New Delhi: Electrification is happening fast and it is happening now in the commercial vehicle (CV) industry. CV manufacturers are now making aggressive moves to beef up their electric vehicle (EV) offerings, though it will take time for EV volumes in this segment to really accelerate.
After the buses and three-wheelers, the original equipment manufacturers (OEMs) are aligning behind the promised benefits of zero-emission trucks, and are encouraging the trucking industry to accelerate adoption of vehicles powered by alternatives to diesel.
To begin with, some of the most visible, and heavily used, small and light commercial vehicles are inching towards electric power. What is driving this change is the hefty burst in e-commerce that has brought with it a change in transportation management and supply chain analytics. Marred by high fuel costs during delivery of consignments, e-commerce sectors are seriously examining the possibility of going the EV way.
“E-commerce companies have embraced electrification in a very big way, plus there are a lot of logistics players who are having completely electrified fleets for the first and last mile. There is pressure on businesses to go green and that’s actually pushing electrification in the small and light commercial segment,” Suman Mishra, CEO of Mahindra Electric, had said at an ETAuto event.
A report by the World Business Council for Sustainable Development (WBCSD) and Flipkart reveals that the e-commerce market in India currently deploys one million EVs as part of its fleet spread across two and three-wheelers, small and medium commercial vehicle segments. This includes last mile delivery vehicles with a daily utilization of 100-150 km, long haul transport (from factories to warehouses or regional fulfillment centers), the report added.
Going clean and green is the need of the hour. And therefore, several manufacturers in the past 6-8 months have announced their intentions to add electric trucks to their fleets. Industry estimates show that the current size of electric LCV stands at 350,000- 400,000 units in the domestic market. This space is expected to grow at 7-10% till 2025.
Corporate strides to CV electrification
Making its maiden move into the e-cargo mobility segment with EVs, home-grown automajor Tata Motors has launched an all-electric version of its popular Ace small commercial vehicle (SCV). The Ace EV comes with a lightweight container that offers a cargo volume of 208 cubic feet. The vehicle can tackle grades of up to 22% under fully loaded conditions.
“We are going to work on and keep identifying more areas for electrification in the commercial vehicle segment. The proportion of investments for electrifying commercial vehicles will only increase,” executive director of Tata Motors, Girish Wagh said.
Similarly, Ashok Leyland has recently said it is eyeing releasing its electric light commercial vehicle (eLCV) within six months. “LCV is a key growth area for Ashok Leyland, and the Bada Dost Range would play a pivotal role in expanding our domestic as well as international sales and propel us in our journey to achieve our vision of being a Global Top 10 commercial vehicle manufacturer. Within six months we are looking at the launch of e-LCVs as well,” Dheeraj Hinduja, Executive Chairman, Ashok Leyland, said.
One of the most encouraging indicators of commercial vehicle electrification is a bunch of new-age companies and startups have also joined the league. The Faridabad-based company Omega Seiki Mobility (OSM) has already begun deliveries of its three-tonne electric light commercial vehicle, M1KA 3.0.It is also ready with e-trucks in 1 and 6.5-tonne capacities.
“We are working on bigger trucks where we are targeting the tipper segment in the next 4-5 months,” founder and chairman Uday Narang said.
Similarly, Pinnacle Mobility Solutions, a unit of Pune-based Pinnacle Industries, also plans to foray into electric light commercial vehicles (LCV) for the cargo segment. The company will start the production of electric LCV in the new Pithampur plant and will eventually shift the production to its proposed plant in Maharashtra.
Factors driving e-truck penetration:
Unlike cars, the decision criteria to purchase CV place greater emphasis on economic calculations. Total cost of ownership (TCO) plays a more important role in commercial-vehicle purchasing considerations. Based on current fuel price dynamics, total cost of ownership (TCO) of light and small duty trucks could be on par with diesels and alternative powertrains in the near term.
Another crucial reason for the commercial transportation industry’s growing interest and investment in electrification is simple – an increasing priority of environmental, social, and governance (ESG) in the auto industry.
“Managing environmental, social, and governance (ESG) issues are critical for automakers nowadays. And therefore, small and light CVs are emerging as a sweet spot for operations. Additionally, spiraling costs of fuels are resulting in a high price differential with electricity prices. Small trucks in this use case could share passenger-car components and infrastructure to accelerate adoption,” Suraj Ghosh, Director, S&P Global, said.
High penetration of e-LCVs alone can lead to a reduction of total transport CO2 emissions by more than 3% by 2030.
According to International Energy Agency (IEA), some of the overarching societal trends, such as the increase in e-commerce and home-delivery, will lead to a much higher demand for light commercial transport, as more frequent deliveries will require more tonne-km of last mile deliveries especially in urban and suburban areas.
Sales of electric light commercial vehicles increased globally by over 70% in 2021, an IEA report said. At a global level, the electric LCV market share is 2%, about four times less than that for passenger cars, it added.
The economic case for electrifying LCVs is stronger than for cars in cases such as urban delivery since LCV fleets are driven intensively, often operate on predictable routes and can be charged at commercial depots. The fact that the uptake of electric LCVs has been slower than cars in most markets to date may be attributable to a mix of factors, including less stringent fuel economy and regulations in this area, fewer model options, and a diversity of use profiles.
Most electric LCVs are acquired for specific uses within fixed delivery areas and may not need an extended driving range. The average battery size of LCVs is 18% smaller than for passenger cars; this may be due to predictable and shorter routes, or because total ownership and operation costs are key factors in fleet owner decisions to buy electric LCVs.
In order to make commercial fleets electric at a faster pace, the areas such as development of charging infrastructure, lowering the cost of ownership and bringing in more fleet financing options to support the EV adoption rate for commercial transport, needs immediate attention. Delhi-based think tank NITI Aayog has proposed the inclusion of EV and EV-charging in the Reserve Bank of India’s framework for priority sector lending. “This would help finance EV fleet conversion, as 60-70% of vehicles are financed with little or no difference in interest rates,” Niti Aayog said in a report.
In addition, stakeholders of the CV ecosystem should work together to respond to the upcoming demand for use-case-specific electric powertrains and address topics such as infrastructure needs and specific customer requirements.
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“We will have to move towards zero emissions in commercial vehicles, but we expect it to happen in the form of gaseous fuels. We are working on LNG and bio-CNG as well,” Wagh said.
The e-commerce boom post-Covid, the changes in purchasing habits and demand from the agricultural sector have resulted in an increase in last-mile transport requirement which has led to a surge in demand for small trucks, he said adding that the company expects an 8-10% growth in the LCV segment.
