EVs for last-mile delivery could boost India’s e-commerce sector

Source: This post is based on the article “EVs for last-mile delivery could boost India’s e-commerce sector” published in Live mint on 24 November 2021.

Syllabus: GS3 –Conservation, environmental pollution and degradation, environmental impact assessment.

Relevance: To understand the new demand for EV’s for environment-friendly last-mile delivery.

News: Recently, NITI Aayog and around 30 companies, including many e-commerce and logistics firms, launched their Shoonya campaign‘ that calls for accelerated electrification of last-mile delivery.

Why big private companies are adopting electric vehicles?

A rapid digital adoption across India during the covid pandemic has pressured companies to expand their last-mile logistics.

A McKinsey analysis stated that as more netizens order online, India requires between 1 million and 1.5 million two-wheelers for delivery, by 2025.

Companies seem to be realizing that electrifying the delivery vehicles could help them cut fuel and maintenance costs, besides reducing harmful emissions. 100% electrification of their two-wheeler fleets by 2025 could save close to $1 billion as well as a 1.5-million-tonne reduction in carbon dioxide emissions each year.

What are the challenges?

The idea is yet to take off on a larger scale owing to structural issues, including financing limitations, lack of awareness, and the limited availability of EV models right now.

Insurers lack sufficient data to accurately price risk while providing cover for these vehicles.

What efforts are done to tackle the last-mile delivery issue?

Efforts by private players:

-The rise of mobility platforms gives companies an option to lease vehicles instead of purchasing them.

-Newer models of EVs are coming up with features such as higher top speeds, longer ranges, and better tech packages that are ideal for last-mile delivery.

Efforts by Union Government:

-FAME-II incentives have been increased from ₹10,000 per kWh to ₹15,000 per kWh, to spur demand and supply in this space.

–Production Linked Incentive (PLI) scheme for the automotive sector, where around ₹26,000 crores have been earmarked for 5 years. The initiative could incentivize EV production in the country.