Electrifying last-mile delivery- How EVs are transforming the future of e-commerce

Electrifying last-mile delivery: How EVs are transforming the future of e-commerce

By Dev Arora

In today’s ever-evolving world of e-commerce and on-demand services, the importance of last-mile delivery cannot be overstated. It has become a determining factor in customer satisfaction and the seamless functioning of operations.

The use of EVs in delivery fleets can deliver big savings, not to mention the positive impact on the environment. EVs boast high energy efficiency levels, ranging from 87% to 95%, compared to the mere 20% of internal combustion engine vehicles (ICEVs). This means they convert a significantly higher percentage of energy into useful propulsion.

It is also worth noting that the total cost of ownership per kilometer for a conventional two-wheeler is approximately Rs. 2.26 higher compared to an EV, amounting to savings of nearly 64%. When you factor in the cost per km across ten years, the TCO for a regular ICE two-wheeler is almost three times than that of the EV.

There seem to be several challenges preventing last-mile delivery companies from transitioning to electric fleets, even though market, economic, and government policies are in place. To maintain momentum and achieve electrification at scale, barriers to capital access must be addressed.

It is estimated that $5 billion in capital would be required by 2025 and $20 billion by 2030 to deploy EV fleets for commercial operations. And while B2B fleet operators are emerging as leaders in EV fleet adoption; these businesses require some flexibility when it comes to the tradeoff between investing in new fleets and business expansion.

High upfront costs associated with investing in new fleet vehicles present a financial burden for businesses, potentially deterring them from adopting electric or alternative fuel options. Additionally, the lack of charging and parking infrastructure, coupled with inadequate expertise in managing electric fleets and maintaining battery health, can hinder the transition process.

Benefits of Leasing

Opting for leasing EV fleets instead of purchasing them is a great option for last-mile delivery companies. Leasing offers flexibility to upsize or downsize fleets, enabling seamless adjustments to fluctuating demands.

There are several other advantages. Firstly, there is no need for a down payment, which reduces the initial financial burden and frees up capital for other investments. Secondly, companies can enjoy a fixed, predictable monthly lease payment with flexible ownership options. This means they have the choice to either own or return the vehicle at the end of the lease tenure, providing greater control over their fleet management and long-term financial planning.

Comparison between EV fleets versus ICE fleets

While EVs may initially pose higher upfront costs, the benefits accrue when all other factors are considered such as maintenance and product lifecycle costs. Therefore, from a leasing point of view alone, it may not be sufficient for businesses to fully optimize their fleet operations. Detaching ownership of the driver from fleet operators can also result in increased wear and tear of the fleet which is why a leasing company that goes the extra mile to cover maintenance and asset management assumes significance.

Indeed, a comprehensive data-enabled asset management plan is crucial for businesses to maximize the benefits of electric fleets. Real-time fleet monitoring, battery health management, predictive diagnostics and support, alerts, and recommendations are required to manage the life and uptime of the fleet. This full-stack approach ensures optimum total cost of ownership, maximizing efficiency, and minimizing downtime.

Additionally, having dedicated hubs for servicing and charging is essential to support the smooth operation of electric or alternative fuel vehicles. These hubs provide a centralized location for vehicle maintenance and energy replenishment, further enhancing the effectiveness of the leasing and asset management strategy. So, it’s essential to go for a leasing plan that covers all these factors.

As last mile logistics partners slowly but surely transition to a sustainable future, those businesses that opt for leasing would be able to scale up faster, operate at higher margins, boast higher fleet uptime, have predictability in bottom line, not to mention remain competitive and profitable in the long run.

The author is the Co-founder & CEO of Alt Mobility

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.