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Role of The Logistics Sector in the EV Market in India 2023

The rise of e-commerce and quick deliveries has led to an upsurge in demand for reliable modes of delivery | Credits: Pexels

Transportation is technically the method through which the entire country is bonded together.

The Indian logistics industry has been experiencing an uptick in its growth numbers consistently. It expanded at a 15 percent compound annual growth rate in the past five years in terms of revenue. Furthermore, the future seems optimistic as the industry is expected to reach the $350-380 billion mark by the end of 2025.

However, one of the major components that can make or break the logistics industry is electric vehicles.

As the sector expands and evolves, many businesses are keeping electric mobility at the center of their plans. With the added benefits and more robust technology, it is the right move.

But, how?

Let us find out how the logistics industry is going to immensely benefit from electric mobility and where it sits in the expansion plans of the logistics sector.

Why does Logistics Sector want To Go Electric?

electric vehicle three wheeler for last mile delivery
Last mile connectivity is the best use-case for EVs | Credits: The Statesman

With newer policies being introduced by the government at each step, and a more confident public sentiment, switching to electric vehicles is a call that many businesses are bound to make eventually.

The Total Cost of Ownership (TCO) of electric vehicles is eventually going to drop significantly. Hence, businesses seem to think of EVs as a better alternative to their requirements.

Here are some reasons why the logistics industry is bullish about switching to EVs.

Environmentally Conscious

As climate change tends to become more than just a conversation, logistics businesses are among the first industries that seem to take the issue seriously. Businesses in the sector are adopting greener methods, even when it comes to packaging, and getting the goods delivered to their customers. This can help them contribute better towards climate change while saving the environment from the harmful effects of ICE vehicles.

Reduction in Last-Mile Connectivity Costs

Last-mile connectivity is one of the prominent areas where electric vehicles look for as economical alternatives as possible. Electric vehicles are the perfect solution for this step. They are easy to use, the adaptation is simple, and enables tracking of the courier effectively.

Government Initiatives

The governments, at both central and state levels, have been proactive in identifying the importance of the logistics sector. While there are the National Logistics Policy and Gati Shakti provide impetus to the industry, there’s also a push from the government for the electric mobility sector.

As many Indians, adapt to e-commerce, and instant deliveries, logistics obviously becomes the backbone of all these initiatives.

Due to this, the Central Government has come up with several incentives such as the FAME I & FAME II schemes to assist businesses in adopting electric vehicles faster and more efficiently.

Better CBA (Cost-Benefit Analysis) Against ICE Vehicles

When compared to ICE vehicles, the benefits of an electric vehicle easily outweigh their fuel-based counterparts.

Yes, the upfront cost of procuring an electric vehicle seems to be quite high, but over a period of time, this cost is covered with help of many factors. Firstly, the logistics industry is constantly on the move is necessary, and EVs can get that job done at a much lower cost. With lesser parts involved in making an EV, the cost of maintenance comes down drastically. Moreover, as fuel costs rise, deploying EVs will eventually lead to them achieving economies of scale over a period of time.

Hassle-Free Registration and Financing Options

EV registration is quite simplified in many states. While most of the states have exempted EVs from any kind of registration costs, the rest of them have some sort of incentives or exemptions in place. Plus, EVs fall under the 5% GST bracket, making them even more attractive.

Apart from this, for businesses, there are a plethora of options available for them to buy an electric vehicle with attractive financing options in place.

Is the Future of Logistics Electric? Trends To Look Out For in Logistics in 2023

delivery man delivering cargo from a van
EVs are at the centre of logistics industry's expansion plans | Credits: Pexels

While EVs seem to be at the center of all the transformation that the logistics industry is looking forward to in 2023, there are a lot of other aspects that need to be looked into.

  1. Last-mile delivery alternatives: Last-mile deliveries for the logistics industry is the final step. Hence, the chances of error at this step need to be minimized for sure. The logistics industry is looking for alternatives that can enable them to make it a no-risk step. Moreover, due to shorter distances, and more feasible solutions, many logistics startups are mulling deploying electric two-wheelers and three-wheelers to fulfill this.

  2. Artificial Intelligence: With the goodness of artificial intelligence and machine learning entering every industry, logistics must be included. With the help of AI, businesses can predict the delivery time, optimize their productivity and reassess the patterns and loopholes in their supply chain.

  3. Green/Electric Logistics: Many components are involved in the logistics sector. These components aren’t just essential but also contribute significantly to carbon emissions. Hence, going green is the mantra for the logistics industry in 2023. The changes in this sphere are already evident with most of the startups as they utilize electric vehicles in the form of two-wheelers and three-wheelers for last-mile connectivity.

  4. Cloud-based systems: From a technological point of view, switching to cloud-based systems is the trend that the logistics industry is preparing for in 2023. Migrating to cloud provides the logistics businesses with better storage of data and quicker transformation along with enhanced security.

Conclusion: Can EVs Be The Next Big Thing For Logistics?

person holding a phone opening the BluSmart mobile app
Electric vehicles have the potential to transform the logistics sector

Logistics is one of the industries that require many parts and pieces running in tandem with one another. One of them gets a bit affected and the entire operation is at risk of getting derailed.

With the kind of trends that the logistics industry is bound to see, and the pain points it wants to address, the capabilities of an EV sit right at the table to address them.

Yes, the challenges are galore when it comes to making that shift from ICE to electric vehicles. However, on the optimistic side, the way these challenges are being addressed at each step is the kind of steps that both EV manufacturers need to take.

Not only is the logistics sector seeing it as a way to save costs, but also a sign of progress and development.

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