on 29 March sent Amazon’s share price up 0.8%, while ABB’s dipped 1.3%.
Looking at both stock’s performances throughout the first quarter of 2021, Swedish-Swiss automation multinational ABB has outpaced not only Amazon but the broader US market.
ABB’s share price climbed 12.1% during the three months to 31 March, outperforming the S&P 500’s 5.8% climb and Amazon’s 5% fall in the same period.
ABB's share price rise in three months to 31 March
According to ETF.com, 3.1 million ABB shares are held across 11 ETFs in the US, while 284 funds hold 25 million Amazon shares. The Global X Robotics & Artificial Intelligence ETF [BOTZ], which had ABB as a top holding with a 7.96% weighting as of 31 March, fell 0.03% in the first quarter of 2021.
Meanwhile, the Invesco QQQ Trust [QQQ], which had Amazon as a top consumer discretionary holding with an 8.34% weighting as of 31 March, was up 1.8% in the same period.
Accelerating EV adoption
The partnership will see Amazon Web Services (AWS) utilise ABB’s energy management, charging technology and emobility solutions to develop a cloud-based platform for the fleet management of electric vehicles (EVs).
The single-view platform will offer real-time data analysis to help global operators maintain complete business continuity as they manage the transition to fully electric transport fleets.
With the platform expected to launch in the second half of 2021, the companies are looking to position themselves as the industry’s go-to charging management platform.
The announcement’s timing coincided with a slew of automotive companies pledging to help electrify commercial delivery fleets thanks to forthcoming models such as Volkswagen’s [VOW.DE] ID Buzz Cargo van and Ford’s [F] all-electric Transit Custom.
Workhorse [WKHS], which specialises in electric delivery trucks, had orders for 8,000 EVs at the end of 2020 from customers such as FedEx [FDX] and United Parcel Service [UPS]. Deutsche Post DHL [DPW.DE] also plans to roll out 400 EVs to its UK-wide fleet by 2025, using the Renault [RNO.PA] Master ZE van and Volvo [VOLV] FL Electric 4x2 rigid truck.
Amazon’s own custom electric delivery vehicles, made in collaboration with Rivian as part of The Climate Pledge – Amazon’s commitment to becoming net-zero carbon by 2040 – began hitting the road in early February. The company plans to have 10,000 on the road by 2022 and 100,000 by 2030.
When Amazon has committed to being net-zero carbon
Frank Muehlon, head of ABB’s global emobility division, expects the platform to revolutionise the world of electric mobility by “integrating EV hardware and software into one ecosystem to provide a seamless user experience”.
The ABB and AWS solution could be vital in accelerating the transition to EVs among fleet operators.
Powering a cleaner future
Almost a quarter (23%) of global energy-related greenhouse gases are caused by the transportation sector and ABB believes that EVs can substantially limit the CO2 emissions contributing to climate change.
BloombergNEF’s Electric Vehicle Outlook forecasts the current 8.5 million global EV fleet to grow to 116 million by 2030. Considering that most fleet operators use limited third-party charging management software, Amazon and ABB could significantly benefit from their position as the software solution for charging hardware.
“As industries forge ahead with [the] electrification of their vehicle fleets, customers need reliable and intuitive services to help them adapt to the new operating model and optimise how they utilise their fleets,” said Jon Allen, director of professional services and automotive at AWS.
“As industries forge ahead with [the] electrification of their vehicle fleets, customers need reliable and intuitive services to help them adapt to the new operating model and optimise how they utilise their fleets” - Jon Allen
Amazon’s shares had a consensus strong buy rating among 31 analysts polled by TipRanks, with an average price target of $4,106.83, representing a 32.7% climb from Amazon’s share price close on 31 March.
ABB was rated a hold based on nine analysts’ ratings. The stock had an average price target of $28.33, which would see a 7% fall from ABB’s share price at close on 31 March.