Electric Vehicles in Last Mile Delivery- Challenges and Options

Blog | April 14, 2021 | Rajiv Raikar

Logistic costs in India are 14% of GDP, thus Last mile delivery being the most costly and time consuming part of the shipping process deserves greater attention. Last mile deliveries are done by delivery boys using petrol two wheelers, diesel /CNG powered three wheelers and mini trucks like Tata Ace or Boleros. This is partly due to the traffic situation, road sizes/ condition and the restriction by authorities on the entry of heavy vehicles in city limits.

Electrical Vehicles (EV) have lower running and maintenance costs with no pollution in comparison to Petrol and Diesel vehicles. EVs though have issues of range anxiety and lower speed. These issues are addressed in the newer vehicles. Presently only EV -2 and 3 Wheelers along with buses are considered to be feasible from operational economics perspective.

The acceptability of EVs in deliveries is largely dependent on the income surplus / benefits over the running costs. Let’s consider the case of standalone driver-owners of 3-4 Wheeler cargo vehicles. The sector is unorganized and the main aim is to earn an amount of Rs. 500-800/day after deducting all expenses. One of the present practices involves hiring vehicles on contract e.g. 8 Hrs/80 Kms with additional charges if specified Kms or hours are exceeded. Thus higher the running Kms, higher are the benefits to the driver.  Presently not many commercially viable EV options are available which can out-compete diesel or CNG vehicles. In the organized sector with companies operating their own or dedicated EV fleet thru contractors the dynamics are different. These organizations offset the delivery costs with other revenues and also want to reduce their carbon footprint which is part of their image building exercise.

Typical Indian vehicles are designed to handle overloading and thus have higher kerb weight. Diesel powered Tata Ace with carrying capacity of 710 Kgs which was retrofitted by my team to run on batteries had a kerb weight of 820 Kgs excluding batteries. The drivers are known to load it to almost 1-1.2 Tonnes. EVs in contrast will end up with lower speed and range if similar attempt is made to overload the vehicle. Thus heavy engineering items or food grains may require different strategy/costing as compared to transporting flowers or documents using an EV.

Battery pack cost is almost 40-50% cost of an EV, battery costs have dropped from $1100/kWh in 2010 to about $140/ kWh in 2020 and are expected to fall further. With this price difference between EV and Internal Combustion Engine (ICE) Vehicles of comparable specifications is narrowing. The rise in number of public charging stations is expected to increase penetration of EVs as many drivers may not have the option of charging at home. For last mile delivery vehicles fast charging can help reduce idle time and increase productivity.

From battery swapping perspective there are two options for cargo EVs.  They may involve entirely swappable and range extension battery packs. Range extension batteries have so far been tried on a limited basis on 2 wheelers.  Swappable packs are presently available for 2 and 3-Wheelers. My discussions with a service provider in south India about 3 years back revealed very little surplus would be left for drivers considering even 100-120 Kms running per day, Situation has changed since, however pricing of battery swapping services would be crucial for deployment of EVs.

Electricity supply scenario in the country has improved even in the villages. This provides options for farmers to transport their produce directly to procurement centers, stores, markets or mandis using EVs. If ably supported through Govt. schemes it could change the way fruits and vegetables are transported thus benefitting the farmers. At times they end up throwing the produce on roadside due to transportation costs.

The cost of solar PV power is dropping with advanced technology and higher capacity utilization factors. In the recent auction Solar Power costs have dropped   to Rs.2/ unit, this is expected to reduce cost of charging and help in penetration of EVs. Roofs of warehouses from where last mile delivery starts could be used for solar panel deployment. The power generated can help running charging stations at the location.

Manufacturers should design the EVs on new platforms instead of using the existing ones of ICE vehicles. This will help in reducing kerb weight as well as improve performance of the vehicle. Similarly instead of using passenger 2- wheelers, specially designed delivery EVs will help improve the operational efficiencies. Success of EVs in last mile delivery will depend to a large extent on lowering the kerb weight of vehicles. Thus apart from designing EVs on new platforms it should also include use of alternative materials. One of the options is use of aluminum which weighs about one-third of steel per cubic feet though the cost is also about three times. Use of paper honeycomb core with aluminum panels also provides opportunities for weight reduction. Engineering plastics also provide similar options. With increased deployment of EVs, cost of components or parts used will also drop resulting in reduction in the cost of retrofit kits and batteries. This will make retrofitting of ICE delivery vehicles viable in the near future.

It’s equally important for the Govt. agencies to be consistent and practical whilst announcing policies for EVs. Subsidies, incentives and tax rebates in the present scenario will help speed up the EV rollout. The distribution of benefits should be done in a transparent manner without cumbersome documentation.  Stricter implementation of overloading rules as well as pollution norms will help in the rollout of EVs in delivery. Standardization of charging plugs or having suitable adapter is crucial for charging at public charging stations. Standardization of battery packs thus facilitating interoperability is necessary for battery swapping. Having swappable batteries with inbuilt telematics will help further adoption of battery swapping as an option.

Overall the use of 2 and 3 wheeler EVs in last mile delivery is definitely feasible with support from Govt. and environmentally conscious citizens.