Companies battle high costs, infra bottlenecks to meet Delhi's electric vehicle mandate

Online delivery companies are speeding up the process of switching from petrol- and diesel-powered bikes and vans to electric vehicles (EVs) to meet a three-month deadline set by the Delhi government.

 The effort promises to be anything but a smooth ride as EV makers battle to overcome high costs, gaps in the supply chain and charging infrastructure, and so-called range anxiety, or an EV-driver’s concern that the battery isn’t sufficiently charged to reach his destination.

 To combat chronic pollution in Delhi, ranked among world cities with the dirtiest air, the Aam Aadmi Party government said on January 15 that all ride aggregators and delivery services will have to mandatorily adopt EVs when reinforcing their fleets.

Aggregators and delivery services would have to ensure that 10 percent of all new two-wheelers and 5 percent of all new four-wheelers are electric vehicles in the next three months. They would also have to ensure that 50 percent of all new two-wheelers and 25 percent of all new four-wheelers are electric by March 2023.

EV shortcomings   

WestBridge Capital-backed Fraazo, which delivers fresh fruits and vegetables to consumers, has started testing EVs on the ground. It has deployed some in Delhi and will soon start trials in Mumbai, Pune, Bengaluru and Hyderabad.

“Even though we save on fuel, the challenge with electric vehicles is their initial buying cost. The power and speed are also less than conventional two-wheelers, which impacts the speed of delivery,” said Atul Kumar, founder and chief executive officer of Fraazo.

Kumar hopes the company would save on costs in the long run as the charging infrastructure for EVs improves.
On Wednesday, the Delhi government signed an agreement with state-run Convergence Energy Services Ltd for installation of charging and battery swapping stations for electric two-, three- and four-wheelers at bus depots of the Delhi Transport Corporation.

Zypp and Bounce 

EV-based, last-mile delivery start-up Zypp, which works with delivery services firms Zomato, Swiggy, BigBasket, Blinkit, and e-commerce retailers Flipkart and Amazon is ramping up in anticipation of a surge in demand from its clients.

Zypp gives electric vehicles on lease to companies or riders after sourcing them from manufacturers.

“Until last year, we were on-boarding 500 new EVs every month onto our fleet but starting April, we will be adding 2,000 every month,” said co-founder and CEO Akash Gupta.
 Zypss has done three million deliveries so far this financial year.

Accel Partners-backed last-mile mobility firm Bounce has already started experiencing an increase in demand from companies.
 According to Vivekananda Hallekere, founder and CEO, most original equipment manufacturers (OEMs) make vehicles for end-consumers and not for businesses.

Once state governments start mandating their use, OEMs will start focussing on commercial vehicles as well.

 Bounce has over 4,000 electric vehicles. It has built battery swapping infrastructure and also acquired EV manufacturing company 22 Motors to venture into manufacturing.

 According to a report by consulting firm RBSA Advisors, India’s electric vehicle market is expected to grow at a compound annual growth rate (CAGR) of 90 percent this decade to touch $150 billion by 2030.

Eventual value for money? 

 Hallekere said retrofitting, which converts old vehicles into fully or partially electric vehicles, will also be a great move for the industry.

On average, an electric two-wheeler costs over Rs 1 lakh, almost Rs 30,000-35,000 more than regular bikes. Start-up founders believe that the eventual value for money will be higher for EV owners.

To be sure, the high cost of these vehicles will be an initial  pressure point, but delivery partners will end up saving at least Rs 4,000-5,000 a month with EVs, given rising fuel costs, Hallekere said.

Gupta agreed. “An EV is 30% cheaper than an ICE engine bike over a period of three years,” he said. ICE is short for internal combustion engine.

Swiggy, Amazon and Flipkart did not specifically comment on the Delhi government's mandate.

Swiggy did say it recently tied up with TVS Motor Co. for a pilot on customised packages like need-specific products, flexible financing options and connected services.
The Bengaluru-based food delivery firm has committed to cover 800,000 kilometres by EVs by 2025.

Amazon India said its delivery fleet will include 10,000 EVs by 2025. Flipkart also plans to deploy more than 25,000 electric vehicles by 2030.