Electric Trucks: For Developing India by 2047

Priyadarshini Alok, January 20, 2023

On completion of 75 years of Independence, Prime Minister Narendra Modi pledged to transform India into a developed country by the centenary of India’s independence in 2047. This means that eventually consumption and economic growth rate will increase in India.  Transport is indispensable to achieve this transition and increase the economic growth since it facilitates the movement of goods at the city, state and national level. However, according to a study by CEEW, the transport sector poses a significant environmental burden because it contributes 10 per cent of total greenhouse gas (GHG) emissions in India, of which road transport accounts for 90 per cent.

Interestingly, trucks in India comprise only about 2 per cent of on-road vehicles but are responsible for 40 per cent of emissions and fuel consumption from road transport. Also mentioned in a report by NITI Aayog, this is around one-third of transport related carbon dioxide emissions in India. Besides GHG emissions, truck fleets also contribute heavily to local air pollution, particularly oxides of nitrogen and particulate matter. These have adverse outcomes for respiratory and cardiovascular health, especially in areas where such fleets are concentrated.

Since the 1990s, India has witnessed unprecedented growth in the road freight sector—an almost ten-fold increase in heavy-duty vehicles. According to the NITI Aayog, India’s trucking market is expected to grow by four times till 2050. While global concerns around air quality and transport emissions have been rising, plans regarding decarbonisation of the trucking sector have been rather obscure in India. This is because of some challenges faced by this sector, as described below:

High Capital Cost: This is attributed to high fixed cost of the truck, except for its battery. The cost of a lithium-ion battery ranges from ₹15,000-20,000 per kW. Heavy vehicles require relatively more power with significant load carrying capacity. The power requirement for heavy duty trucks is 1.1-1.3 KWh per km depending on the type of vehicle. This equates to a battery size of around 800-1,000 KWh to deliver 800 kms of range. For this battery size, the cost of the truck would be around ₹1-1.5 crores. This is around four times the cost of conventional diesel trucks. Inclusion of trucks in the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme,various state EV policies, and its linkage with scrappage policy can help resolve this to an extent. The Government can provide subsidy for zero emission trucks based on tax received from fuel cess, road tax and pollution cess. Additionally, standardisation of the vehicle residual value, and targeted dissemination of this scheme to truck owners can motivate them to switch to zero emission fuel options.

Lack of Availability of Finance: The average age of a truck in India is 9.5 years. The first buyer owns it for 4-5 years and then resells it to get around 50 per cent of the capital cost. Hence, fleet operators have realised that they cannot resale the truck beyond 6-7 years because of the low residual value. Because of this, truck owners defer the purchase of new vehicle. In the case of electric trucks, the upfront cost increases by eight times, with break-even being achieved in more than five years. Priority sector lending, innovative business models, demand aggregation, push for research and development and pilots to demonstrate the viability of zero emission trucks can help decrease the risk. The government can help remove this market barrier by subsidising part of the interest rate on zero emission trucks—an approach that can be effective in bringing down monthly payments as well as interest rates for purchasing ZETs.

High Total Cost of Operation (TCO): According to Volvo, research suggests us that a truck runs with full payload for only 17 days a month. This is because of wastage of time in idling, brokerage meddling, loading points, inter-state check posts, etc. This determines the need for effective utilisation of the truck to optimize TCO. The average monthly running of trucks needs to move significantly upwards from the current ~8000 km/month. Hence on the regulatory side, there is a need for a framework to increase the efficiency of truck fleets.

Technical Constraints: Currently, no electric truck models are available. This is because of the lack of policy push and mandates for truck electrification. Also, the weight and space considerations, at current energy densities, would be in a range of 5,000-6,000 Kgs, equivalent to a payload loss of 5-10 per cent as compared to diesel. The high charging time for the trucks, would also discourage the truck owners to convert their fleet to electric. There is a need for research and development to manufacture and deploy fast chargers, which could be deployed along various truck corridors.

Highly Fragmented Sector: Around 10 per cent of Indian truck operators own a fleet exceeding 25 trucks. Others own single trucks and rely on third parties to handle their orders. Many brokers are involved in this process. Around 75 per cent of the market is run by small owners who own less than 5 trucks. This is both challenging and encouraging as it diversifies the capital cost requirement. However, it is challenging to convince the single truck owners, who own less trucks. This can affect the zero-emission truck adoption rate. Hence, there is a need for behavioral change among both industry and consumers. If consumers are concerned about how goods reach their destinations, it can lead to demand aggregation. Sales mandate and use of electric trucks for priority sectors can also lead to increase in demand to achieve economies of scale.

Infrastructure Availability: A distinguishing factor of the Indian commercial vehicles market from other markets (including the US & EU) is that the number of Heavy Commercial Vehicles (HCVs) plying on highways is insignificant, largely due to below par road infrastructure. This includes lack of wayside amenities, maintenance and repair facilities, charging infrastructure and parking spaces. There is a need to design and integrate wayside amenities according to the needs of truck operators. Solutions could include mandating dhabas to deploy charging infrastructure, enabling DISCOMs to provide power along the highways and integrating renewable energy in charging infrastructure.

Trucks also account for 21 per cent of all road fatalities in India. Adoption of electric trucks will encourage safer operating conditions for truck drivers and reduce their involvement in road accidents. It can use artificial intelligence to alert drivers in real-time about poor driving, such as speeding, and to reward safe driving. In March 2022, India announced the construction of electric highways with the idea that EVs would not just be limited to small road vehicles—rather buses, medium, and heavy-duty trucks would also be electrified in due time. Thus, Zero Emission Trucks can help lower logistics costs and contribute to the goal of “Developed India by 2047.”

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