How will Electric Vehicles Impact the Intra-city Logistics Industry?


The global automotive industry is trying to switch to alternative energy options in a big way. India’s recent investments too will see an exemplary shift in the near future. Indian EV Market value stood at USD 5 billion in 2020, and it is predicted to reach USD 47 billion by 2026. This is a CAGR of more than 44% during 2021-2026.

All this while there has been a lot of burden of oil imports, rising pollution, and international commitments to combat global environment changes. As Electric Vehicles (EVs) grow in popularity, all the nations are adopting EVs, as they are more energy-efficient transportation and on-road delivery methods. The EV’s market share of automobiles is continuously expounding, in intra-city transport, last and mid mile delivery. We will see more electric LCVs, electric bikes, electric cars, and electric three-wheelers on our roads.

What makes EVs perfect for the Logistics Industry?

♦ Reduced Cost of Ownership

As the government introduces new policies and adopts new technologies in the electric vehicle industry, the TCO (Total Cost of Ownership) of EVs are coming down meaningfully. The new battery swapping technique considers the batteries as a separate entity, and therefore it can be owned by energy operators. This is another method that brings the upfront cost of EV usage, particularly for the intra-city logistics industry. This is going to promote the sales of EVs in India.

♦ Environment friendly

ICE road transport contributes majorly towards polluting the environment with toxic gases. Electric mobility in the logistics sector will have a major role to play in effectively dealing with the environmental issues created by ICE vehicles.

♦ Higher Savings On Fuel Costs

EVs reduce greenhouse gas emissions and bring down running costs. With a continuous surge in petrol prices, EVs have turned out to be an excellent alternative for ICE vehicles in saving energy and energy costs.

♦ Minimal Maintenance

EVs require less maintenance and service support. The maintenance costs connected to the oil change, spark plugs, fuel tank, and pump, etc. bring down the maintenance requirements. The easy addition of new technologies in EVs augments the implementation of electric vehicles in the logistics sector easily.

♦ Reduced Last Mile Logistics Costs

The supply chain companies find EVs as more economical alternatives for last-mile logistics. Due to the simple vehicle structure EVs have, it allows easy integration of present-day technologies for fleet tracking and optimization. Proper tracking and optimizing bring down last-minute logistics costs.

♦ Tracking And Analysis of Electric Vehicle Easier

It is easy to track valuable information about EVs and their batteries for fleet operations. The details relating to lifecycle, battery health, charging, and discharging can be tracked with the software and sensors in the electric vehicle logistics.

♦ Support From Government Initiatives

The logistics sector is the most contributing source of greenhouse gas emissions. This calls for a need for transition to EVs. The logistics sector also saves on the cost of importing the fuel, reducing the import bills with this transformation. Both central and the state governments are constantly introducing new initiatives and policies to endorse electric vehicles for the logistics sector. Fame India scheme specifically focuses on encouraging electric vehicle purchase by providing subsidies on the purchase of EVs. The scheme aims to provide necessary charging infrastructure for EVs too.

♦ Scope Of Retro-fitment In Intra City Logistics

In India, many states in consultation with the Government have planned an easier mechanism for an exit strategy for EV enterprises. For prioritizing the vehicle segment for EV transition, the policies for retrofitment of existing ICE vehicles such as passenger cars, companies are implemented. The companies like Etrio support e-commerce companies, logistics players and drivers, with seamless transition solutions. The EV conversion system is evolving with an aim to provide affordable electric mobility in all segments of society.

♦ Cost-Benefit Analysis (CBA) With ICE Vehicles

The upfront cost of electric two-wheelers cars, buses, and three-wheelers may be higher than their ICE counterparts, but it continues to decline and will be much more affordable when it reaches economies of scale. But they add to significant fuel cost savings. For public transport, a higher daily run also converts into savings. This use case will immediately position all kinds of vehicles from two-wheelers to buses into being instantaneously electrified.

♦ Focus On End User and Operator Benefit

With the asset-light options springing up in relation to intra-city transport vehicles like three-wheelers, two-wheelers, and LCVs, the total cost benefits are appreciated not only by the operator but by the passengers/end users also. OEMs and EV companies are reducing the complexity and uncertainty of prospective EV buyers by providing simple, care-free configuration and ownership options.

♦ Hassle Free Registration and Finance at City Level

For the OEMs and prospective EV buyers, there is a big incentive in the form of exemption from the issue and renewal of registration fees. From subsidy on purchase to an exemption from road tax, registration charges, to low interest rates on loans; everything boils down to many viable electrified transportation options at the city level.

For the next 20 years, things were quiet on the electric vehicles front. But the 1950s brought them back into the limelight. Growing concerns about pollution from gasoline cars prompted governments from across the globe to rethink their on-road strategy. People were now dreaming of a sustainable zero-emission car that would be the catalyst for change.

Logistic Industry on its way to achieving sustainability

Businesses Adopting Electric Fleets

In 2017, Wal-Mart pre-ordered 15 of Tesla’s electric tractor-trailers. This was their major move to save up about $25,000/year, semi-truck. Likewise, many impactful orders for intercity transport vehicles come from the richest companies, drive other companies to implement these technologies, and set industry trends. Electric intra-city EV fleets help them move towards more profitability and they have increased level of customer confidence and are moving towards sustainable transport.

♦ Spending On EVs Will Go Up, With Government’s Constant Support

Stimulated by increasing government investments and support, global spending on EV purchases has grown. From simple tax breaks to subsidies and encouragement to retrofitment from ICE vehicles, more complex formulas are being applied to magnify EV sales.

♦ Asset Light Model Vis-A-Vis Ownership Model

Many B2B companies are favoring asset-light models and prefer the drivers to own EVs or they want to collaborate with third-party financing/leasing companies. Vehicle leasing schemes or the rental leasing for e-three wheelers, in particular, are successful and provide a hassle-free ownership experience to its consumers compared to the ownership model.

♦ Electric Bus and Truck Registrations Will Expand

Electric bus and electric heavy-duty truck (HDT) registrations increased globally. Truck makers indicate an all-electric future, therefore they are broadening their range of available zero-emission HDVs, and the registrations are steadily increasing.

♦ Demand vs supply

Rapidly speeding up the EV market will have a lot of impact on the supply chains. Economic Times in Oct ‘21 reports that in the first half of FY22, EV sales have more than tripled to 1.18 lakh units. The biggest demand came from the commercial segment i.e. two-wheeler and three-wheeler segments. A supply chain and manufacturing capability is another complex task that is requiring a lot of planning and investments to meet future demand.

♦ Business Benefits will reap in for Supply Chain enterprises

EVs have drawn considerable interest among supply chain enterprises because of the efficiency and sustainability it brings. All types of delivery businesses can easily apply delivery fleets for last-mile deliveries. Since it is gradually gaining popularity, it is helping in accurately planning delivery routes, dispatches with driving lesser miles. Minimum fuel, cost-effectiveness, and easy maintenance further add to the business benefits.

Electric-powered cars will certainly still improve, and within the next few years, we will expect to ascertain more hybrid and pure electric vehicles on the roads. New solutions need to be found in other research fields like producing electric energy from renewable sources, integrating vehicles' batteries into the longer-term smart-grid systems, a new wireless charging system, and self-driving/parking abilities. Besides these technical features, also some social influence of the latest principles of human mobility to future communities of smart cities are going to be considered.

Conclusion- EVs will revolutionize Intra City Logistics Industry

Fuel-led vehicles will eventually become a thing of the past, so we need to switch to EVs quickly for the prevalence of EVs and their infrastructure. EVs are the future due to the advantages it has over their counterparts. NITI Aayog reports that in India’s logistics costs can come down by 4% of the country’s GDP. This will lead to major savings by 2030. Last-mile mobility has a huge EV penetration opportunity. Fast deployment of EVs needs a comparable ramp-up of key enablers like subsidy and ease of financing etc.

This encourages all of the above intracity logistics industry to actively contribute to decongesting and decarbonizing the environment. Etrio is a pioneering start-up in this field. It is India’s first company to receive approval from the Automotive Research Association of India for retrofitting, and building an ecosystem for electrifying your intra-city fleets.