Last-mile fleets are spearheading electrification in India

The world’s most populated country has had enough of pollution, and is now rapidly electrifying its mobility. That means something different in India than it does in Europe, though: the main vector for electrification are two- and three-wheeled light vehicles instead of cars. 

In August 2022, there were around 5.5 million two-wheelers and 8 million three-wheelers in India, typically powered by high-polluting combustion engines. The pollution they cause is so bad that, according to a 2022 study by CMSR Consultants, 78% of residents in six major cities (Delhi, Mumbai, Pune, Bangalore, Chennai and Kolkata) said last-mile delivery vehicles were an important source of pollution, with 67% supporting the idea of switching to EVs.

In the pandemic, both pollution and oil prices in India fell to historically low levels. Now they’ve crept up again. Simultaneously, electrification has regained momentum. According to Statista, the demand for electric two-wheelers alone will hit more than 8 million units by 2030. Both the Indian government and the last-mile delivery industry are aiming for even higher figures. 

In fact, that industry – which has ballooned in size thanks to the proliferation of e-commerce in India – is now spearheading electrification in India, supported by government incentives and international collaboration. However, the path towards electrification in India will be long.

A report by the Delhi-based Centre for Science and Environment that examines electric-vehicle sales since 2012 projects no more than 2.05 million units sold by 2030, mainly due to lack of infrastructure improvements. The International Energy Agency is even more pessimistic, predicting no more than 1.9 million EV sales in India by the same year. 

Electrification examples

It’s not just environmental concerns that have kept electrification high on the agenda in India after the pandemic. The switch to EVs also offers considerable economic benefits. 

A study by Boston Consulting Group finds that total cost of ownership of a high-speed two-wheeler EV is around 35% lower than the same model with a combustion engine. And an electric three-wheeler is 25% cheaper than its diesel counterpart. 

India’s e-commerce and last-mile delivery industries have been aware of those benefits for a while now, and as a result are now boosting the share of EVs in their fleets. Here are some examples: 

• Last year, the Indian multinational restaurant aggregator and food delivery company Zomato partnered with Jio-bp, a joint venture of Reliance Industries and BP to help it electrify its entire fleet by 2030. As of 2022, the company had around 4,000 riders with EVs. The strategy of Zomato includes increasing awareness among its drivers on EVs across India and partnering with OEMs and leasing companies to electrify its fleet. 
• Also in 2022, Amazon India partnered with TVS Motor, one of the largest two-wheeler manufacturers in the country. This was to enhance EV deployment through electric two-wheelers and three-wheelers for last-mile deliveries. The roadmap of Amazon India is to add 10,000 EVs to its fleet by 2025, following Amazon's global strategy to adopt 100,000 EVs by 2030. 
• Flipkart, the first Indian e-commerce company to introduce EVs to its fleet and join The Climate Group's EV100 initiative, has announced the goal of becoming 100% electric by 2030. 
• Swiggy, India's leading on-demand convenience delivery platform, partnered with Taiwanese battery-swapping company Gogoro last August to switch to electric intelligent scooters. A rival, the online supermarket BigBasket based in Bangalore, aims to electrify 90% of its fleet. 
• In August, Mærsk, a Danish shipping and logistics company, announced that it would deploy an additional 500 EVs to its fleet in 26 cities in India to ramp up electrification in first-, middle- and last-mile delivery in the country. Maersk took the first step in September 2022 by launching electric three-wheelers and four-wheelers in Mumbai, intensifying the importance of EVs in distribution logistics. 
• UK-based Saietta has released a cost-effective Vehicle Control Unit (VCU) specifically for three-wheeled and four-wheeled light electric vehicles (LEVs) in collaboration with HCLTech. Saietta will start manufacturing the VCU in India and deliver over 80,000 units to Indian LEV manufacturers over five years.

50 million EVs by 2030?

A 2021 report by the Rocky Mountain Institute, released with Indian government think-tank Niti Aayog, says there could be over 50 million EVs in India by 2030, if vehicle finance and public and private capital mobilisation improve.

Critical for that more optimistic scenario is the recent growth of the last-mile delivery industry. According to the World Business Council for Sustainable Development, e-commerce will make up 3.5% of India's economy by 2030. Adopting 100% EVs in e-commerce deliveries could avoid 44% of the emissions from conventional vehicles, reducing fossil fuel consumption by 30 billion litres.

On top of national initiatives, half of India’s states have EV policies that include privileges such as subsidies for EV purchases and road tax exemption. According to the Economic Survey of India 2022-23, the Indian EV market will witness a compound annual growth rate of 49% in 2022-30, with EV sales predicted to reach 10 million annually by 2030. 

By that year, India hopes to see EVs represent 30% of all passenger car sales, 70% for commercial vehicles and 80% for two-wheelers and three-wheelers. 

The main image shows an electric auto rickshaw in India. Courtesy of Shutterstock, 2236730437.