How electrifying fleets can tackle global problem of excess cars

In the US, a typical vehicle sits in the garage 96% of the time, but in emerging economies like India newer concepts are gaining ground

A delivery rider in a Mahindra Treo Zor electric vehicle departs a loading bay at a BigBasket warehouse in Noida, Uttar Pradesh, India. Fleet operators are leading the way to electrification in India. BloombergShow less

Companies in the transport sector, and carmakers in particular, are among the most-visible pioneers of the inevitable shift to cleaner fuel. Electric cars are becoming a household concept, regardless of their prohibitive cost for most people — another classic case where modern technology is largely unaffordable for the poor.

That’s where large fleet operators come in, according to New York-based RedBlue Capital, an early-stage investor in clean mobility start-ups. Companies such as Amazon and food-delivery services such as DoorDash and Instacart will drive a faster adoption to EVs, RedBlue partners Olaf Sakkers and Prescott Watson say.

Ride-hailing outfits, taxis, transit buses and corporate shuttles will also play a part, considering such operators are cautious about the total cost of ownership and use the vehicles a lot more, making the economics of EVs attractive to them.

In 2019, RedBlue invested in Zoomo, an Australian e-bike start-up that supplies to food-delivery services. Through bulk sales, Zoomo has already become one of the fastest-growing e-bike companies in the world, according to Watson. More recently, RedBlue invested $28 million in EVage, a supplier of light electric lorries in India.

“We should measure the success of the transition to EVs against how many miles they run, not by how many vehicles are sold to the general public,” Mr Sakkers said.

“For many people, EVs are just a second or third car that they hardly drive, which doesn’t move the needle. But fleet operators use them many times every day.”

That’s particularly true for a country like India — a nation of 1.4 billion people or one sixth of the world’s population. There, very cheap, no-frills cars made by the local units of Suzuki and Hyundai dominate. Price elasticity is so tough that Ford and GM ended up exiting, unable to sell enough cars to justify the billions of dollars in investment over many years.

In India, fleet operators are already leading the way to electrification. BigBasket, which delivers everything from groceries to cooking utensils, is on a mission to electrify 90 per cent of its fleet.

In New Delhi, people often tweet about their rides with BluSmart, a 100 per cent electric taxi start-up with almost half a million app downloads. It estimates the market will grow more than four times to $90 billion by 2030 across several Indian mega cities.

Amazon and Walmart-owned retailer Flipkart are also pushing for more EVs, but the problem is they can’t get enough supply.

“India has traditionally waited to localise wealthy countries’ auto products once prices fall,” Mr Watson says. “But the ‘wait 10 years’ approach doesn’t work with climate timelines today and so India, in particular, will have to develop indigenous technologies to make EVs cheap enough for near-term mass adoption. That’s the opportunity we’re investing in.”

That’s different from larger, more developed nations where cars tend to grow bigger even as utilisation remains limited. Call it a car obesity problem. In the US, a typical vehicle sits in the garage 96 per cent of the time, Mr Sakkers wrote in his book Mobility Disruption Framework, citing research by McKinsey.

But in emerging economies like India, newer concepts are gaining ground. E-scooters are selling like hot cakes and the South Asian nation is now mulling battery swapping as opposed to charging stations to ensure faster adoption of cleaner fuels.