The shift to electric delivery vehicles by United Parcel Service Inc (UPS  ) and FedEx Corp (FDX  ) reportedly faces challenges amid U.S. supply uncertainties.

These companies are striving to replace their gas-powered vans to align with environmental goals.

The transition to electric vehicles (EVs) is crucial for U.S. President Joe Biden's climate objectives in transportation. However, hurdles include battery shortages and financial struggles among electric van startups, according to Reuters.

Both UPS and FedEx confront concerns about the sustainability of their electric van suppliers, with doubts lingering over their longevity in the industry, per the report.

Luke Wake, UPS's vice president of fleet maintenance and engineering, reportedly questions the viability of these companies in the long run.

The package delivery giants are losing access to California incentives that help offset the high prices of EVs. This further complicates their efforts to transition to electric fleets, as they grapple with limited supply and high costs.

UPS remains committed to its 2016 plan of incorporating EVs and other eco-friendly vehicles into its fleet, including renewable natural gas (RNG) trucks. Meanwhile, FedEx explores options for integrating lower-emission trucks.

Several electric van manufacturers, including Arrival SA (ARVLF  ) and Lightning Emotors Inc (ZEVY  ), face financial difficulties, affecting their ability to supply vehicles to UPS and other clients.

Changes in California's incentive program and potential EPA regulations could influence the adoption of electric step vans.

While incentives are changing, regulatory shifts may play a pivotal role in shaping the market.

Price Action: UPS shares closed higher by 0.53% at $147.39 on Thursday.