Electric vehicles are slowly making inroads in the Indian logistics scene, particularly with light commercial vehicles (LCV) and three-wheelers for last-mile delivery. Just a couple of years back, electrification in logistics was struggling to take off, with no significant player except Mahindra Electric had any serious commitment. However, with many retailers pushing to electrify last-mile delivery fleet, it now holds a good promise. Many OEMs are working overtime to launch their vehicles. Some new entrants, such as ETO Motors, are also now entering the market with multi-brand EV Fleet. Adopting electric vehicles for last-mile delivery holds several benefits for fleet operators and retailers in reducing GHG emissions to meet regulatory requirements and reduced operational costs due to savings in fuel cost and vehicle maintenance costs. In our view, multiple reasons would propel the adoption of electric vehicles in logistics.
Pull from New Age Players
Many new age e-commerce players such as Amazon, Flipkart are experiencing phenomenal growth in their business, expected to reach $90 Billion by 2022 (PWC). eCommerce Centers also have locally distributed warehouses or fulfillment centers near all major cities. They plan to electrify its fleet to show their commitment to reduce Green House Gas (GHG) emissions and reduce delivery costs. The electric fleet can help them achieve that, and therefore, they have already announced big plans to roll out the electric-powered fleet. Many of them started by converting older ICE vehicles to electric-powered using conversion kits. However, they are also working with OEMs to induct their electric-powered vehicles into their fleet.
Push by OEMs
While in the beginning, electrification was centered around the conversion of older vehicles to electric-powered, now there are multiple OEMs in advanced stages of launching their product in the market. New models would help create a pull effect on the market. The customer will have various options to choose from, driving the higher adoption of electric-powered LCVs and three-wheelers for last-mile delivery.
Improved Price Performance of Battery
Battery prices have been following a downward trend for the last decade. The average battery prices have been fallen by 85% between 2010 and 201. If this trend continues, battery prices expected to further come down around $94 per KWh by 2024 and $62 per KWh by 2030, as projected by BloomberNEF. Since the battery is one of the costliest components in electric vehicles, falling battery prices will make the vehicle a very attractive proposition for fleet operators.
Smart Charging Infrastructure
Gone are the days of slow charging or your ability to set up more chargers in the same premises without upgrading the grid infrastructure. With advancements in battery technology and improved fast-charging infrastructure, a vehicle can be charged much faster and made available for productive use. DCFC can charge the battery at a rapid pace in minutes to an hour. While charging, other activities such as preparing the vehicle for the next delivery can also be done. One problem faced by fleet operators was how to charge dozens of vehicles simultaneously for the next round of deliveries without making a considerable investment in upgrading the grid to take the higher load. Now smart charging can solve this problem and intelligently handle the complex process of vehicle charging. Fleet owners need not make huge investments in grid infrastructure. New smart charging software such as Cero can make complex decisions and supply power to the vehicle that needs it most.
Government Support
Another critical factor that would drive faster adoption of EVs will be support extended by the government. In India, FAME II subsidy available to fleet operators for buying electric vehicles, subsidised electricity rates announced by various state governments, waiver of the registration fee for electric vehicles to propel electric vehicles’ adoption. These subsidies and benefits make it a very attractive proposition for fleet operators to convert their fleet to electric vehicles. This, combined with long term savings and advantages of the EV fleet, makes it even more attractive for fleet operators.
Summary
There’s little doubt that the 2020s will be the decade of electric vehicles, and their adoption will increase in fleet operations. Demand for light-duty trucks and three-wheelers is expected to rise manifold in the coming years, especially for home deliveries, helping fleet operators reduce costs and meet government regulations. There is also a substantial improvement in battery technology that provides extended trip ranges. An overall improvement in the battery’s price-performance makes it viable for fleet operators to electrify their fleet.
Cero platform provides OEM independent OCP compliant smart charging solutions to accelerate EV adoption in India. Smart charging by Cero will allow fleet operators to simultaneously charge many vehicles without making huge investments in upgrading the grid.
