Growing urbanisation, e-commerce, and motorisation has made urban freight movement a crucial part of our lives. The urban freight network consists of goods originating from or outside the urban periphery and entering into an urban area through commercial vehicles.

Road transport, with a share of 78 per cent, dominates freight movement. Presently, freight vehicles rely on diesel and accounts for 30-35 per cent of the total diesel consumption in India. High reliance on diesel remains a cause of concern, both from an environmental and economic perspective.

Urban freight is rapidly growing and accounts for a significant share of local air pollution. Going forward, the growth in urban areas is likely to create huge demand for urban freight vehicles — light/small commercial vehicles. It is therefore critical to promote low carbon vehicle technologies, to negate the adverse impact of burning diesel. EVs are emerging as one of the most viable options, apart from being the cleanest form of technology commercially available.

Currently, India is at an early stage of EV transition, and the freight vehicle segment offers a front-runner advantage. The higher vehicle utilisation rates in this segment makes a strong case for a viable business model given the technology becomes user-friendly. Additionally, there is a need to continuously explore and invest in clean technologies that can be adopted in the high tonnage vehicle segment.

While urban freight transition is a low hanging fruit, there are some inherent challenges which must be overcome. Urban freight involves movement of a diverse set of commodities, varied by weight and volume, carried by different vehicle types, and following different trip patterns. A large part of urban freight falls in the unorganised sector, and the vehicles are mostly owned by the drivers themselves. Hence, unlike commercial passenger vehicles, a generalised approach cannot be adopted for electrification of urban freight vehicles. Specific use-cases must be targeted to chart a roadmap for urban freight electrification in India.

TERI has conducted a detailed analysis of both organised and unorganised freight services in Bengaluru, Surat, and Delhi. The case studies were conducted to assess techno-economic potential of electrifying freight movement in postal services and third-party logistics (e-commerce) in Bengaluru, textile industry and municipal solid waste collection in Surat, and fruits and vegetables distribution from Agricultural Produce Market Committee (APMC) mandis (wholesale markets) in Delhi.

The highest potential for electrification was identified in Solid Waste Collection in Surat. This was mainly due to high current operational costs, fixed routes for waste collection, ease of setting up charging solutions at transfer stations and fleet level ownership. Certain practices like use of tractors for collecting street waste were identified as highly inefficient and can easily be replaced by EVs to save costs and emissions. Limited economic potential was observed for transitioning vehicles carrying fruits and vegetables from mandis in Delhi as most were CNG vehicles with low operational costs. Heavy overloading was observed in Surat’s textile freight (almost 96% in three wheelers), which is a significant technological barrier for EV adoption. Overloading was observed across the case studies except in postal freight. Postal freight had higher volumetric requirements. E-commerce freight in Bengaluru already has EVs deployed and has the potential for further transition as the fleets are organised, goods are lightweight and there are clear economic savings to be made.

Overall, total cost of ownership (TCO) analysis demonstrates that the cost economics associated with EVs are quite different between the four-wheeler (4W) and three-wheeler (3W) segments. For 4Ws, the high purchase cost presents the most significant challenge for widespread uptake. For 3-W, the conclusions are much more favourable, with electric vehicles having lower TCO both at net present value and cumulatively.

In the short term, policy interventions like ease in EV freight movement and timings, reduced permits/road tax, incentives in setting up charging infrastructure, and parking incentives may improve attractiveness of EVs for urban freight users. In the medium term, local governments can facilitate EV pilots in freight for visibility. State and city governments can create action plans for electrification of urban freight, including cleaning of the grid and linking it with the charging infrastructure. It is critical that state EV policies also focus on the commercial vehicle segment, which has a significantly high utilisation rate. The identified specific use cases like door-to-door solid waste collection, e-commerce, etc. can be planned to be scaled at the national level in the long run.