Electric Vehicles in Supply Chain

Why do EVs make sense?

Technology keeps evolving and impacting lives. It is changing how things happen in various industries worldwide. One of the most impacted industries is the supply chain industry, mainly because electric vehicles are becoming more popular now than ever before. Research shows that by 2025, 30% of all vehicle sales will be hybrid electric vehicles and EVs. This has been a result of carriers in the supply chain industry opting for clean-running vehicles.

Global demand for electric vehicles is accelerating, as consumers become more eco-conscious and countries set new targets for cutting carbon emissions. There is no doubt that the rapidly accelerating EV market will have a major impact on supply chains. Global EV sales grew to more than 6.9 million units in 2021 — an increase of 107% compared to 2020.

For the Government

Sustainable vehicles include electric vehicles (EVs) as well as hybrid electric vehicles (HEVs).
Several countries have shifted to EVs Industries to improve the efficiency and sustainability of product transportation in metropolitan areas.
With ever-increasing technical progress, these breakthroughs have resulted in a rise in efficacy across the board that will only intensify.
Today many multiple production-linked incentive schemes intend to create a local manufacturing ecosystem to support goals around greater adoption of electric mobility as a mode of transportation.
This goal can be achieved by the government once they are ready to incentivize and make fresh investments into developing indigenous supply chains for key technologies and products.

For the Organizations

Global supply chains are continuously evolving, and on-road distribution rules have been completely redesigned.
In recent times, several organizations have started focusing their attention on the delivery vehicles they utilize and their effectiveness.
Owing to their great agility and low carbon footprint, EVs are very useful for last-mile deliveries having the potential to bring considerable value.
Government subsidies and various economic factors have contributed considerably to companies’ use of sustainable vehicles for transporting freight, goods and packages.
They are adaptable and suited for a wide range of freight and package delivery applications.
EVs also have the opportunity to create significant additional value for companies by promoting ongoing savings in operation and maintenance, improving delivery services, routing efficiencies and providing the opportunity to build upon the services.
The transition of fleets to EVs provides businesses with a credible role in reducing global greenhouse gas emissions and inspiring wider EV adoption across society.

For the Consumers

EVs save around 40 per cent of the delivery cost as compared to traditional internal combustion engine (ICE) vehicles.
They also promote pollution-free circulation, cut back considerably on carbon emissions and are valuable for compact city centres, urban spaces and indoor spaces.
EVs are easy and cheaper to maintain because of their simple structure and operations compared to an ICE vehicle due to more mechanical parts, complexities and difficulty in maintenance.
EVs are silent and have no noise whatsoever; with lesser moving parts and uncomplicated controls, EVs are easy to drive as well.
Electric Vehicles are lighter in weight, and their acceleration is impeccable compared to fuel-powered vehicles.
With fewer moving parts, electric vehicles offer the opportunity to convert these spaces into storage and offer larger cabin rooms.

Initiatives of the government of India to increase the adoption of Electric Vehicles

EV Infrastructure

It is important to have a widespread network of EV charging stations to gain consumers’ confidence and spur the adoption of EVs.
As per the latest data of the Ministry of Power, 940 stations out of the 1,640 charging stations as of February 2022 were in nine megacities – Surat, Pune, Ahmedabad, Bengaluru, Hyderabad, Delhi, Kolkata, Mumbai, and Chennai.
The government said that 678 public EV charging stations were set up in these nine cities between October 2021 and January 2022, an impressive 2.5 times jump from the earlier numbers provided by it.
The budgetary allocation by the government as part of the total e-mobility budget for charging infrastructure has increased from about 3.8% in 2015 to 10% in 2019.
Also, as a part of the National E-Mobility Programme, no licensing is now required to set up charging infrastructure.

Schemes & Policies

The Central government is also prioritizing the shift toward clean mobility and recently amended the Faster Adoption and Manufacturing of Electric Vehicles in India under the FAME II scheme to make electric two-wheelers more affordable as of November 2021.
Under phase two of the FAME scheme, about 1,65,000 electric vehicles have been supported, by way of demand incentive which is approximately INR 5.64 billion (US$75.16 million).
Under the FAME II scheme of the Indian EV policy, many approvals have been granted for around 6,315 electrical buses and 2,877 EV charging stations which cost around INR 5 billion (US$66.63 million) in 68 cities across Indian states & Union Territories and 1,576 charging stations which costs to about INR 1.08 billion (US$14.39 million) across different expressways and highways.
The policy framework should recognise and promote solutions that are more scalable, environmentally friendly, economical, or a combination of these.
For instance, battery swapping effectively alleviates concerns about long recharging times for EVs, resulting in faster adoption rates.
The government plays a twin role – as a facilitator to encourage private players to set up charging stations and as a proactive player to set up charging stations through state-backed public players such as EESL and public oil companies.

Limitations of Electric Vehicles

Range Anxiety

With the current battery technology installed in electric vehicles, it is not feasible to travel long distances on a single charge.
Most individuals have “range anxiety” because they fear an EV’s range is insufficient to get them to their destination.

Cost of Battery

The battery and power electronics costs constitute almost two-thirds of an EV’s cost.
The battery of the electric vehicle, power electronics and motors can cost six to seven times more than an IC engine.

Charging Infrastructure

Inadequate accessibility to EV Charging stations is one of the most significant barriers to poor adoption of EVs.
Charging an EV might take as little as 30 minutes or more than 12 hours. This depends on the size of the battery and the speed of the charging point.
A typical electric car (60kWh battery) takes just under 8 hours to charge from empty to full with a 7kW charging point.
Most drivers top up the charge rather than waiting for their battery to recharge from empty to full.
For many electric cars, 100 miles of range can be possible in 35 minutes with a 50kW rapid charger.
The bigger the car’s battery and the slower the charging point, the longer it takes to charge from empty to full.

Battery Technology & Supply Chain Issues

The lithium-ion battery is the most common and frequently utilised EV energy source.
To enable EVs, new mining and supply networks are required.
India relies on imports for EV batteries, resulting in exorbitant prices for these vital components and, eventually, EVs.

Lack of Service Options

With the growth of the Indian OEMs and Electric vehicle segment in the country, there is a need for retraining repair professionals or finding newly trained workers for EVs.
An Electric vehicle has lesser moving parts when compared to an ICE vehicle, but the technology is something our informal service network does not know of.
This causes a level of anxiety for EV owners who are constantly worried about getting stranded in the middle of nowhere.

Key Benefits of Electric Vehicles in Modern Supply Chains

Opportunity for business expansion

Electric trucks are becoming more popular, which presents tremendous growth opportunities for energy firms, freight forwarders and logistics providers. As the requirement for supercharger infrastructure grows, energy companies can team up with transportation companies to provide the necessary electricity to warehouses and distribution centres.

EVs also present freight forwarders with the possibility to specialize in shipping. Electric vehicles have revolutionized the automotive production process and are a reliable and sustainable alternative i.e. reinventing the supply chain and logistics industry.

Benefit to the environment

To accomplish their environmental goals, an increasing number of enterprises are switching to electric trucks. EVs contribute to the reduction of air pollution caused by exhaust emissions. EVs produce zero tailpipe emissions, reduce the level of carbon dioxide in the atmosphere, are quieter than ICE vehicles and lessen fossil fuel energy dependence.

Zero-emission transports are also beneficial for our well-being, as enhanced air quality leads to fewer health issues. Furthermore, EVs also minimize a nation’s reliance on other countries for fuel imports.

Cutting Costs

While the environmental benefits are vast, one of the most important considerations in the shift to eco-friendly electric vehicles is the financial savings. The greater use of EVs in digital supply chain management is accelerating due to a better understanding of how the transition will influence the bottom line of firms. Fuel cost savings, maintenance cost savings, and optimum operational cost savings are just a few of the major drivers propelling the shift.

Efficiency

EVs are also incredibly efficient in terms of energy, torque and performance. EVs convert over 77% of the electrical energy from the grid to driving power, whereas conventional ICE vehicles only convert 12-30% of energy from gasoline. Additionally, EVs use less energy in stop-and-go city traffic.

Future of Electric Vehicles (EVs) in the Supply Chain

Electric vehicles have become more widely available. How will EVs continue to change the supply chain game? Let us look.

Leading the Change

With many parts of the world aiming for carbon neutrality in the future, EVs’ impact on supply chain deliveries will become increasingly green over time.
The ultimate success of the automotive sector will depend on a flourishing regional supply chain.
The commercial market has made substantial progress in recent years toward an electric future.
Experts predict that EVs will reshape the automotive industry and cause an influx of positive relationships with suppliers.
The purchase and use of EVs will also benefit local manufacturing, creating and allowing for the retention of more jobs.

Mandates on the Horizon

Numerous countries have considered entering into the electric vehicle supply chain.
Nations with key global markets such as England and China are adopting EVs as a more energy-efficient transportation and on-road delivery method.
The electric vehicles’ share of the automobile market continues to expand as production facilities boom worldwide.
More states are promoting EVs as the optimal form of transportation that will prevent greater pollution in urban communities subjected to excessive carbon emissions.
From lawmakers’ tax credit incentives to rebates, people in the United States are witnessing an increase in state legislation regarding electric vehicles in the supply chain.

Increased Opportunity for Circular Supply

EVs use an electric motor that requires a battery rather than an engine to run and are dependent on technologically advanced semiconductors, sensors and other electronic components.
To produce batteries for EVs, manufacturers have to obtain and refine raw materials such as lithium, nickel, cobalt, copper, aluminium, manganese and graphite.
As of 2021, new composite materials have also begun allowing for the production of lighter vehicles, which then extends the range of batteries for EVs.
A self-sustaining supply chain would allow companies to recycle or reuse raw materials from waste rather than mine from a limited supply.