After remaining below the electrification radar, electric LCVs are now seen as the first step towards pushing the CV segment towards more emissions-friendly technologies.
28 Sep 2024 | 936 Views | By Amit Mohile
Load-carrying vehicles are generally considered less suitable for electrification than passenger-carrying vehicles. However, the market around electric Light Commercial Vehicles (e-LCVs) appears to be nearing critical mass in 2024, driven by a combination of factors including growing sales, expanding model choices, and increasing government focus on reducing emissions in the ...
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Load-carrying vehicles are generally considered less suitable for electrification than passenger-carrying vehicles. However, the market around electric Light Commercial Vehicles (e-LCVs) appears to be nearing critical mass in 2024, driven by a combination of factors including growing sales, expanding model choices, and increasing government focus on reducing emissions in the transportation sector.
Two models – e-Zeo from Mahindra and another model from Euler Motors – are set to join the arena in the coming days. However, beyond anecdotal data such as model launches, numbers from the central government’s Vahan portal suggest that the category is seeing strong growth, albeit off a low base. Sales of electric LCVs, which were negligible in 2023, have climbed to nearly 4,000 units in the first six months of 2024, signifying a growing presence of electric LCVs in the e-commerce light and medium cargo sectors.
According to Vahaan Data, Maharashtra has recorded the most rapid increase in e-LCV sales among various states over the past six months, with a total of 794 units sold from January 24 to June 24. Following Maharashtra, Uttar Pradesh and Tamil Nadu have also shown significant growth, with 580 and 462 units sold, respectively, making them the next potential hotspots for e-LCV sales across India.
Expanding Choices
Rising demand initiates a virtuous cycle, as increasing sales encourage established original equipment manufacturers (OEMs) to create new models. Players like Tata Motors, Switch Mobility, and VE Commercial Vehicles have responded positively to this trend by introducing multiple variants in this segment.
Market players, including Mahindra & Mahindra, have recently announced plans to launch electric versions of the Supro and Jeeto E-LCVs with multiple payloads. Nevertheless, Tata Motors' ACE EV currently leads the market with sales of around 2,940 units.
Similarly, Tata Motors has introduced the Tata 1000, a mini-truck with a higher-rated payload of 1 tonne and a certified range of 161 km on a single charge, targeting sectors such as FMCG, beverages, paints and lubricants, LPG, and dairy.
Another eCV manufacturer, Euler Motors, has released a teaser for its upcoming entry into the small commercial vehicle segment, with plans to launch the first four-wheeler with a payload greater than 1,000 kg in the last week of September. The company recently unveiled a new 5 lakh sq. ft. plant in Palwal, Haryana, with an annual production capacity of 36,000 vehicles, including ELCVs, at a cost of Rs 100 crore.
Need for Electrification
The rising activity level in the segment is encouraging for policymakers.
Although clearly behind other, passenger-focused segments in electrification, the CV segment represents an important target for emission reduction as they account for an outsized share of the total emissions by the transportation sector. Even though India's heavy-duty vehicles account for only 3% of total on-road vehicles, they account for a staggering 44% of emissions in India, according to Dr. Hanif Qureshi, Additional Secretary in India’s Ministry of Heavy Industries.
India’s CV market – estimated at 7 lakh to 9 lakh units per year – is the world's third-largest truck market after China and the United States, with LCVs estimated to account for around 50-60% of these. Similarly, out of the total stock of 80 lakh to 1 crore CVs in India, about 40-50 lakh are estimated to be LCVs.
According to government estimates, these numbers are set to skyrocket, with the medium and heavy segment alone reaching 1.7 crore by 2050. This is being fueled by increased freight demand caused by urbanisation, population growth, and economic development.
In a recent social media post, Qureshi said India is at a critical juncture and the country must urgently address various issues related to electrifying the CV sector.
Little wonder then that – with the pollution contribution of the transportation sector expected to quadruple by 2050 – policymakers are increasingly talking about the electrification of the freight sector. However, given the practical difficulties of electrifying larger vehicles, they are focused on the LCV segment.
Breaking with the dominant narrative that CVs are unsuitable for electrification, Qureshi is of the opinion that the segment can be electrified if there is sufficient localisation and scale.
"The key to increasing e-truck deployment is economics, not technology, and manufacturers cannot effectively scale their products without the support of major banks," he said at a recent event by International Council for Clean Transport (ICCT), adding that local manufacturing is a prerequisite to achieving this goal.
Range Anxiety
However, even as policymakers point to the need to electrify the goods transportation sector, several factors stand in the way of a wider adoption of the technology in the goods segment compared to passenger carrying segments such as three-wheelers and buses.
The first is concerns over range. Unlike passenger oriented vehicles such as auto-rickshaws, which ply on shorter, more predictable routes, it is difficult to predict whether a typical LCV is going to be hired for a short journey or a long one on a particular day. This makes them vulnerable to battery exhaustion mid-journey, as current electric LCVs typically come with ranges of 80-150 km.
However, certain categories of customers are finding innovative ways to overcome the range limitation: e-LCVs are now being used on fixed routes with chargers installed at both points. To help matters further, fast chargers that can replenish EV batteries in around 30 minutes, have also sprung up in metropolitan areas.
Chargers suitable for e-LCVs, which have increased from 1,800 in February 2022 to 16,347 in March 2024, are also encouraging sales of electric LCVs.
Cost Factor
Another big impediment is upfront cost: The sticker price of an e-LCV is currently two-to-three times that of an ICE variant. For example, the price of a Tata Ace EV Mini Truck ranges from Rs 10.20 lakh to Rs 11.43 lakh, whereas the same Tata Ace Gold costs close to Rs 4 lakh on the road in New Delhi.
However, says Venugopal Rao Nellutla, the Chief Marketing Officer of Saera Keto Motors based in Hyderabad, e-LCVs promise significant long-term savings for companies that have the potential to use these vehicles extensively.
“Despite the higher initial cost of electric e-LCVs compared to internal combustion engine (ICE) vehicles, their positive total cost of ownership makes them an appealing option for fleet operators,” he points out.
Another demand driver is increasing awareness about environmental, social, and governance (ESG) goals and certifications. The use of e-LCVs can help companies achieve their ESG targets.
Hence, says Nellutla, he sees a bright future for e-LCVs with payload capacities ranging from 1 to 3.5 tonnes with a range of 150-250-kilometer range.
The rise ofWhile challenges such as range anxiety and higher upfront costs persist, innovative solutions and long-term cost benefits are gradually overcoming these hurdles. As more manufacturers enter the market and charging infrastructure continues to expand, e-LCVs are poised to play a significant role in India's transition to cleaner transportation. The sector's growth not only promises environmental benefits but also aligns with corporate ESG goals, suggesting that 2024 could indeed mark a turning point for e-LCV adoption in India. As the market evolves, it will be crucial to monitor how manufacturers, policymakers, and fleet operators collaborate to further accelerate this transition in the coming years.