India’s Bureau of Energy Efficiency (BEE) has recently proposed fuel efficiency norms for medium and heavy-duty vehicles (MHDVs). Diesel trucks and other vehicles continue to dominate road freight in the country. By attempting to set mandates for automobile manufacturers, the norms are one kind of Supply Side Regulations – can drive the adoption of battery electric trucks (BETs) and help lower emissions. This message rang clear at a roundtable we recently convened.
Among the participants were original equipment manufacturers (OEMs), fleet operators, charge point operators (CPOs), automotive industry leaders, and experts across the EV industry. While they saw the norms as a favourable step, they also shared insights for effective implementation. These included:
Addressing practical realities of BETs
BETs have variable costs, which can affect the total cost of ownership (TCO). Improvement in vehicle efficiency, reduction in financing costs, roadside assistance from the OEMs, and optimisation of charging speed and time, are important for BET fleet operators.
CPOs noted that charging infrastructure expansion is slow because they incur high capital expenditure, due to infrastructure and land rent costs, for setting up BET charging stations. Factors such as apprehension from local stores and hotel owners located on highways in allowing truck drivers near their premises, existing common truck stops on unverified land and vandalism along highways, is further complicating charging infrastructure set-up.
Additionally, the power infrastructure required for the charging stations is dependent on state DISCOMs. They registered concerns over stable power supply and called for a uniform charging tariff across the country. The industry expressed that charging time for BETs and payload stress due to battery weight require specific policy attention and technological innovations.
The role of supporting incentives
Production mandates as proposed by the norms should aim at enabling TCO parity for BETs. Upstream costs (battery prices) and downstream costs (charging costs, electricity, shipper contracts) need to be carefully balanced with the right incentives. This will drive large-scale adoption and provide conditions for self-sustained market growth.
Along with the proposed norms, effective credit mechanisms like carbon markets or trading systems can incentivise BET production and benefit OEMs who are investing in BET manufacturing. Timely operationalisation of the norms can also attract more OEMs in the business.
Solving the finance puzzle
As financing costs for electric truck fleets remain high, collaborative solutions like priority lending, public-private partnership (PPP) models, shared financing frameworks for BET manufacture and infrastructure set-up should be encouraged.
Covering both supply and demand
The proposed norms focus on supply-side, there should be measures to drive demand-side adoption for BETs to find more takers. While manufacturers are beginning to have internal mandates to produce BETs. Sustainability goals and corporate ESG objectives can also be leveraged demand-side. Government mandates for BETs in the private sector, public sector and government procurement can be of support.
Building awareness to push for change
Clearly defined norms and mandates are essential to build industry confidence and long-term planning. But there is a need for wider awareness and more certainty to manufacturers. More clarity on the equipment and vehicle types to be electrified, contract structures, and credit mechanisms to push the transition is required.
In all, the industry found these norms a key piece of their future business strategies. We look forward to continuing deliberations on this major issue and bringing together important voices to shape the next chapter of sustainable freight in India.
The BEE norms were released in public last month and are now closed for feedback.