Can Ebikes For Delivery Become The New Normal For India?

When it comes to logistics and ecommerce, India has shown an ever-growing appetite for greater innovation and quicker services. But that comes at a cost. As the number of deliveries increase so do the vehicles on the road and that’s where India needs to balance ambition with change to meet its various national and international policy objectives.

At the same time, India has to cut down the use of fossil fuels in vehicles as per the Paris Agreement of 2015, which is signed by 195 countries. As part of its commitment to the agreement, India plans to reduce its carbon emissions per unit of GDP by 33-35%, and produce 40% of its installed electricity capacity by 2030 through non-fossil fuels.

For India to meet the terms of the agreement, it has to spend more towards adoption of carbon-neutral technologies such as electric vehicles and renewable energy by 2025.

Ahead of the Paris Agreement, the Indian government set up a National Electric Mobility Mission Plan (NEMMP) in 2013 to have at least 30% electric vehicles among all vehicles on the road by 2030. To fuel this change, the union government has announced Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme in 2015. It had proposed to invest INR 10K Cr towards electric vehicles (EV) adoption in the next three years.

Complementing the central government’s ambitious plans are the promising state government EV policies and dedicated departments. The government efforts are reflected in the boom of electric vehicle startups in India. From Mahindra and Ola’s EV-focused partnership to a slew of electric bike companies to startups coming to improve battery management and charging infrastructure. The electric vehicle sector has seen a lot of investment and startups, and things are slowly changing.

The timing of this revolution could not be more right. Recognising the need and positive opportunity from electric vehicles, various startups have deployed electric vehicles in their delivery fleets including ecommerce major Amazon, furniture company IKEA, hyperlocal delivery startup Grofers and food delivery giants such as Zomato and Swiggy.

Together, these make up a significant amount of deliveries. With their scaled-up operations, these companies incur significant logistics cost and as a result are always looking for ways to save costs and streamline their operations. A very visible trend among these companies is engaging with electric automotive startups, which have become enablers in the delivery ecosystem.

In India, ventures such as logistics startup DOT, dockless bike sharing startup Mobycy, electric bikes manufacturer Okinawa,  electric bikes maker e-HIRAN, FedX-owned global delivery company TNT, and Bengaluru-based micro-mobility platform Yulu are making big waves these days by partnering with the major ecommerce and delivery platforms to enable greener deliveries.  

Image Description: EV delivery fleets of Swiggy and Zomato respectively. 

Electric Bikes Bring In Savings

One of the most significant benefits for ecommerce platforms from moving to electric vehicles is cost saving. But delivery-dependent businesses are also growing conscious of their environmental footprint, and are trying to reduce it over time.

For instance, DOT, an electric vehicle logistics startup founded in 2015, supplies EVs to major clients to replace their conventional delivery vehicles fleet. It counts the likes of Walmart, Amazon, Grofers, Blue Dart, DHL, Lenskart, Swiggy, McDonald’s among others, as clients. According to DOT’s MD Vineet J Mehra,  the use of electric vehicles will contribute to a wide range of sustainable goals such as improved air quality, less noise pollution, energy security along with low carbon power generation mix, and reduced greenhouse gas emissions, which are some of the more obvious benefit for anyone looking at this sector.

DOT claims to have more than 500 two-wheelers and 125 E-Cargo vans which are rented to its partner companies. The company operates on a paid per km model where the price per km has been fixed for the vehicles. Mehra said a fleet of 250 EVs will save around $1 Mn worth of fuel and can reduce the carbon emission by 4K tonnes annually.

Talking to Inc42, a Zomato spokesperson said, “We have the largest food delivery fleet in the country which is growing rapidly. It is, therefore, imperative that we introduce pollution-free and minimal fossil-fuel solutions to create a sustainable model.”

As of April 2019, Zomato claimed to be present in 10K cities globally   with over 1.4 Mn active restaurants. It also claimed to have delivered 38 million orders in April 2019 and has a last mile delivery fleet of 1.8 Lakh delivery partners.

Since February 2019, the foodtech company has added over 15,000 cyclists fulfilling 1.7 Mn deliveries per month on electric and mechanical cycles in over 200 cities in India. The company initially launched across 12 Indian cities with majority of its electric bikes in Delhi NCR, but is now steadily expanding to other Indian cities.

Zomato rival Swiggy also announced an EV delivery fleet pilot across 10 Indian cities last month. Swiggy counted the 40% lower maintenance costs and operational cost as the advantages. It is also hopeful that this shift will also lead to higher effective pay-outs for Swiggy’s delivery partners who are expected to own these EVs, due to the allied cost saving.

Supporting the Swiggy’s claim, DOT’s Mehra added, “Electric vehicles have fewer moving parts or components and batteries with a lifetime of up to 15 years. This drastically reduces their maintenance costs.”

It’s not just the operational cost, but also the fuel cost which is lower. EV startup Mobycy founder Akash Gupta said, “Cost of running EVs is 50% to that of traditional bikes. Also, the fuel cost for EVs is 2.5% of the traditional fossil fuel cost.”

The dockless ebikes manufacturer was founded in 2017 and rents electric bikes to companies like Zomato and Swiggy for INR 2K – INR 3K per month. Mobycy does not have to pay for the fuel, thus saving on the vehicle’s running cost. It is also planning to partner with small restaurants and pharmacies, to enable hyperlocal deliveries on ebikes.

Another EV manufacturer, Okinawa Motors have been supplying electric vehicles to multiple delivery startups for their daily logistics need. The company claims to have sold 700-800 ebikes till date. Okinawa is also one of the few companies to have received Fame II recertification and recently announced the launch of its 2nd manufacturing unit in Rajasthan.

It must also be noted companies are not just incurring direct costs for using conventional vehicles. According to a Shared Mobility report by Niti Aayog, the cost of congestion is estimated to be INR 1.47 Lakh Crore annually in Delhi, Mumbai, Kolkata, and Bengaluru.

India’s Need For Electric Vehicles

India is clearly a greenfield as far as the electric vehicles market is concerned. There’s a massive demand for clean tech and technologies that reduce air and vehicular pollution.

As Delhi becomes the most polluted capital in the world, and India’s air quality touched hazardous levels of PM2.5 particles — India has become an obvious hotbed for green fuel innovations such as EVs or renewable power. The 1.3 Bn people economy has reported 210 Mn registered motor vehicles in March 2015. This is alarming because vehicular emissions have been estimated to contribute to about 385K premature deaths worldwide till 2015. So there’s good reason for these companies and startups to look at the Indian market.

With India moving towards 5G connectivity in the next three to four years and the rise in the number of smartphone users, the number of users who shop online or order food and grocery through apps is bound to grow exponentially. As internet penetration continues to deepen, the boost in adoption of sectors such as ecommerce and foodtech has increased the number of delivery vehicles in the country.

A Deloitte India and Retailers Association of India (RAI) report valued India’s ecommerce industry at $200 Bn and has predicted it to reach $1.2 Tn by 2021. This highlights how much India is relying on deliveries for its daily shopping, and the cost saving for Indian logistics and ecommerce companies when moving towards electric vehicles.

Growth Barriers For EV Deliveries

While the positives are clear for most businesses, the fact remains that the electric vehicle segment needs to become more relevant for all kinds of deliveries. Given the limited running capacity of these electric bikes, they are largely used for short distance deliveries, which does not make them well suited for large cities where food delivery has a wider footprint.

A Zomato spokesperson told Inc42 that distance and delivery time are the two important factors to consider while using ebikes for delivery. “While traditional bikes can easily cover long distances, we assign only short distance deliveries — an average of 2.5 km — to the delivery partners using ebikes to ensure timely delivery,” the spokesperson said.

But that’s bad news for companies like Tork Motors which are looking at long range vehicles. Tork CEO Kapil Shelke told Inc42 that delivery startups will need long range EVs for effective delivery time. Tork Motors is one of the premium-segment EV manufacturers in India and its upcoming t6x bike expected to be priced over INR 1 Lakh.  “Even though long range bikes tend to fall under the premium bracket, I feel that delivery professionals are also aspirational and will be open to adopting long range bikes because of the high return on investment.” he added.  

Other premium electric vehicle manufacturers are Ather Energy and Revolt Intellicorp. Additionally, Emflux is about to launch its electric superbike next year, which has a top speed of 200 kmph.

Another downside of using ebikes can be the fact that electric vehicle technology is rapidly evolving. In comparison to the internal combustion engines which are quite stable in terms of technology interventions, the electric vehicles have the potential to become more and more efficient in every six months, Mobycy’s Gupta added, which could increase the cost of development for companies.

Ebike Makers Tackle India’s Poor Charging Infrastructure

One could say the slower adoption of long distance electric bikes is linked to another critical challenge in the Indian market, that of the lack of charging infrastructure and parking stations for electric vehicles.

For example, Ola ventured into the EV space with its electric car fleet in 2017 under pilot in Nagpur with an initial investment of $8 Mn. However, just after nine months the project got tanked due to the dissatisfaction of Ola drivers. Reports noted that the drivers were unhappy with long wait times at charging stations and high operating expenses of electric cars. Many drivers also wanted to turn in the electric cars and go back to traditional diesel vehicles.

The company has spent over five months in getting government clearances for new charging stations. Nagpur residents also held protests against these electric vehicles because of the long queues which spill out on the road outside EV charging stations.

Not every company has this problem. Zomato claims to have received an encouraging response from its delivery fleet. “The response has been so good that we plan to convert 40% of our delivery fleet to ebikes within the next two years,” the company spokesperson told Inc42. Talking of the total adoption of EV bikes, the spokesperson noted that there are factors such as weather, distance and traffic conditions, which will contribute to the total adoption.

Majority of ebikes in India use detachable batteries. CEO of Okinawa Motors, Jeetendra Sharma claims that Okinawa’s lithium ion batteries weigh around 10 Kg and can be easily charged from one of the house sockets.  

On the other hand, DOT is using a swappable battery model. Its vehicles are being charged at the company’s own charging stations and some of its clients have also set up exclusive charging infrastructure for the DOT fleet.

While Mobycy uses non-swappable lithium-ion batteries, its detachable batteries are charged overnight at Mobycy parking points. “We’re also exploring charging via swappable batteries in the near term,” Gupta added.

Another ebikes enabler, Yulu also use swappable lithium-ion batteries, which are charged at the company’s own charging infrastructure.

Over Reliance On Govt Subsidies

Most EV manufacturers agreed that companies in this field have to move beyond government subsidies, and encourage setting up parking places, incentives for customers, and the charging infrastructure.

Electric will grow if there are more and more charging stations, said Mobycy’s Gupta. According to him, electric vehicles will have a strong growth rate of about 40% CAGR over the next four to five years. He also added that the government can add charging stations at every petrol pump or reduce parking fees for electric vehicles, as a means to improve adoption. Recently last month, Indian government policy think tank Niti Ayog has asked the Ministry of Petroleum and Natural Gas to install EV charging infrastructure in 1K fuel stations across India.

DOT’s Mehra wanted more consumer-friendly initiatives from the traditional ecosystem enablers. He said EV customers need better financing options, just like they do for traditional vehicles. “Banks should be able to invest in electric vehicle companies,” he added.

Tork Motors’ Shelke believes the government’s push for bulk production is harmful for those targeting the premium segment, where production volumes are lower. This limits the variety of vehicles in the market, and could stifle competition.

Can India Meet Its Electric Goals?

While India aims to achieve deeper penetration of EVs by 2030 yet, sustainable mobility is not just about replacing conventional vehicles with electric vehicles. It is also about a shift in cultural thinking, coupled with a technological overhaul.

This is already underway in markets outside India, and the momentum in international markets will also be a factor in India’s electric future.

In Europe, EV sales jumped 67% year over year (YoY) in January 2019. Over in the US, 208K new electric vehicle registrations were reported which is more than double the number filed in 2017.  

In China, the China Passenger Car Association (CPCA) data noted that in the first quarter of 2019, passenger electric car sales accounted for 92% of all EV sales, as compared to 2018, when they made up for 80% of all EV sales. Further, it is predicted that EVs will take 50% of China’s car market share by 2025. The total passenger electric cars sold in this period was around 250K.

Given the cost benefits, the support from government initiatives such as FAME and the rise of EV startups in the country with unique propositions for the fledgling market, the Indian market is taking baby steps towards an electric future. While getting vehicle owners to turn electric is the long-term goal, the increasing adoption of electric vehicles and bikes in logistics and deliveries is definitely a much-needed step towards that goal.

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