FMCG Companies Consider Electric Vehicles for Last-Mile Distribution

As last-mile distribution increases greenhouse gas emissions, some fast moving consumer goods (FMCG) companies are developing plans to replace their existing fleets with electric vehicles (EVs).
Most companies are in the early stages of these plans. But Dabur India has decided that in five years, electric vehicles will make up 80-90% of its total last-mile distribution fleet across India. Dabur India currently has about 800 vehicles. The plan, part of the company’s long-term vision to become a carbon-neutral company by 2050, is to introduce 100 electric vehicles in the first year and add 100 each year to replace fuel-powered vehicles. existing fossil. In four years, only electric vehicles will be used on all routes with the required infrastructure, such as charging stations, said Mohit Malhotra, CEO of Dabur India.

“The initial cost of acquiring an electric vehicle is 10-20% higher than a normal diesel freight vehicle of the same capacity. However, the lower running cost compensates for this difference over a period of time. The benefits will be in terms of reducing carbon emissions – both scope 2 and -3 emissions. We will cover around 20 cities with electric vehicles in the first phase,” Malhotra said.
Cities Dabur plans to cover in the first phase include Delhi-NCR, Mumbai, Pune, Ahmedabad, Kolkata, Chennai, Bangalore, Hyderabad, Varanasi, Sonipat and Chandigarh.
A spokesperson for Hindustan Unilever (HUL), which has around 4,500 distributors and around 1,500 suppliers, said: “Electric vehicles bring exciting propositions for both order capture and fulfillment. As part of order capture, we plan to evaluate ownership options for our market executives/salespersons who use two-wheelers to work in markets across the country. Likewise, our distributors are also evaluating the feasibility of using electronic delivery vehicles that can carry a minimum payload of one ton. The spokesperson added that HUL estimates that, over a period of time, thousands of electric vehicles could be deployed as part of the company’s distribution infrastructure, based on commercial viability and capacity. .
COO (Indian Business) and CEO (New Business) of Marico, Sanjay Mishra, said the company is exploring avenues for the use of electric vehicles for transportation, which has been gaining popularity recently. “We are working with our logistics partners to assess the use of optional electric vehicles, considering sustainable impact as well as commercial viability during our assessment. This will align with our ESG (environmental, social and governance) framework and objectives, driving demand for responsible production and consumption practices,” said Mishra.
A spokesperson for Nestlé India said that although the company has not yet started using electric vehicles in its logistics, it is exploring such options for the future as part of its drive towards sustainability in all its operations. operations. A sustainability expert said last-mile distribution via electric vehicles by FMCG companies will contribute significantly to reducing air pollution as well as greenhouse gas emissions. “This is a pragmatic step given the limitations of electric vehicles in managing heavy and long-haul transport. Similar attempts are underway at mine sites in India to use electric earthmoving and transportation options. However, companies must ensure that the electricity to be recharged is also renewable,” the official said.
There are said to be around 12 million retail outlets in the country. With the FMCG sector expected to grow by 10-12% per year, distribution would also grow to account for larger emissions.
Analysis by Crisil indicates that electric vehicles present an opportunity of nearly Rs 3 lakh crore for various stakeholders in India in the five years to FY26. The opportunity includes potential revenue of around Rs 1 .5 lakh crore on vehicle segments for original equipment manufacturers as well as component manufacturers and around Rs 90,000 crore in the form of disbursements for vehicle financiers. Shared mobility and insurance make up the balance.
Crisil Director Hemal Thakkar said: “Given the improved cost parity and the government’s emphasis on vehicle electrification, we should not be surprised if vehicle penetration electric reaches 15% in two-wheelers, 25-30% in three-wheelers and 5% in cars and buses by FY26 in terms of vehicle sales.”


Comments are closed.