- Fleet electrification commitments by key players in food, grocery and e-commerce delivery have contributed majorly to EV sales.
- The reduced total cost of ownership (TCO) over internal combustion engine (ICE) vehicles added to the growth of EV sales.
- Subsidies and adoption mandates by the central and state governments also drove the adoption of EVs
Sales of electric vehicles for last-mile deliveries are estimated to grow to 25% of the total EV sales by 2025, as stated by a report published by the Boston Consulting Group (BCG) last week.
Natarajan Sankar, managing director and partner, and lead for BCG India’s auto and mobility practice, said that last-mile deliveries were set to experience significant growth over the next five years, with a compound annual growth rate (CAGR) of 15-20% across a wide range of applications.
The report pointed out that the environmental benefits of EVs did not solely determine their deployment. Instead the financial benefits, in the longer term, due to the reduced total cost of ownership (TCO) over internal combustion engine (ICE) vehicles played a significant role. Subsidies and adoption mandates by the central and state governments have also driven EV adoption.
“The food delivery sector is projected to see a CAGR of 30% during this period. This robust growth along with supporting regulatory measures will drive the need and demand for expanded delivery fleets, leading to a 20-30% increase in adoption of EVs by 2025,” Sarkar elucidated.
Ambitious fleet electrification commitments by key players in food, grocery and e-commerce delivery have been proof of the growing popularity of EVs. Food delivery aggregator, Zomato, has announced 100% electrification of its fleet by 2030, while grocery delivery service provider Big Basket has announced more than 70% fleet electrification by 2024.
EV asset operators have been purchasing and offering fleets on rental contracts, as not many driver owners buy EVs, due to higher upfront costs, perceived uncertainty about technology, range anxiety, and limited awareness of TCO benefits.
The report also mentioned the improvements needed to maximise EV adoption. These included increasing utilisation (km covered/day) by 50% by cross-utilizing vehicles across applications to minimise downtime, and improving the design of vehicles to better suit the needs of delivery operators. Delivery personnel have unique needs, including large storage space, good pickup even after putting in heavy load, customizations like backrest for usage over longer periods etc., and at the same time, many use EVs for personal commutes after work.
The report suggested that OEMs need to rely on other market strategies apart from conventional dealer-driven channels to improve sales. To improve their significance in the market, EV asset operators must be able to differentiate their value proposition, while delivery firms need to adopt a concerted approach to increase EV adoption and achieve their targets.