PepsiCo's next act: Moving beyond the electric pilot

Over the next decade, beverage giant PepsiCo will need to convert a large portion of the 27,000 trucks and vans that move its products — from bags of Cheetos to bottles of Mountain Dew — to electric and other zero-emission technologies. 

The company, through its Frito-Lay snack food division, is using a manufacturing facility in Modesto, California, as a testbed to try to learn lessons about scaling up electric vehicles. 

Last week, Frito-Lay announced it was able to cut the greenhouse gas emissions of the fleet at the Modesto site in half and the diesel use by 78 percent. To do this, the plant is using 60 vehicles — a combination of tractors, box trucks, yard trucks and forklifts — that run off batteries, natural gas and renewable natural gas. 

The facility is still waiting for 15 Tesla Semi electric trucks, which PepsiCo says will be delivered before the end of 2021. PepsiCo revealed more than three years ago that it had placed a pre-order for 100 Tesla Semis.

That lengthy waiting period sheds some light on one of the biggest challenges for fleet organizations, big and small, across the U.S. as they deploy electric trucks and vans: a lack of vehicles.

“Equipment availability” has been a challenge throughout PepsiCo’s decade-long journey to decarbonize its fleet, confirmed Steve Hanson, senior director for fleet operations, engineering and sustainability at Frito-Lay.

A decade ago, PepsiCo deployed hundreds of electric trucks from startup manufacturer Smith Electric Vehicles as its first substantial foray into EVs. PepsiCo was able to get over 10 million miles from those EVs, but several years after buying PepsiCo bought those vehicles, Smith went out of business.

Startup manufacturers represent both a major opportunity and a big risk for companies such as PepsiCo that are looking to buy volumes of the latest electric vehicles. Earlier this month, Ryder filed a lawsuit against startup manufacturer Chanje after the startup allegedly failed to deliver electric vans Ryder had paid for (Chanje gets its origins from Smith).

The Modesto plant represents PepsiCo’s first return to EVs after the Smith days, and the company has been calling on more large automakers to scale commercial electric vehicles. “We’ve advocated for large OE [original equipment] engagement. We need the service support, parts support and advancement of the technology. As OEs have become involved, it’s very exciting,” Hanson said.

All of the electric vehicles that Frito-Lay is using at the Modesto site are “pre-production,” and Frito-Lay is providing feedback to those suppliers on what worked and worked didn’t. The site is using electric vehicles from Peterbuilt, BYD Tesla and Crown as well as Volvo natural gas tractors.

But to reach its sustainability goals — carbon neutral by 2040 and a 75 percent reduction of absolute greenhouse gas emissions by 2030 — PepsiCo will need to scale far beyond this pilot. It’ll need to convert “an incredibly large portion of the fleet” to ZEVS and low-emission vehicles, Hanson said. “We’re chomping at the bit for real scale.”

As major technology transformations happen — such as the electrification of transportation — it’s difficult for companies to navigate the timing of how aggressive to make these switches. Moving too early faces certain risks, while moving too late encounters other risks. 

Oftentimes, pilot projects are the main way companies learn about how to deploy complicated technology and work alongside an ecosystem that’s navigating the same choppy waters. Pilots are great, but as the commercial EV industry matures, it’ll need to move beyond these proof-of-concept installations. 

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