Fueled by the proliferation of multiple business models and government initiatives such as the National Retail Policy, e-commerce, estimated at $74.80 billion in 2022, is projected to grow to $350 billion in 2030. In parallel, the Overall growth of various sectors of the economy is expected to increase medium and last mile shipments which make up 40-50% of the overall logistics cost. This in turn is meant to ensure growth for the Indian LVC extension market.
The economy for last mile delivery companies has been under strain due to high inflation in diesel prices, which have risen by 55% in the past two years. Furthermore, in the same period, the prices of natural gas at the pump also increased by 71%. Assuming an average monthly mileage of 6000 km for a light commercial vehicle with a GVW of less than 3 tonnes, the approximate cost increase over the last two years for the end user was INR 1.5 Lacs and INR 1.1 Lacs respectively for Diesel and CNG variants. An electric alternative, therefore, has started to make commercial sense in the delivery ecosystem. While 3W cargo vehicles have jumped onto the electric bandwagon in a big way, posting 101% growth over the past year, the time is certainly ripe for the light commercial vehicle segment to follow suit.
Furthermore, given the government’s proposal presented at the COP 27 summit to phase out all fossil fuels that contribute to greenhouse gas emissions, there is a need to focus on the electrification of this segment. Furthermore, with market players such as Flipkart and Amazon committing to decarbonisation by including EVs in their logistics fleet, eLCV segment will get a significant boost.
There are, however, areas we need to be aware of as we move towards an effective transition towards electrification in road freight transport. The imperatives for smooth electrification of the LCV segment include:
TCO (Total Cost of Ownership) / movement of acquisition costs and purpose-built vehicles
The total cost of ownership of eLCVs is lower than their ICE counterparts due to lower fuel costs (read electricity costs) and maintenance costs, however, acquisition cost could be a barrier especially in the case of small fleet operators/individual owners. This is where models such as the decoupling of battery and vehicle costs could come in handy, for example in swap solutions or renting a battery, etc. Batteries with a longer life may be more suitable for the latter solution. The availability of easy and affordable finance will also significantly help in this regard.
Furthermore, while selling commercial vehicles not as a product but as a business solution has rapidly gained traction, in the case of electric vehicles, this also needs to take into account factors such as range, power, capacity and the charging solution offered as this will have a significant impact on the cost and utility of the electric solution offered. Thus, the targeted construction not only in the form of skip, tonnage, etc., but also in terms of the offered battery/charging solution will be of paramount importance for a successful implementation in different use cases.
Reduction of downtime due to recharging
The biggest pain point in the switch has been the time taken to recharge as this leads to wasted productive time during the day. A typical electric vehicle with GVW below 3 tonnes that can be used as a last mile delivery solution, for example Tata Ace EV (GVW – 1840 kg), which has a battery capacity of 21.3 KWH and a range certified range of 154 km, it will take 6-7 hours for a slow charge and ~2 hours for a fast charge. Assuming a daily requirement of 150 – 200 km, two top-ups a day would be required and while one can take place during non-working hours, the other must be carried out during production hours.
A solution to this bottleneck would be the presence of a dense exchange network combined with essential ingredients such as an interconnected network in the cloud between the stations and the vehicles, as well as the necessary guarantees for the safety and security of the batteries. Companies like Solar mobility they have already made great strides in this direction and could be an important catalyst in this transition. Another solution can be a battery that supports fast charging despite the high temperatures prevailing in the country. Solutions such as Lithium Titanium Oxide (LTO) cells, which EVage is introducing together with Toshiba, could be a plausible solution in this sense.
A green grate and a grate capable of carrying the additional load
At COP26, India pledged to produce 50% of its electricity from sustainable non-fossil fuel sources by 2030. This is crucial for EVs to claim the promised environmental lead over ICE vehicles. Heavy power demands from eLCV fleet player charging stations could draw peak load capacity from the local power grid. The government’s goal of establishing off-grid renewable hybrid charging/exchange stations can help local grids cope with the increased load. A concerted effort by government, utility companies and OEMs is needed to ensure that the grid and the general public are unaffected.
स्मार्ट और दमदार | Tata Yodha 2.0 and Intra V50 off-road driving experience | TOI Auto
Ensure the supply of battery raw materials
Keeping in mind the Indian government’s 2030 electrification target, Indian mobility will need to reach an estimated battery capacity of 800 GWh. This requires a focused effort to secure battery raw material and intermediate materials so as to reduce supply chain risks. Again, we have seen some green shoots of cell manufacturing with companies like Log 9 and Toshiba entering the fray and with the National Program on Advanced Chemistry Cell (ACC) PLI, more players are expected to enter this space.
Longer battery life is also one of the ways to reduce the demand for battery raw materials and alleviate customers’ fear of forced battery replacement. For example, in replacement solutions, cooling the batteries before recharging and dispensing them through a well-designed battery management system can certainly help increase battery life. On the other hand, the use of chemicals, for example LTO (Lithium Titanium Oxide), which have a life of between 15,000 and 20,000 cycles, do not need replacement throughout the life of the vehicle and in the future, chemicals such as using niobium could further improve the speed charge characteristics and life of the batteries.
A ubiquitous exchange network with a rapid exchange/exchange system also helps limit the need or increased range and therefore the size of batteries, which in turn reduces the demand for battery raw material. Finally, advances in recycling technology would also help achieve some of the raw material safety goals.
Given the growth potential of last mile logistics, the LCV segment certainly has a bright future in electrification and careful consideration of the elements it entails will certainly help ensure a successful transition.
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