The Government’s Role in EV Adoption for Last-Mile Delivery
India’s growing urbanization and the surge in e-commerce have intensified the need for efficient and sustainable last-mile delivery solutions. With traditional internal combustion engine (ICE) vehicles still dominating the global automobile market—constituting over 80% of vehicle sales—fossil fuels remain a major contributor to greenhouse gas emissions, accounting for over 25% globally. The urgent shift to sustainable alternatives such as electric vehicles (EVs) is increasingly evident. India, as the world’s most populous nation, has a strategic role in driving this transition and reducing reliance on conventional fuels.
Progress and current status of EV adoption
India has made commendable progress in promoting EVs, aligning with its Net Zero target of 2070. Over the past decade, the country has taken significant strides, resulting in a nearly 50% increase in EV sales in 2023, reaching 1.52 million units. By 2024, this number rose to approximately 100,000 more units, a 20% growth from the previous year. Despite these achievements, EVs currently make up only about 2.4% of total vehicle sales in the country.
Recognizing this, Prime Minister Narendra Modi has projected an eight-fold growth in EV sales by the end of the decade. This optimistic outlook aligns with the government’s ambition to have 30% of all vehicles sold in India as EVs by 2030. To meet these targets, stakeholders must focus on specific areas, particularly last-mile delivery, where EV adoption is both a challenge and an opportunity.
The role of EVs in last-mile delivery
Last-mile delivery, the final leg in the logistics chain, is often the most resource-intensive and environmentally damaging stage. A recent projection suggests that EVs could constitute 25% of all last-mile delivery vehicles by 2025. Achieving this ambitious target will require sustained government support and industry cooperation. Policymakers and businesses must address key issues, including vehicle affordability, infrastructure limitations, and operational efficiency, to encourage the widespread use of EVs in this sector.
A critical factor for last-mile delivery is the availability of charging stations, which are essential for seamless EV operations. As of February 2024, India had 12,146 operational EV charging stations, according to the India Brand Equity Foundation (IBEF). While this represents progress, it falls short of supporting the growing EV market. Significant investments and targeted policies are required to ensure the rate of charging infrastructure development keeps pace with EV adoption.
Addressing this gap requires comprehensive solutions:
Land and resource support: Offering free land for charging stations and duty-free import of necessary equipment can reduce initial setup costs for businesses.
Incentivized infrastructure development: Governments can provide subsidies to private companies and startups involved in building charging networks, particularly in underserved areas.
Inclusive coverage: Beyond urban centers and highways, charging stations must be installed in hinterlands and residential areas to cater to the unique requirements of last-mile delivery.
Policy interventions for fleet operators
To further encourage EV adoption in last-mile logistics, targeted financial incentives are essential. Companies operating delivery fleets require specific support mechanisms such as:
Subsidies for bulk purchases: Reducing the upfront cost of EV acquisitions for fleet operators.
Tax rebates: Offering relief on operational taxes for businesses transitioning to EVs.
Favourable Financing: Low-interest loans or leasing options for commercial EVs can make the transition more feasible for smaller businesses.
Moreover, introducing scrappage schemes for aging ICE vehicles could accelerate fleet modernization and promote the adoption of EVs.
Promoting local manufacturing of EV components, particularly advanced batteries, is equally critical to reducing costs and improving accessibility. The Production-Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) batteries has already set a foundation for innovation in battery technology. Continued investments in research and development can lead to lighter, more efficient batteries with longer ranges, an essential factor for last-mile delivery operations.
Environmental and Economic Benefits
Transitioning to EVs is in line with global efforts to cut carbon footprints. Cleaner transport options will significantly contribute to India’s sustainability goals, mitigating pollution in congested urban areas. While EVs come with higher initial costs, their lower operating and maintenance expenses make them a financially viable option over time. This long-term economic advantage can offset the initial investment for businesses.
India can draw lessons from successful EV adoption models worldwide. Norway’s extensive charging infrastructure and tax exemptions have positioned it as a leader in EV penetration. Similarly, China’s subsidies for electric logistics vehicles have propelled EV usage in last-mile delivery. Adopting such tailored approaches can significantly boost EV uptake in India.
Collaboration for a sustainable future
Government policies alone cannot drive change. Collaboration between policymakers, private players, and industry associations is crucial. Public-private partnerships can accelerate infrastructure projects, while startups offering innovative solutions like battery swapping and on-demand charging should be encouraged. Also, aligning EV adoption with renewable energy usage ensures a sustainable lifecycle, reducing dependence on non-renewable sources.
A major obstacle to EV adoption is the lack of awareness among businesses and consumers about their benefits. Campaigns emphasizing cost savings, environmental advantages, and government support can encourage a shift in perception. Equipping fleet operators and drivers with the skills needed to manage EVs will further instill confidence.
Future prospects
India’s EV journey is at a pivotal stage. To ensure success, the focus must remain on creating a conducive ecosystem. This includes integrating EVs into urban mobility plans to improve coordination between infrastructure and operational needs, offering tailored incentives to small and medium enterprises that dominate last-mile delivery to drive large-scale adoption, and leveraging data-driven approaches to monitor usage patterns and optimize policy intervention.
The road to a sustainable logistics ecosystem is challenging but achievable. The country’s progress so far demonstrates its potential to drive global change, and with the right measures, EVs can become an integral part of India’s sustainable mobility narrative.
