India which saw its first Electric Vehicle (EV) in 1996 in Lucknow is still struggling in its journey for adoption of EV. According to Bloomberg NEF Projection, India sold only 8000 Electric Vehicles locally in a span of six months from April-September 2019. Logistics Insider through this feature puts forward the insights of the EV market along with the use and contribution of Electric Mobility in Logistics.
As individuals and organisations start to show empathy towards the environment, “Go green” was a global phenomenon associated with every business. And, Logistics was no exception.
With ‘Green Logistics’ taking the centre stage, many logistics players have decided to take a step in that direction and is slowly moving towards the adoption of Electric Vehicles (EVs) as conventional transport vehicles are a proven source of carbon emissions constituting 30% of particulate pollution in metro cities.
The road monsters contribute to bad air quality and also make up a high impact on the global warming.
However, despite the environmental benefits and existence of EVs since the 19th century, the adoption of electric mobility in logistics has been at a sedate pace.
Lacklustre Appeal Despite Benefits
The Greener Plug in Electric Vehicles is the way forward as it has many individual as well as environmental benefits over the conventional
Some of the major benefits are:
• Lower Fuel Cost
• Lesser Breakdown, as fewer components are subjected to wear and tear
• Lesser Maintenance Cost
• Emits less harmful air pollutants directly reducing the production of greenhouse gas and health risks
However, the rate of adoption towards EVs is still slumping.
According to the Society of Manufacturers of Electric Vehicles in FY18, the sale of electric cars came down to 1,200 units from 2,000 units in FY17, showing a drop of 40%. Though things are changing now more than ever, there is no dearth of organisations who shy away from the adoption of Electric Mobility in Logistics due to the following:
• Lower speed affecting the delivery time
• Low energy density of batteries in comparison to diesel and petrol vehicles causing delay in supply chain
• Long battery recharge time
• Lack of public charging stations
• Route change due to short battery life
• Financial impact on the whole supply chain considering the new cost in planning, execution and control processes.
To provide the consumers with better service without inconvenience, the LSP looks towards adopting EVs with zero maintenance, faster and long-lasting charging, best after sale service and large loading capacity.
Cost of ownership trumping other benefits?
The Corporate Social Responsibility (CSR) programmes under which companies integrate social and environmental concerns in their business operations and interactions with their stakeholders turns out to be one
of the major factors for companies to move towards the adoption of EVs in today’s date.
While the logistics businesses consider CSR and move towards electric fleet, there is still a major conflict caused due to finance when it comes to the ownership of Electric Vehicles.
Where on one hand ecommerce companies like Flipkart or last mile service providers like Shadowfax aim to make its overall fleet electric, there are companies who does not wish to own an electric fleet and rather work on rental basis.
Turns out, the main reason for doing so is the high price of owning the fleet, high interest rate charged by unorganised lenders and non-availability of loans by banks due to non-established market of EVs thus putting the fleet owners is a difficult spot.
“As an organization, Ecom Express would not like to own transportation asset but work on a long-term partnership model of hire/rental besides facilitating finance models to support its employees, vendors and in making it an integral part of its business sustainability model.”~ Late Sanjeev Saxena, Co-founder, Ecom Express
However, on the contrary, many companies aim to own the electric fleet by not worrying about the initial costing and taking into consideration the other benefits.
“Their electric light truck ELECRO1.t is a maintenance free vehicle, thus saving a lot when it comes to services part. “At the same time, per kilometre running cost of ELECRO1.t is less than one Rupee as compare to any other diesel vehicle.”~Kapila Soni, Founder and Director, Croyance Automotive
Understanding the Role of Government
The Government of India is vigorously pushing the country to the adoption of EVs as it plans to make a major shift to electric vehicles by 2025. The country unveiled the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India Scheme (FAME India) in the year 2015 as a part of the National Electric Mobility Mission Plan (NEMMP) 2020.
Further, the government had also reduced GST on EVs from 12% to 5%, deducted income tax of `1.5 lakhs on the interest paid on loans to buy EVs and brought down GST rate on Charger/ Charging Station of EVs from 18% to 5%.
According to Mr Saxena, “The government’s push towards promoting Electric Vehicles with FAME policy is a positive development and has been lauded by the industry.”
He says, when it comes to the future of electric vehicles in India, the major focus must be on bolstering up the infrastructure especially related to charging of EVs.
The lack of adequate charging infrastructure, high price of EVs and difficulties in loan approvals are the main hindrance in its adaption.
Speaking on the same, Ms Soni says, “The government has made its intention clear to promote electric mobility in logistics through commercial fleet owners and incentives will only be offered to them.”
The government’s efforts towards the adoption of EVs will result in making India the second biggest EV market after China with 7% of the new car sales in 2030, suggests another report by BloombergNEF.
Mr Saxena said, “The government, both central and states, will have to offer solutions, such as reduced taxes, income tax benefits and import duty exemptions for certain EV parts, for electric vehicles to be adopted in the
mass market and eventually, facilitate logistics players to embrace it in their fleet. The Logistics industry can be a catalyst in driving e-Mobility in India in relation to 2-wheelers, 3-wheelers and 4-wheelers.”
As the businesses move towards alternative, cleaner and diversified automotive mix, the adoption of EV will hike and will develop a mature and large market for EVs in the coming years. The Logistics Ecosystem is set to move towards sustainable mobility considering the positive impact on environment and reduced cost per delivery.
Further to it, the need to adapt a more sustainable source in road logistics is a necessity which will constitute in the evolution of economically and environmentally stable country.
According to Ms Soni, “As EVs have very less parts to maintain or replace, there will be less breakdown leading to faster and smother journey. Simple mechanism and advanced technology will benefit the drivers for hassle
free and comfortable driving and most importantly leave zero carbon foot prints. With no petrol and diesel usage for EVs, it will lead to a lesser dependency on other countries, which is important for a nation’s development. So, over all replacing fleet with EVs will lead to a new slogan Together we save, Together we grow.”
Also, the early adoption of the electric mobility in logistics in the near future will give a competitive edge to the players, helping them rule the segment.
Mr Saxena said, “At Ecom Express, we are conscious of the fact that the business is enabled by transportation and the initiatives that are needed to be taken by the company in driving the change by working on the types of
electric vehicles that can be mobilised.”
The working of electric fleet in the supply chain activities holds great potential however it is still not fully explored by the logistics players.
Further, Mr Saxena told us, “Ecom Express is evaluating the operational point of view such as the development of infrastructure networks for battery recharging/swapping; the size and mix composition of fleets, such as 2/3/4 wheelers; and the time-window constraints related to higher driving ranges.”
The companies are showing their desires in the shift towards sustainable mobility, having an upper hand in the market and thereby making an impact.
“We have already taken a small step with 25+ electric vehicles running in Delhi-NCR Region and have plans to increase the electric fleet strength to over 100 pan-India in 2020,” added Mr Saxena
Despite the known challenges and hurdles, the industry has already started to contribute to Green Logistics with sustainable mobility. The Industry as well as the government understands the need to achieve economical
and environmental stability of business and the country. Thus, the future of Electric mobility in logistics stands bright.