Powering Last-Mile Delivery With An EV and A Charger

Energy generation and consumption including the fuel used for vehicles contribute to over two-thirds of the carbon footprint

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Technology has come a long way. The evolution from the days of the steam engine to electric-powered mobility has been huge. The climate is constantly changing due to carbon dioxide emissions, which subsequently is a huge contributor to global warming. Global warming has been a cause of the rise in the temperature as well as the melting of the polar ice caps. India is home to 21 out of 30 most polluted cities in the world, according to a report by IQAir. The emissions need to be contained as countries all over the world are trying to reach the goal of complete carbon neutrality. Nations all over the world are trying to reverse the adverse effects on the environment posed by global warming. India pledged to become a carbon-neutral nation by 2070 at the recent COP 26 in Glasgow.

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The country is going through an electric revolution. Despite the high initial cost, people are going for electric vehicles. A sustainable option yet one of the more budget-friendly alternatives to vehicles with internal combustion engines, electric vehicles have been a revelation, especially in the commercial sector. The Indian government has introduced incentives for the purchase of electric vehicles (E2W, E4W). Electric vehicles are slowly being integrated into commercial vehicle fleets as well. Electric vehicles especially the electric 2-wheeler sector due to the cost-effectiveness and the financial factor in India. More than 50 per cent of Indians own a two-wheeler explaining the higher penetration of electric vehicles in the electric two-wheeler sector.

Commercial vehicles used for logistics purposes travel over five times the distance travelled by a vehicle operated for personal conveyance meaning that it would directly contribute to over five times the carbon footprint of the country. Last-mile delivery has gained popularity and the new policy which mandates logistics and aggregators to go 100 per cent electric by 2025. EV players like Zypp, Bolt, etc. are collaborating with e-commerce and q-commerce companies across logistics, grocery, food delivery, etc. Swiggy, Zomato, Delhivery, Spencers, Amazon, etc. are collaborating with companies providing electric two-wheelers. The collaboration allows for sustainable last-mile delivery. The load capacity has been a concern for electric-powered vehicles due to the consistency of the load-bearing capacity of the vehicle across the charge state of the battery from 100 to 0%. EV batteries get discharged as the power output drops due to dropping voltage. The general perception amongst fleet operators is that charging the vehicle after every few hours will result in a loss of time which will, in turn, affect the earnings of the fleet operators.

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The higher utilization of the commercial vehicles results in a lower total cost of ownership (TCO) per kilometre because electric vehicles have a higher upfront cost. The government has taken steps for better adoption of EVs by placing incentives and subsidies like FAME-I and FAME-II.

"While the upfront cost of an EV is higher or is currently being subsidized to boost demand, in commercial application due to high utilization and running cost being less than 10% of the ICE equivalent, vehicle owners can easily as high as 40% overall savings. Further, EVs can boost revenue for logistics companies as EVs can also operate during hours of the day when ICE based commercial vehicles are prohibited in certain cities like Delhi," said Dr Akshay Singhal, co-founder and CEO, Log9 Materials.

The streets are being ruled by commercial vehicles, especially two-wheelers and three-wheelers. The majority of the logistics companies and start-ups are switching to electric and discarding internal combustion engine-powered vehicles to align with the Government's policy of zero carbon emissions. Delhi Government's recent policy shifts require logistics companies to follow the mandate which instructs the logistics companies and aggregators to go 100 per cent electric by 2025.

"Almost all companies engaging in last-mile delivery have committed to electrifying their 100% fleet over the decade. Many such companies are FoodTech (Zomato, Swiggy), logistics & eCommerce (Delhivery, Shadowfax, Xpressbees, Amazon, Flipkart), grocery (BigBasket, Grofers). Therefore I believe that logistics companies are the pioneers of this transformation.," said Akash Gupta, founder and CEO, Zypp.

According to a report by JMK Research and Analytics, High-speed E2Ws have seen a year-on-year growth of 47 per cent, with 41,048 units being sold in FY2021 as opposed to 27,787 units sold in FY2020. The share of high-speed E2Ws in the overall E2W sales went up from 20 per cent in FY2020 to 28 per cent in FY2021. Low-speed E2Ws, on the other hand, witnessed a decline of 17.9 per cent vis-à-vis FY2020. However, low-speed E2Ws, apart from being more affordable, are also exempt from RTO registration and riders don't require a driving license with no helmet compulsions.

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Due to the lower total cost of ownership per kilometre, there is a huge demand for EVs from the logistics companies, combined with the push from various e-commerce companies to go green on their fleet operations as over 40 per cent three-wheeler market share was taken up by electric vehicles in the financial year 2021.

Electric is the way forward for the logistics companies as it's good for the drivers since the vehicle does not make any noise, there are no vibrations, good for saving costs, good for the environment and good for market perception. Most major e-commerce companies have already announced the transition of their complete fleet to electric over the next five to seven years. With the rising fuel prices and maintenance costs, EVs now are much better posed than an ICE in terms of cost.

"We have seen a lot of traction in last mile, middle mile and first mile, in terms of EV adoption. Line Haul operations to be diversified into EV's still looks like a distant dream. Currently, hyperlocal logistics companies have emerged as first movers," said Prateek Rao, founder and CEO, Zyngo EV Mobility.

The logistics companies remain sceptical of the electric vehicles due to the range anxiety that comes along with the electric vehicle. The infrastructure for electric vehicles to flourish has not yet been completely established which has made it increasingly hard for the logistics companies to shift to 100 per cent electric. Chargers and superchargers being unavailable in India have become a challenge for the shift to complete electric mobility. However, EV manufacturers have come up with solutions like battery swapping and fast charging have made it easier for the rider and logistics company to enjoy a hiccup-free ride. Range anxiety for logistics companies is more about the utilizable hours in a day than the numbers of km that can be clocked per charge. Usual batteries taking hours to charge has been a big deterrent. For a logistics company, uptime is of paramount importance. However, logistics companies have also been revisiting their delivery models to get the maximum benefit out of the EV which in some cases could mean fixed boundary driven deliveries or even installing charging stations at their hubs of operations to minimize downtime.

"The biggest catalyst for a hockey stick movement in uptake of EV's in logistics sector will be the no of km run per day which in turn will drive revenue for the logistic player. Unit economics will only work out for logistic player if the EV is shuttling cargo on the roads for atleast 10-12 hours in a day," said Jubin Verghese, co-founder and CEO, Gegadyne Energy

Energy generation and consumption including the fuel used for vehicles contribute to over two-thirds of the carbon footprint. Hence, for these goals to be achieved it's not only important to switch to electric vehicles but also to make our electric grid cleaner and independent of fossil fuels. The announcement by Prime Minister Narendra Modi for having more than 500 GW of renewable energy generation in India by 2030 provides a boost to the entire electric vehicle ecosystem while staying on track to meet the carbon emission figures.

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The leaders in the logistics space also believe that the way forward for logistics. According to the players in logistics, the EVs in the commercial space are limited due to the limitations in the vehicle variant. New age logistics companies intend to replace internal combustion powered engines to electric vehicles in the geographies where support and maintenance of the vehicles would be available.

"The industry is aligned to move to electric vehicles at the earliest considering sustainable energy and cost. We all need to see how large global and domestic manufacturer will enter into this space with more reliable product so that the adoption can be smoother and faster," said Rahul Agrawal, Chief Financial Officer, Xpressbees.

Government is trying to promote electric and other sustainable energy. The approach of the Government seems to be enthusiastic as various states are drafting rules for the usage and adoption of the electric vehicles.