B2B opportunities in the EV sector

If you have been keeping your ears on the news, it won’t come to you as a surprise that the market of electric vehicle is expanding wide and long and how. With favourable government initiatives and gradual shift in consumers’ perception regarding electric mobility, electric vehicles are all set to take the mobility market by its horns and bring about game changing transformation to the sector. A report in the Business Standard shows the market in a very promising light - “The electric vehicle (EV) market is likely to be a Rs 50,000-crore opportunity in India by 2025, with two- and three-wheelers expected to drive higher electrification of the vehicles in the medium term in the wake of Covid-19”.

While consumers are showing increasing interest in electric mobility, the growing media attention even globally has made a wide space for ample opportunities in the business-to-business market. Major key players are already creating stir in manufacturing utilities for sustained thrive of the EV sector. In a conference event in Berlin in 2018, the CEO of Volkswagen Matthias Muller announced that they had secured battery supply partners in Europe and China. That’s not all. The group also plans to expand assembly of EV cars to 16 plants globally by the end of 2022. As infrastructure development has been the most prominent detractor of the EV market, there is a need for innovative measures to aid a cohesive infrastructure for the EV sector. And hence, B2B segment is expected to come in full throttle to lead the EV revolution to a tangible outcome.

Here are few Business To Business Opportunities where Electric Mobility is expected to thrive in very near future:

A. Last mile delivery:

Along with booming interest in electric mobility, another major boom India has witnessed in the last decade is the boom in demand for local supplies. Which has in turn rendered a significant push to the delivery ecosystem and last mile operation. Owing to increasing need for faster delivery, numerous hyperlocal startups have mushroomed all across the country catering to quick local supplies that delivers sometimes within a day. Names like Zomato, Swiggy, Big Basket, etc are today ruling the hyperlocal market scenario in India.

The COVID 19 has also catalysed the eCommerce business dramatically with more and more people opting for online shopping over physical stores and no contact delivery. This has pushed the eCommerce market to expand their fleet without having to invest more in resources and increasing the cost of operation. This is the gap which Electric Mobility can fill and is already starting to fill up.

Electric vehicles have couple of advantages that make it a preferable choice over Internal Combustion Engine. First being the cost. The cost to rent and maintain e-vehicles like e-scooters and e-cars is exponentially lower in comparison to their ICE counterparts. Also there are no other additional expenses like petrol/diesel etc with electric vehicles which makes for very low investment and high return for eCommerce Business.

Another advantage is the incentives given by the Government Of India to push electric vehicle in every sector to its optimum utility. In fact, the government has set a target of moving 50% of the vehicles plying on the roads to an EV-led mobility system by 2023 and switching to complete EV-led mobility by the year 2025.

Thirdly, expansion of fleet also means adding more woes to air pollution and with businesses growing more and more conscious of their brand image, it is only sensible to opt for cleaner mobility.

B. Battery Technology:

Battery Technology is an integral part of the Electric Vehicle ecosystem in India. The technologies in electric vehicle battery market have undergone significant changes in recent years, with battery technology evolving from low energy density to high energy density. The rising wave of new technologies, such as lithium-nickel-cobalt-aluminium (NCA) and lithium-nickel-manganese-cobalt (NMC) are creating growth potential in electric vehicle battery. A lot of market research have indicated that electric vehicle battery technology is forecast to grow at 38% CAGR from 2020 to 2025 which creates an ample space for business opportunities in Battery Technology. To push the market further, the Government Of India established the National Mission on Transformative Mobility and Battery Storage in March 2019 under the Chairmanship of Niti Aayog. With significant emphasis on localization, measures are being taken to reduce dependence on import and manufacture batteries and other components indigenously. An article by Pranati Cheshtha Kohli published on investindia.gov.in states that – “Gujarat, which has already seen large-scale investments for Li-ion battery manufacturing, is offering additional support in the form of subsidized utilities under the state’s electronics policies. Telangana has announced the availability of 200 acres of land plus power and water for the manufacturing unit at a concessional rate. Andhra Pradesh, as early as 2017, announced the allocation of 200-400 acres for development of the electric mobility-focused industrial park.” This only reinstates that market opportunities are booming when it comes to battery and overall charging technology of electronic mobility in India. 

C. Last mile Connectivity (Passengers):

Last mile connectivity is also one area where Electric Vehicle is likely to thrive. It is so much more convenient to opt for 2 wheelers for the last quick distance to a destination. Electric Bike rentals are already creating buzz in the streets where people use them to cover short distances. It is convenient, affordable and doesn’t pose any added danger to the environment. The lower total cost of ownership and operating costs make it a win-win solution for public and business alike. A lot of key players in the market are in fact diversifying (also expanding) their fleet to cover last mile connectivity and intra-state transport and restructuring their operating models. 

D. ICE Scrapping:

With more and more interest in Electric Mobility, it is but obvious that dwindling interest in ICE would be an automatic casualty. And as the Internal Combustion Engine Vehicles become obsolete, the business opportunities for scrapping them will grow more in the future. A lot of these pollutant vehicles will be barred on the road and will end up in scrapping centre, metals and materials of which will be recycled to make and innovate environmentally aligned products. 

What are the bottlenecks?

While numerous positive moves are forwarding the EV Revolution ahead, and in fact, much faster than expected, thanks to government’s interest and business’s shift towards electronic mobility, the ecosystem is not without its challenges. It is crucial to address the concerns that threaten to dilute the business opportunities in the EV space in order to allow it to grow and facilitate further possibilities and who knows, may be generate other sources of employment.

Many delivery personnel who own 2 wheeler prefer to use ICE 2 wheelers for alternative use as they feel while electric 2 wheelers can cover their last mile delivery, it may not be suitable for their personal use. To cover both, ICE is preferred over as they prefer to invest in one vehicle for both their personal and delivery uses.

The second challenge that the EV ecosystem is facing is the questionable condition of Indian roads. The bumpy rides and frequent potholes make it difficult for ecommerce businesses to carry out fragile deliveries. They need sturdier vehicles. Electric Vehicles are not perceived as such and hence there is cloud of apprehension to adopt electric vehicles for eCommerce. Although it must be noted that these shortcomings are being addressed and players are coming up in the market with refined products that will help combat these challenges.

Most B2B eCommerce players prefer their drivers own the vehicles as they don’t favour adding too many assets. However due to above mentioned reasons, drivers like to own an ICE over an EV and thus a lot of B2B spaces carry out their logistic business without EV. It will take a little more time to shift towards Electric Vehicles and that will happen once effective performance of EV in comparison to its ICE variants are recognised in the market. Also the resale value of Electric Vehicles is non-existent at this point which also impedes its adoption rate.

The big picture, however, looks encouraging for the B2B space. On account of fixed routes, cost savings due to higher frequency of utilization and positive infrastructure development, the business space is going to get wider and wider to accommodate (and in fact to lead) the electric mobility revolution in India. 

Best,

Rahul Thakur

Undoubtedly 2021 is the Year of Electric