India has grown from the 12th largest economy in the world in 2003 to the 5th largest economy in 2023. Economic growth in the last two decades has increased the demand for energy in transport, industry and agriculture, which has led to a 142 percent rise in the level of carbon emissions. In addition, rapid urbanisation has led to an increase in the per capita consumption of goods and services. This has, in turn, led to an increase in per capita emissions by 93 percent between 2003 and 2022, from production and transportation of these goods and services.
The rise of the Indian e-commerce industry has particularly fuelled India’s economic growth and the subsequent increase in emissions. India shipped over 4 billion packages in FY23, including in-house logistics and third-party players. The market is expected to witness a 10x hike to the delivery of 40 billion parcels per year by 2030 and carbon emissions could be as high as 8 million tonnes. Research also suggests that India’s last mile emissions per delivery (285 gCO2) are significantly higher than the global weighted average (204 gCO2) and that the five Indian metro cities—Delhi, Mumbai, Kolkata, Bangalore, and Chennai—emit more CO2 emissions in their last-mile deliveries than the logistics sectors of countries such as France and Canada.
The market is expected to witness a 10x hike to the delivery of 40 billion parcels per year by 2030 and carbon emissions could be as high as 8 million tonnes.
We believe that India needs to prioritise transport solutions that are both clean and affordable. One solution is switching to electric vehicle fleets for last-mile delivery. This is expected to reduce emissions by 1.5 million tonnes every year by 2025, if these vehicles are electrified. This is equivalent to reducing 300,000 cars on the road. Moreover, it is estimated that we could see a 14 percent reduction in carbon emissions by 2030 if the small commercial vehicle segment, characterised by three-wheelers (3W), were fully electrified. India has seen a push in this direction in the form of government policies such as the National Electric Mobility Mission Plan (launched in 2013) and the FAME II scheme (launched in 2019).
The push for electrification has also led to economic growth and innovation across different fronts, such as innovations in battery technology, charging infrastructure, and digital logistics platforms. Nevertheless, the adoption of Electric Vehicles (EVs) in the 3W segment has been slow due to high upfront costs, lack of reliable charging infrastructure, and low consumer awareness. Affordable last-mile logistics is directly proportional to the utilisation of the vehicle. In other words, the higher the distance travelled by an EV, the lower the ownership and operational costs. The same logic of utilisation applies to setting up a successful EV charging network. If a charging station can sell energy to more EVs in a given day, through economies of scale, the cost of charging an EV becomes more affordable. Due to under-utilisation, EVs have not been able to demonstrate their true value, which has also impacted the scale at which charging networks can be successfully established and made profitable.
One of the main reasons for the under-utilisation of electric 3Ws in logistics is the extended time to charge. Last-mile logistics operators cover an average of 150 km in a day, while EVs fitted with large battery packs are only able to realistically deliver a range of 100 km on a single charge. With longer charging times, logistics players are forced to deploy 2 vehicles to cover the required distance—thereby increasing their cost of operations. Additionally, there are parking charges that EV fleet operators or owners incur to charge their vehicle, for periods of three to five hours.
The adoption of Electric Vehicles (EVs) in the 3W segment has been slow due to high upfront costs, lack of reliable charging infrastructure, and low consumer awareness.
To combat charging anxiety, vehicle manufacturers often install EVs with larger battery packs. This increases the price of the vehicle, rendering it an unviable option for service providers and fleet operators. Another challenge that last-mile logistics providers face with respect to EV adoption is the length of battery life. Currently, commercial 3W EV batteries provide 1,500 charges and result in 30 percent battery degradation. Battery degradation is an outcome of charging, and batteries and chargers built by two separate manufacturers often fail to effectively work together. For the first time in the automotive industry, the energy that powers a vehicle has a direct impact on the life and performance of the vehicle itself. Hence, it is important for EV charging providers to work in synergy with battery and EV manufacturers.
At Exponent Energy, we have developed a solution that solves the problems of:
(1) Long charging time;
(2) Short battery life; and
(3) High cost of operations for commercial vehicles.
Exponent is a full-stack energy company that builds battery packs (e^pack) and charging stations (e^pump) that work together to unlock a 0 percent to 100 percent charge in 15 minutes, and provides a 3,000 cycle life warranty while using regular Lithium-ion cells.
We partner with vehicle manufacturers to i) integrate the e^pack into their existing vehicles; ii) create a 15-minute rapid charging variant; and iii) simultaneously establish a charging network with e^pumps across various cities. As of today, we have partnered with Altigreen Propulsion Labs to create the world’s fastest-charging 3W called the neEV Tez. The neEV Tez features an 8.2kWh battery pack, which is 30 percent smaller than the regular neEV variant. A smaller battery pack with a 3,000-cycle life warranty and five year financing ensures that the EV is 30 percent more affordable.
Through partnerships with last-mile logistics companies such as Magenta Mobility, FYN Mobility and others, Exponent has deployed over 300 EVs with its proprietary e^pack and covered over 2 Million kms on the road to date. We have completed over 40,000 rapid charging sessions on a network of 30 e^pumps spread across the city of Bengaluru. Among the 30 e^pumps set up, at least 10 e^pumps charge an average of 25 EVs per day. While we are currently operating in Bengaluru, we plan to enter five new cities in India by the end of FY23.
Energy has fundamentally transformed in the automobile world. In petrol vehicles, otherwise known as Internal Combustion Engines (ICE), energy companies were decoupled from vehicle manufacturers, as they had minimal impact on the life and performance of the vehicles they powered. In this way, the process of transferring energy was simple and mechanical.
What changed with EVs was the advent of battery packs (with complex chemicals) on one end and charging stations (transmitting high quantities of electricity) on the other. How a charger powers a battery fundamentally impacts the life and performance of the vehicle itself (as the battery is ~50 percent of the cost of an EV). Therefore, the process of transferring energy in EVs is a complex two-sided problem.
How a charger powers a battery fundamentally impacts the life and performance of the vehicle itself (as the battery is ~50 percent of the cost of an EV).
Solving this required us to build a company with a fundamentally unique DNA. We needed to not only maintain advanced R&D and engineering capabilities, but also develop a distinct business and operational acumen to provide a seamless charging experience for customers as frequently as twice a day. Achieving this balance has been the most challenging experience for us.
So far the government has excelled in encouraging companies to foray into the EV space with the Production Linked Incentive Scheme (PLI) scheme, as well as the FAME scheme—both of which incentivise consumers to purchase EVs. Moreover, the new AIS-156 standards urge EV manufacturers to follow best practices in vehicle development, leading to higher-quality EVs on the road.13
Moving forward, to catalyse the electrification journey, a policy move that can benefit the ecosystem is to implement performance-linked incentives for charging infrastructure players, purely on the basis of the energy throughput that their network achieves. This will ensure charging networks that are able to sell energy consistently will be financially incentivised, leading to the growth of a high-performing and robust charging infrastructure.
As we scale our solution to more cities, we plan to continue to partner with multiple vehicle manufacturers to integrate our e^pack and create several 15-minute rapid charging variants. We also plan to ensure that we have a dense e^pump network in every city we enter (one e^pump at every 2km radius). Considering the promising future of sustainable mobility in India, and in keeping with the increasing demand for EVs in the logistics sector, our aspiration is to deploy sufficient Exponent-powered EVs to build towards an efficient, widely utilised and profitable charging network.
Arun Vinayak is the Co-founder and CEO of Exponent Energy.
Sanjay Byalal is the Co-founder of Exponent Energy.
Siddharth Sikchi is the Brand Manager at Exponent Energy.
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