India’s logistics sector is rapidly expanding, valued at $187 billion in FY24 and projected to reach $347 billion by FY30, growing at a compound annual growth rate (CAGR) of 11%. This growth is fueled by India’s transition to a global manufacturing hub, rising local consumption, and significant government investment in transportation infrastructure. Road logistics currently dominate, accounting for over 86% of the logistics market, with most vehicles still using internal combustion engines (ICE). However, the penetration of electric vehicles (EVs) in logistics is growing, currently standing at about 8%, or $15 billion, largely driven by E-Rail. By FY30, EVs are expected to handle 14% of logistics, valued at $49 billion.
Within the EV logistics market, the adoption of EVs is rising, particularly in the three-wheeler (3W) and light commercial vehicle (LCV) segments. EV road logistics are expected to increase from less than 1% today to 4% by FY30, representing a $10 billion opportunity. E-Logistics can be categorized based on vehicle type, including E-3Ws, E-LCVs, E-M&HCVs, and E-Rail. E-3W cargo vehicles, well-suited for last-mile logistics, have seen higher electrification than other road transport vehicles.
Logistics fleet operators in India are increasingly incorporating EVs into their expansion plans to enhance sustainability. Companies like Delhivery, Ecom Express, FM Logistics, and Rivigo have integrated EVs into their fleets and announced ambitious electrification goals. Ecom Express aims to convert 50% of its fleet to electric by 2025, while Rivigo targets 40% EVs by 2026, with plans to have 3,000 to 4,000 EVs in its fleet. Pure-play EV companies like MoEVing are also gaining traction, securing significant investments, and planning to deploy 1 million EVs by 2030 and expand into 10 new cities by 2024.
Despite the progress, challenges remain, particularly in the medium and heavy commercial vehicle (M&HCV) segment. Limited EV model availability and high upfront costs hinder the transition for M&HCV fleet operators. Additionally, the shift to EVs is driven by the decreasing cost of EV batteries, government incentives such as subsidies and tax breaks, and lower operational costs due to reduced charging expenses compared to fuel costs. Advanced fleet management tools are also improving efficiency, optimizing routes, and reducing last-mile delivery costs.
However, the transition to EVs faces challenges such as limited battery range and a shortage of charging infrastructure. High costs associated with setting up charging stations for inter-city logistics further complicate adoption in the LCV and M&HCV segments. The substantial upfront investment required for EVs, despite promising long-term savings, poses a financial hurdle for logistics firms. Moreover, the development of reliable EV aftersales service centers adds another layer of complexity.
In the broader transportation market, aggregators like Uber, Ola, Rapido, and pure electric mobility players like BluSmart are leading the shift to EVs in the 3W and 4W cab segments. State governments are also transitioning their bus fleets to EVs, joined by private bus operators using electric buses for intercity commutes. Uber plans to increase its green fleet to 25,000 vehicles in the next 3-4 years under its “Uber Green” brand, while BluSmart and NueGo are expanding their fleets with new electric car and bus models.
The transition to EVs is driven by government incentives, decreasing battery prices, and collaboration between fleet operators and manufacturers. However, challenges such as limited charging infrastructure, high initial investment, and securing financing persist. Despite these obstacles, the logistics and transportation sectors are making steady progress toward electrification.
