Consumer purchasing habits have changed significantly because of the pandemic, and many of us now consider online shopping to be the default option. To address and satisfy the enormous demand for online shopping around the world, faster delivery alternatives and hyperlocal shopping have seen huge growth over the past two years.
Customer happiness is now more dependent on convenience than ever. The need for quicker, more reliable, and efficient last-mile operations has also been supported by the value placed on convenience.
The growth of online purchasing has significantly increased the number of vehicles operating in last-mile activities. The cost of logistics will be a key factor in determining the performance of firms engaged in a variety of last-mile delivery operations. Accounting for the total cost of vehicle ownership—and the savings offered by EVs over the long-term—as well as rising environmental concerns, analysts expect to see more and more companies opting to use electric vehicles in last mile delivery.
Transition to Electric Vehicles in Last Mile Delivery
Green supply chain initiatives are being implemented, and many vendors and businesses are shifting to electric vehicles instead of conventional ones for last mile delivery because of the need to stay competitive with sustainability trends. This transition has a wide range of beneficial effects on both society as a whole and on the distributors involved.
The main advantages of using electric vehicles in last-mile deliveries is reduction in pollutants and low fuel usage. There is a direct correlation between the amount of gasoline used and the total cost of logistics, and due to their lower fuel usage, EVs can reduce operational expenses.
Sustainable Last Mile Delivery Operations
Even though EVs have been around for a while, their effectiveness and sustainability have recently attracted the attention of the organizations involved in last-mile deliveries. Here are a few recent examples:
- Walmart announced plans to purchase 4,500 all-electric delivery vehicles.
- Dominos is buying 800 Chevy Bolt electric vehicles for delivery use at stores across the U.S.
- Amazon is rolling out thousands of custom electric delivery vehicles from Rivian in more than 100 cities.
While the use of EVs may prove beneficial for various delivery businesses, it is especially suitable for last-mile delivery operations because it has a fixed and constrained range to travel. Examples of last-mile delivery operations include milk, groceries, food delivery, home service deliveries, retail delivery, and e-commerce.
Artificial intelligence can be used to optimize the delivery route and daily dispatches, which will result in less miles driven and better last-mile visibility for businesses. The usage of EVs for last-mile delivery operations can be understood by looking at a few of the existing business cases. The strategies companies are deploying around EVs could influence other organizations with similar missions to think about the benefits and switch to EVs in order to achieve a better, greener future.
Cost Benefit Analysis of EVs in Last Mile Delivery
In the upcoming years, fleet operators will add more electric vehicles to their fleets because their total cost of ownership is significantly lower than that of internal combustion engine (ICE) vehicles. Total cost of ownership is how commercial users evaluate the profitability of their fleets of vehicles (TCO). TCO takes into account all expenses related to owning and managing fleets of vehicles, including the cost of the initial purchase, fuel, maintenance, residual value, and insurance.
The government subsidies and declining cost of Li-ion battery are the key factors causing this cost parity. In terms of power storage, lithium-ion batteries have been and probably will remain the industry standard. Due to longevity, a large supply base, and economies of scale, the production method and technology for lithium-ion batteries have become commodities. EVs are quite economical in terms of operational costs when compared with ICE vehicles. This means with a few years of operations, the total cost of conventional for ICE vehicles will be much more than EVs. Approximately 49% of an EV's total cost of ownership in 2016 was related to battery expenditures. Up to 2030, when batteries are anticipated to make up 19 percent of an EV's total cost of ownership, this number is anticipated to decrease by roughly 13% annually.
Electric Vehicle Market Forecasts
On the heels of favorable government policies, subsidies being offered for the purchase of EVs, and increasing environmental concerns, the electric vehicle market is forecast to grow at compound annual growth rate (CAGR) of 21.20% to reach USD 1,657.10 billion in 2027, according to a recent market research report by TechSci Research titled Global Electric Vehicle Market.
For more information on this fast-growing sector and other related markets, be sure to check out the following reports by TechSci Research:
- Global Electric Commercial Vehicle Market
- Portable Electric Vehicle Charger Market
- Global Hybrid Electric Vehicle Market
- Electrified Road for Electric Vehicle Charging Market
About TechSci Research
TechSci Research is a research-based management consulting firm providing market research and advisory solutions to its customers worldwide, spanning a range of industries. It provides off-the-shelf market research reports to its clients along with customized research solutions and helps global companies to enter, expand, and succeed in different markets. With the help of its strategic solutions and business implementation assistance, TechSci has helped many companies to make crucial strategic decisions.