Last-mile mobility in India is growing, fueled by e-commerce and EVs, offering sustainability and cost benefits, writes Vivek Lohia, Managing Director, Jupiter Group.
Last-mile mobility has emerged as one of the most dynamic segments in India, driven by the rapid rise of e-commerce and quick commerce over the past five years. This boom has coincided with the growth and maturity of the electric vehicle (EV) industry, creating a natural synergy primarily because last-mile is a high-run application for Commercial Automotive. Last-mile delivery—characterized by high vehicle utilization—fits well with EVs, offering advantages like reduced tailpipe emissions, lower operational costs, and better total cost of ownership (TCO). This alignment supports India’s dual goals of reducing logistics costs as a share of GDP and advancing sustainability.
However, despite its potential, last-mile EV adoption is not without challenges. Range anxiety, inadequate charging infrastructure, and long charging times create significant barriers, especially for commercial vehicles operating on unpredictable routes. Unlike inter-city commercial mobility, last-mile routes are not fixed, which exacerbates range anxiety since charging stations are not as densely distributed as petrol stations. The lack of infrastructure in these unpredictable zones creates a challenge in placing charging stations where they are needed the most. Additionally, charging times tend to be longer, further increasing the need for more chargers per station. Coupled with the high upfront costs of batteries, these challenges have spurred innovations, with battery swapping emerging as a solution for some of the sector’s pressing needs.
Battery Swapping: A GameChanger for Last-Mile Logistics
Battery swapping has emerged as a promising alternative to traditional EV charging, particularly in highutilization sectors like logistics. Initially, it gained traction in the two-wheeler (2W) space due to lower battery ranges, and its success today is largely driven by its ability to reduce upfront vehicle costs. By allowing vehicles to quickly exchange depleted batteries for fully charged ones, battery swapping overcomes the long waiting times typically associated with charging stations, addressing a significant barrier to EV adoption in logistics. Key benefits include:
- Operational Efficiency
One of the most critical factors for last-mile delivery fleets is uptime. Battery swapping allows delivery vehicles to stay on the road longer by minimizing downtime for charging. Drivers can simply swap out the depleted battery for a fully charged one in a matter of minutes, allowing the vehicle to continue its route with minimal delay. This operational efficiency is crucial for fleets working in dense urban areas, where quick turnaround times are necessary to maintain service standards. - Lower Capital Expenditure (CAPEX)
Battery swapping reduces the need for businesses to invest in expensive battery purchases upfront. Instead, logistics operators can lease batteries from swapping stations, significantly lowering their initial capital outlay. This flexibility allows operators to adopt more cost-effective ownership models, such as payper-use or pay-per-kilometre schemes, that lower per-mile expenses and improve financial flexibility. - Sustainability and Environmental Benefits
Standardizing battery swapping across fleets helps ensure that used batteries are managed in an environmentally responsible manner. Batteries that are past their useful life can be recycled or reused in a controlled manner, significantly reducing the carbon footprint of urban transport systems. This aligns with India’s sustainability goals by promoting circular economy principles in the EV sector. - Space Efficiency
Urban areas often face significant constraints when it comes to space for charging infrastructure. Battery swapping stations occupy considerably less space than traditional charging stations, making them easier to deploy in areas where real estate is limited, such as crowded urban centres. This compactness is a huge advantage for logistics companies that need to optimize space usage for their vehicles.
Challenges Hindering Battery Swapping Adoption
While battery swapping offers several advantages, its adoption is not without challenges. Several issues must be addressed before it can become a mainstream solution for last-mile logistics in India:
- Battery Standardization
One of the primary obstacles to scaling battery swapping is the lack of standardization across different EV brands. Each manufacturer uses its own specifications for battery designs, connectors, and voltages, which limits the interoperability of batteries across different vehicle types. Without a standardized battery format, it becomes difficult to create a universal swapping network that can serve all types of EVs, creating barriers for operators who want to scale their fleets efficiently. - High Initial Infrastructure Costs
Establishing a battery swapping network requires a significant upfront investment in infrastructure. While the Indian government has introduced subsidies and incentives to support the growth of EV infrastructure, the cost of setting up swapping stations remains high, particularly in rural areas where EV adoption is still in its early stages. The business case for investing in these areas may not be as strong, making it challenging to roll out battery swapping stations across the entire country. - Battery Maintenance and Management
Since battery swapping involves sharing batteries among multiple vehicles, ensuring that these batteries remain in optimal condition is crucial. Batteries must be regularly tested, maintained, and replaced as needed to ensure safety and performance. This adds an additional layer of complexity to fleet management, particularly in high-usage scenarios like last-mile delivery, where battery health can directly impact vehicle performance and reliability. - Regulatory Frameworks and Policy Uncertainty As a relatively new concept, battery swapping lacks clear regulatory guidelines in India. Issues such as taxation (e.g., GST for battery swapping services), safety standards, and battery disposal regulations are still evolving. The lack of clear policies can deter businesses from making long-term investments in battery swapping infrastructure, as they are unsure about the future regulatory landscape.
Swapping vs. Fast Charging: The Battle for India’s Last-Mile EV Solution
While battery swapping has received significant attention as a potential solution, the EV industry is rapidly evolving, and recent developments in battery technology are shifting the focus toward fast charging and higher-range batteries.
- Falling Battery Prices
The cost of batteries has halved in recent years, making it more economically viable for businesses to purchase integrated batteries instead of relying on swapping models. With home charging being more cost-effective (Rs. 8/kWh) compared to public charging or swapping (Rs. 14-24/ kWh), top-up charging at home is becoming a practical and affordable solution. This trend is particularly important for larger vehicles, such as cargo three-wheelers (3W) and four-wheelers (4W), which require higher battery capacities to support longer ranges. - Improved Battery Lifespan
New battery chemistries now offer lifespans of over 3,000 charge cycles, compared to the 1,000 cycles that were typical just a few years ago. This makes the need for frequent battery replacements less pressing, reducing the reliance on battery swapping as a solution. - Faster Charging Technology
Fast-charging technology has advanced significantly, with some systems capable of charging a vehicle to 80% in just one hour. This capability greatly reduces the need for battery swapping in scenarios where vehicles need a quick top-up.
For larger vehicles like 3W and 4W, fast charging is often the preferred solution due to the operational challenges posed by swapping technology. The physical weight and handling of larger batteries make swapping more difficult, and the longer charging times required for larger batteries make fast-charging technology a more practical choice.
Government Support and Key Policy Developments
The Indian government has been proactive in supporting EV adoption and battery-swapping infrastructure. Several initiatives have been launched to address the challenges faced by the EV sector, including the announcement of the Battery Swapping Policy during the Union Budget for FY 2022-23. Although still in draft form, this policy aims to address key barriers, such as battery standardization and infrastructure Goals of the Policy.
The Battery Swapping Policy focuses on creating a robust ecosystem that complements other government programs, such as FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) and the PLI (Production Linked Incentive) Scheme. By encouraging the adoption of two- and three-wheelers, which dominate urban mobility and logistics, the policy seeks to provide a cost-efficient and scalable alternative to traditional EV charging.
- Incentives for Setting Up Networks
The policy encourages investments in battery swapping networks, providing financial support to operators establishing infrastructure for two- and three-wheelers. - Enhanced Accessibility
By addressing challenges like range anxiety and long charging times, the policy aims to make EVs more accessible and viable for fleet operators and delivery personnel.
By fostering collaboration between policymakers and industry players, the Battery Swapping Policy can help create a more efficient and inclusive EV ecosystem. This is particularly critical for India’s logistics and delivery sectors, where two- and three-wheelers are poised to lead the EV revolution.
Logistics Sector: The Bigger Picture
The logistics industry stands to gain the most from EV adoption. As one of the largest contributors to GDP, reducing the cost of logistics is a TECHNICAL INSIGHT national priority. EVs, powered by efficient battery-swapping networks or fast-charging stations, offer cost savings, sustainability benefits, and improved operational efficiency.
Battery swapping has the potential to address India’s last-mile mobility challenges, especially in high-usage, urban-focused sectors such as e-commerce and logistics. However, it is unlikely to be a one-size-fits-all solution. Instead, the future will likely see a hybrid approach, with battery swapping serving as a solution for smaller, short-range vehicles, while fast-charging networks evolve to cater to larger vehicles. The combination of these technologies, supported by strong government policies, industry investment, and ongoing innovation, promises to revolutionize last-mile delivery in India and drive the country toward a more sustainable future.
Disclaimer: The views expressed by the author are his own and do not necessarily reflect the views of FMM magazine.
Vivek Lohia
Managing Director
Jupiter Group