The Long Road For Electric Trucks In India

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The transportation sector is responsible for nearly 14% of India’s total GHG emissions. It is also the fastest-growing greenhouse gas emissions sector in India. Road transport, in particular, accounts for over 90% of transport emissions in the country. Therefore, to achieve the net-zero goals, India has to decarbonise road transport.

Electrification of road transport will definitely go a long way in reduction of country’s overall GHG emissions. While electrification of two- and three-wheelers, cars, and buses has already gained a momentum, the heavy duty logistics sector electrification is still lagging behind in India.

India has more than 2.8 million trucks that run over 100 billion kilometres per year. By number, trucks are just 2 per cent of the on-road vehicles, yet they contribute over 40% of emissions and fuel consumption from road transport. According to few studies, in order to reach net-zero emissions, the share of electric trucks to overall freight trucks should be at least around 8per cent by 2070.

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So, what impedes the electrification of trucks in India?

India Lags Behind in Electric Trucks

There are multiple of reasons because of which the sector hasn’t yet got the traction it needs. Some of the major reasons include no clear financial incentive that may propel the consumer towards new electric vehicles, especially heavy duty vehicles like trucks. There is a common doubt on competence of trucks, even the pickup trucks, in carrying the heavy loads, and also about the maintenance they may need. Other than this, unorganised state of the sector makes it hard to target the consumers. Further, a proper policy push from the government is still in waiting, which is the most important component for introducing any novel concept in an uneven market like India. Let’s see in details how these factors affect the electrification of trucks in India.

Unorganised Sector

Over 80 per cent of the overall logistics cost in India goes to the unorganised sector. Truck market is highly unorganised. About 75 per cent of the fleet is operated by the owners owning five or fewer trucks. Further, once the cargo is delivered, about 30-50 per cent of trucks return empty, leading to wastage of time and resources. Thus, the challenges in the include waste of resources, high costs, heavily intermediated returns and redundancies in the sector. Moreover, this legacy business model presents a huge barrier in innovation.

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Thus, replacing them with electric options becomes costlier. For instance, take the case of electric buses. The lease model is used opposed to outright purchase by the state transport undertakings (STU). The manufacturers themselves are asked to operate the buses. But when it comes to trucks, the operators are small and fragmented. Due to this sole reason, the technical and financial risks are enormous to be tested by these operators.

Lack of Financial Incentives

Financial incentives attract the manufacturers, as well as buyers, to the electric trucks. No such initiative is in place as of now. The second phase of the scheme, FAME-II, was launched in 2019 with Rs 1,000 crores to support 7,000 electric buses, 500,000 electric three-wheelers, 55,000 electric passenger cars and 1 million electric two-wheelers. There was no mention of electric trucks.

Furthermore, a recent tender concluded to add 5,450 electric buses on Indian roads, in addition to existing fleet of 2000 plus. But as for electric trucks, there is no such model of development in place. Apparently, there is no demand for electric trucks in the market as of now. Conversely, if the Trucks would have been made a part of any initiative like FAME, things could be different. Such financial support will incentivise original equipment manufacturers (OEMs) to spend more on research and development and bring in models for potential buyers.

Policy Push by Government

Government policies will play a crucial role in switching fossil fuels with electrification and, thus, reaching net-zero emissions, especially in transportation sector. India is the sixth-largest commercial vehicle market in the world and a large exporter of vehicles and spare parts. A right policy move will be a perfect boost for the electric trucks to flood the Indian logistics sector. Many states in India have their own electric vehicle policies; yet, the freight sector is ignored in most of them. India needs a policy for electrifying its trucking fleet.

International Council on Clean Transportation studies estimate that heavy-duty truck activity might quadruple by 2050 to over 400 billion kilometres annually. Thus, decarbonising the sector is vital for reaching the net-zero targets. The zero-emission trucks are aligned with India’s ambitious climate, air quality, and energy security goals.

Market Volatility

Indian logistics market is volatile and depends on a lot of factors. It is mostly price driven. Since the COVID-19 crisis began, it has affected almost all business operations in every sector and every part of India. Logistics has been particularly hard-hit. Even before the second wave of the disease began, in the spring of 2021, the pace of recovery was still unclear. Thus, this makes it even harder for the fleet owners to invest in new unchecked technology.

High Cost of Electric Trucks

High cost of electric truck poses another challenge. As already mentioned earlier, the owners of fleets are generally small and fragmented. Hence, high cost investment in a new technology becomes riskier for them. For instance, a TATA LPT 1613 Truck comes at a price of around Rs18.3 Lakh (around $23,000) in India. The truck comes with 16.2 Tonne of GVW. Comparatively, Tesla’s Semi 500-miles range model will come around $180,000, a 6-7 times price range. The high costs make electric options less unviable, even after accounting for lower running costs thanks to fuel savings.

Countries Electrifying Trucks

Being a newly evolving segment of the EV market, the demand of electric trucks is on the increase across the globe. Top OEM’s like Ford, GM, Volkswagen, Stellantis, BYD, Daimler AG, AB Volvo, etc. had varying amount of losses in the overall market, but their electric truck divisions had a steady growth rate during the pandemic.

The European region will be seeing a fast growing electric trucks market. The electric trucks market in Europe is segmented into France, Germany, Netherlands, Norway, Sweden, and United Kingdom. This can also be attributed to the fact that Europe has stringent emission regulation standards. For instance, Austria will require that 100% of new registrations of heavy-duty vehicles less than 18 tonnes be zero-emission starting in 2030 and for those greater than 18 tonnes, starting in 2035. Similarly, Norway has set a 50% zero-emission sales target for new heavy-duty trucks by 2030. The region is home to electric truck manufacturers such as Volvo, Daimler and others.

North American region is the fastest growing region in the electric truck market owing to the high demand for electric trucks for logistics transport fleets. The U.S. electric truck market is expected to advance at an exponential CAGR of 54.0% during 2021–2030. The increasing number of government measures to promote e-mobility and strict emission standards placed on fossil-fuel-powered commercial vehicles will play a vital role. For instance, California has committed to 100% zero-emission trucks by 2045.

Asia-Pacific is the largest segment for electric truck market in terms of region. China dominates the electric truck market in Asia-Pacific region. Strict government laws and norms against pollution and global warming, high investments in research and development by government and key market players, and growing awareness among the people are driving the growth.

Electric Trucks Will Arrive in India Sooner Rather Than Later

Irrespective of all the negatives, there are some positive hopes. At CoP26, India has not only pledged net-zero carbon emissions by 2070 but also committed to reduce the total projected carbon emissions by 1 billion tonnes (BT) by as early as 2030. To reduce its fuel consumption and GHG emissions, electrifying trucks will prove to be helpful. Thus, It is imperative that India introduces electric truck in the first half of this decade, so that by the end of the decade the aim of reduction of carbon emissions by 1 billion tonnes seem within grasp.

Of course, with the new focus on Green hydrogen use in transport too, Hydrogen powered trucks might actually be seen at the same time, or even earlier than full fledged electric trucks in India well before 2030.