Online retail platforms struggle to meet electric-vehicle goals

Bloomberg Updated - August 06, 2021 at 09:55 PM.

Not enough EV models that can be deployed at scale

It is not a plug-and-play model yet, say the players

Sourabh Saini, a delivery driver for online supermarket BigBasket, is thrilled by the attention he gets as he zips around Noida, in his three-wheeled electric van.

“I like how my electric van always gets noticed,” said Saini, who made the switch from fossil fuels about eight months ago as part of BigBasket’s push to electrify 90 per cent of its fleet. “Customers are surprised at how silent it is. They get curious about my experience of driving an EV and start asking about its price and range.”

That makes him somewhat of a novelty in India, where BigBasket and online giants Amazon.com Inc. and Flipkart — who could hold the key to getting more gas-guzzlers off the roads — are struggling to source enough vehicles to meet ambitious targets to electrify their delivery fleets.

“It’s not plug and play,” said Mahesh Pratap Singh, head of sustainability and responsibility at Flipkart. “ There is much from a supply and reliability perspective, or a viable commercial option out there. That led us to believe you’ve got to put one big bold ambition out there and really nudge the entire ecosystem and shape it, rather than just being a consumer.”

The nature of online delivery operations — quick trips from a central hub where a standard charging solution can be installed — is well suited to EV adoption, overcoming the range anxiety and shortage of charging infrastructure that has proven a roadblock to general take-up. Electric vehicles account for less than 1 per cent of India’s annual car sales, compared to about 6 per cent in China.

Cheaper running costs, plus the opportunity to burnish their green credentials, also make EVs an attractive option. “It does make economic sense,” said Flipkart’s Singh. While the upfront cost of an EV might be higher, “monthly running costs are lower since your maintenance cost is lower. The dynamics start to change as the scale comes in.”

Manufacturers of EVs

But India’s delivery giants are finding there aren’t many models available that can be deployed at scale, and what supply there is can’t keep up with demand. Maruti Suzuki, the nation’s biggest automaker, doesn’t make any electric-powered cars, having said the cost of an EV puts them beyond most buyers.

India’s largest two-wheeler maker, Hero MotoCorp, will only have its first electric scooter on the market around March 2022. Tata Motors, a leader in electric passenger cars with its top-selling Nexon, doesn’t have an electric small-commercial vehicle of the type usually used in last-mile delivery. Tata has begun developing electric small-commercial vehicles because of the sector’s “strong” potential, said Girish Wagh, president of the automaker’s commercial vehicle unit.

That leaves Amazon, Flipkart and BigBasket mostly relying on Mahindra & Mahindra’s Treo Zor, a three-wheeled van that costs ₹2,73,000 ($3,670) and has sold about 1,000 units in the five months since deliveries started in November. Mahindra produces about 400 Treo Zor vans a month.

“There aren’t enough quality manufacturers making electric vehicles today,” said Olaf Sakkers, general partner and co-founder of venture capital firm RedBlue Capital, who has invested in two Indian EV start-ups. “E-commerce companies like Amazon, Flipkart are single-minded about becoming electric but the biggest problem is supply.”

Electric goals

Amazon aims to have 10,000 EVs delivering parcels in India by 2025, while Walmart’s Flipkart has said it will deploy more than 25,000 EVs and be fully electric by 2030. BigBasket, a unit of Tata Group, has pledged to meet its 90 per cent EV target within three years. Flipkart and Amazon have both tied up with Mahindra Electric Mobility for three-wheelers and Hero Electric Vehicles Pvt for scooters.

To be sure, electrification of delivery fleets is taking time in North America as well. Amazon has ordered 100,000 electric vans from start-up Rivian Automotive Inc, which last month pushed back the production of its debut vehicle because of supply-chain bottlenecks.

Walmart Canada is seeking to convert 20 per cent of its fleet to electric vehicles by the end of 2022 and has reserved 130 Tesla’s Semi trucks, which haven’t started production yet.

Early moves into EV fleets in India were also plagued by poor designs that couldn’t withstand monsoon rains and notoriously bumpy roads.

Published on August 6, 2021 16:25