Electric vehicles (EVs) are increasingly being used, especially in the organised last-mile delivery sector. In India, their use is being promoted by major food, grocery, and e-commerce companies. According to IBEF, the Indian EV market is expected to witness strong and steady growth through 2030, supported by focused efforts from companies and strong government leadership. Significant growth is being observed in the electric three-wheeler (e3W) market, excluding e-rickshaws, especially for last-mile goods delivery. This growth is supported by about 55% lower operating costs compared to conventional autos, driven by e-commerce expansion and a smooth shift to electric vehicles.
A big e-commerce company recently rolled out 10,000 electric vehicles (EVs) for last-mile deliveries, aiming to run a fully electric logistics network by 2030. On the state front, Goa leads in EV adoption, with 14.20% of all new vehicles sold this year being electric. Tripura and Chandigarh come next. Delhi is likewise making excellent progress, with an EV share of 10.72% demonstrating its commitment to green transportation. As of February 2024, there were 12,146 public EV charging stations in India, with Maharashtra having the most, followed by Delhi and the other states.
Preferences of individuals and organizations are being shifted toward electric vehicles, where sustainability is supported and new technology is adopted. This is considered a key opportunity for EV manufacturers and other industries.
What EV means for the Last Mile delivery Segment?
According to a BCG analysis from 2023, last-mile deliveries are likely to increase dramatically over the next five years, with a CAGR of 15-20%. This expansion affects a range of industries, including food delivery, grocery, and e-commerce.
The composition of delivery fleets will vary depending on the type of demand:
- Two-wheelers (2W) are mostly used for food delivery last mile services.
- Three-wheelers (3W) and small commercial four-wheelers (4W SCV) make up around 20% of fleets in grocery and e-commerce deliveries.
Currently, organized last-mile delivery accounts for about 25% of the total market. This opens up significant prospects for the adoption of electric cars (EVs).
The following are important elements promoting EV adoption in last-mile delivery:
- Lower Total Cost of Ownership (TCO): As EVs initially come with more costs, their ownership cost is eventually found to be more cost-effective than that of internal combustion engine (ICE) vehicles.
- Policy Support: Various incentives and programs offered by both the national and state governments are further pushing the transition to electric mobility in this area.
Support from the Government for Electric Vehicles (EVs)
Under numerous national initiatives, the Indian government has provided major support for the adoption and manufacturing of electric vehicles (EVs).
To direct the development of electric vehicles in India, the National Electric Mobility Mission Plan (NEMMP) 2020 was developed. It was developed to encourage environmentally friendly transportation and enhance fuel security. The Ministry of Heavy Industries launched the FAME India Scheme in 2015 as part of its strategy to boost the nation’s usage of electric and hybrid automobiles.
The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, worth ₹10,900 crore, was launched on September 29th, 2024, to promote EV adoption. This two-year program is being implemented countrywide to help enhance the EV ecosystem.
Under the PM E-DRIVE Scheme, support is provided in the following ways:
- Consumer-Focused Demand Incentives: The upfront cost of electric vehicles is reduced through direct incentives provided at the point of purchase. These amounts are reimbursed by the government to the Original Equipment Manufacturers (OEMs).
- Financial Assistance for Charging Infrastructure: ₹2,000 crore has been committed to create public charging stations for various EV types.
These programs actively support the use of electric vehicles in India, while simultaneously working to build a strong and sustainable EV ecosystem. Electrifying last-mile deliveries is an appealing concept that highlights the importance of the global sustainability crisis. Making this idea a reality, however, requires careful coordination of a number of components.
Key Market Dynamics Shifts Because of electric vehicle adoption
The use of electric vehicles (EVs) has brought notable changes to market dynamics, especially in the lastmile delivery sector. As businesses switch to electric vehicles, different operations in different industries are changing, opening up new business prospects. The changes are:
- Emergence of EV Fleet Operators: Large fleet operators and EV asset providers are the primary drivers of EV adoption. Vehicles are purchased in quantity and rented out, lowering the ownership expenses for distribution systems.
- Integrated Service Offerings: Additional services such as maintenance, insurance, and roadside assistance are being bundled by EV fleet operators, often in partnership with players across industries. This supports smoother adoption for businesses.
- Support for Asset-Light Models: Many delivery platforms want to operate without their own cars. As a result, electric vehicle asset operators have emerged as appropriate partners for last-mile delivery demands.
- Rise of “Fit-for-Purpose” Vehicles: There is an increasing need for EVs that are specifically made for last-mile logistics. Ergonomic design and increased load capacity are common aspects of these vehicles that increase driver efficiency and comfort.
- Improved Brand Image and Sustainability: By using EV fleets, a firm can support sustainability goals and improve its reputation. Green firms have a competitive advantage as environmentally concerned customers favor them more and more.
- Influence of E-Commerce and Delivery Giants: Major e-commerce and food delivery platforms are expediting EV adoption by establishing electrification targets and conducting pilot projects with original equipment manufacturers (OEMs) to determine the best EV models for their operations.
Difficulties with EV Fleet Adoption
There are notable shifts in the cost structure and operational dynamics that come with the deployment of electric vehicle (EV) fleets. There must be a large initial outlay for things like buying EVs, setting up charges, and hiring employees. However, savings usually offset these costs over time.
In addition, compared to conventional fuel-based fleets, optimizing EV fleet networks has particular difficulties. Distance and fuel efficiency are the primary factors influencing routing in conventional systems. EV network planning, on the other hand, needs to take a larger number of factors into account. The procedure is more complicated than in fuel-based operations because of factors including battery management, limited vehicle range, and the availability of charging stations.
A major revolution in the logistics business, the electrification of last-mile delivery is being driven by important industry leaders, changing consumer expectations, and environmental concerns. This move necessitates a major change in operations and strategy. The cost dynamics of EV adoption require an agile revision of current approaches.
Forming partnerships and sharing efforts will help maintain EV supply, grow charging networks, and support sustainability goals. Using data can help plan efficient routes and charging networks. Projects like reusing fleet vehicles, managing battery life, responsibly retiring old vehicles, and designing innovative EVs should all focus on being environmentally friendly. The road to a last-mile delivery environment that is cleaner and more effective can be effectively paved with these combined efforts. ■
Disclaimer: The views expressed by the author are his own and do not necessarily reflect the views of FMM magazine.
Pushpank Kaushik
CEO & Head of Business Development
Jassper Shipping