Amazon is preparing to slash its partnership with the United States Postal Service (USPS), as it doubles down on expanding its own delivery network — including its growing fleet of electric delivery vans from Rivian.
The information was reported on Tuesday by both The Wall Street Journal and Reuters, citing people familiar with the matter.
According to Reuters, the cut comes after the two companies failed to agree on business terms for an upcoming contract.
Jeff Bezos-founded Amazon is USPS’s biggest customer, having accounted for about 7.5% of the agency’s revenue last year.
Amazon and the USPS have been in talks for more than a year about extending their relationship.
However, Amazon‘s package volume has already begun to decline, with a full reduction likely by fall.
The reports follow a December article by (also) Bezos-owned The Washington Post, which said Amazon was considering ending the contract entirely.
Failed Negotiations
US Postmaster General David Steiner told Reuters on Tuesday that the two companies are still negotiating the terms for an upcoming contract.
“I couldn’t tell you where that’s going to end,” Steiner said, declining to comment on the size of any reduction and citing a confidentiality agreement.
In a statement on Tuesday, Amazon said it had “wanted to increase our volumes with the USPS.”
“We negotiated with them in good faith for over a year to try and reach a deal that would bring them billions in revenue,” the retail giant wrote, adding that it “believed we were heading toward an agreement, when the USPS abruptly walked away at the 11th hour and introduced the auction concept.”
The USPSbegan taking proposals in January for access to its last-mile delivery network, opening up more than 18,000 destination delivery units and local processing centers through an auction process aimed at raising funds.
Amazon said it submitted a bid and, though it hopes “to continue our partnership, even at a reduced level, we now have to prepare to meet our customers’ delivery needs regardless of the outcome of the auction.”
Amazon said last year that, after a 30-year relationship, it was “surprised” the USPS wanted to run an auction.
Given the uncertainty the auction process brought, it was evaluating its options.
USPS Losses
At a congressional hearing held on Tuesday, Steiner warned that the postal service could run out of cash within twelve months — or as early as October, if it makes its required retirement payments.
The postal service has faced multibillion-dollar losses over the past decade, with Congress approving a $107 billion financial assistance package in 2022.
As of its latest update in December, the USPS has committed to a $9.6 billion upgrade of its delivery fleet. However, the electrification of the USPS fleet has proven more expensive than expected.
It plans to roll out 106,000 new vehicles by 2028, including 45,000 next-generation electric vehicles built specifically for the postal service and 21,000 commercial off-the-shelf fully electric vehicles.
This includes a 2022 contract with Oshkosh Defense for 50,000 Next-Generation Delivery Vehicles (NGDVs), which has cost nearly $3 billion.
However, according to a December report by the New York Post, only 612 of these vehicles had been delivered as of November 10 — despite billions already spent.
Taxpayers Protection Alliance President David Williams told Fox Business earlier this year that the procurement of these vehicles had been handled poorly.
Amazon’s Fleet
Amazon recognized last year that, if the USPS deal were to fall through, it would need to further expand its internal delivery network.
The company handles most of its deliveries through its Delivery Service Partners.
Additionally, Amazon has been testing and including several electric delivery vehicles from different brands in its fleet, which also includes electric heavy trucks and delivery vans from Mercedes-Benz.
Just a couple of months ago, the retail giant was seen testing General Motors‘ BrightDrop vans — weeks before the Detroit automaker halted production of these vehicles.
However, most of Amazon‘s delivery fleet consists of Rivian electric delivery vans.
Amazon ordered 100,000 EDVs in 2019, to be delivered by 2030, as part of its early investment in the EV maker, and began deploying them in mid-2022.
The company operated more than 30,000 Rivian EDVs by the end of 2025 — not only in the United States, but also in Canada, where the first units were recently delivered, and in Europe.
New EDV Trim
Upon reporting its fourth quarter financial results last month, Rivian said that it is co-developing a third version of the electric delivery van with Amazon.
An All-Wheel Drive EDV will be introduced, featuring a larger battery pack.
“In addition to the EDV FWD [Front-Wheel Drive] standard battery pack variant already on the road, we are developing new variants of the van with a larger battery pack and AWD,” a statement read.
The larger battery brings a 30% increase in range, while All Wheel Drive improves traction in conditions like mud and snow.
“These new variants will expand EDV route coverage in Amazon‘s network,” Rivian stated.
Beyond 100,000
The USPS pullback may also accelerate Amazon’s timeline for expanding its Rivian fleet beyond the initial 100,000-unit contract.
When questioned if the 100,000 Amazon units were still on track, founder and CEO RJ Scaringe reaffirmed the target and said that Rivian is already “thinking about what comes beyond that initial 100,000 unit contract.”
With Amazon now preparing to absorb over a billion packages annually that USPS currently handles, the need for additional last-mile capacity — particularly in suburban and rural routes where USPS has historically been Amazon’s only option — could bring that conversation forward.
Amazon invested more than $4 billion last year to expand its rural delivery network, and Rivian‘s upcoming larger-battery EDV, which delivers 30% more range, is designed precisely for those longer routes.
Outlook
In February’s earnings call, Rivian‘s Chief Financial Officer Claire McDonough warned that sales for the R1 models and the electric delivery van (EDV) were likely to remain flat in 2026.
Founder and CEO RJ Scaringe noted later in the call that they did “expect some growth in our EDV demand in 2026,” adding that the new variants will “help unlock specific use cases within the Amazon network.”
Scaringe said late last year that it expected demand for the EDV “to grow quite meaningfully as we look at going into 2026 and 2027.”
Last year, Amazon indirectly extended its collaboration with Rivian by signing a deal with ALSO., its micro-electric mobility spin-off.
The firm will provide Amazon with thousands of its new pedal-assist cargo quad vehicles — which can carry over 400 pounds of packages, but are compact enough to operate safely on a bike.
