THE RISE OF E-MAAS PLAYERS: CAPITALISING ON THE GROWING DEMAND FOR DELIVERY SOLUTIONS

EV (Electric Vehicle) Mobility-as-a-Service (E-MaaS) encompasses various offerings in the ride-hailing, rental-mobility and fleet-operating segments. The E-MaaS market is projected to reach a revenue of $5-6 billion (Rs 41,235 crore to Rs 49,482 crore) by FY 2030, indicating significant growth potential in the coming years. In the period from 2019 to 2022, around $400 million (Rs 3,300 crore) of equity investments were directed towards the E-MaaS segment, most of which have gone into last-mile delivery solutions.

In 2022, the size of the e-commerce market was estimated at USD 63bn and is expected to grow at a CAGR of 27 percent to reach $163 billion (Rs 13,44,261 crore) by 2026. The Indian quick commerce industry is expected to grow 10x-15x from 2022 to 2025. Most of the quick commerce companies have committed to ambitious EV adoption targets. To seize the opportunities presented by the flourishing e-commerce markets, delivery companies and their partners must embrace the transition to EVs. 

The Total Cost of Ownership (TCO) benefit of EVs is significant for those who utilise it as a commercial horses. As a result, an EV is an ideal fit for the delivery partners. There are currently more than seven lakh delivery partners on the last-mile delivery side. However, the financial constraints faced by many of these delivery partners prevent them from purchasing an EV outright. This is where the option of EV rental fits in perfectly, providing them with much-needed assistance. 

There are significant savings in the comparative running costs of EVs, resulting in higher take-home incomes for the delivery partners (The example shown below is of a food delivery partner tied up with an EV rental provider). Given that these delivery partners are at the bottom of the pyramid, an incremental income of 25-40 percent results in a significant impact.

Fleet operators

The 3W, primarily employed for commercial purposes, boasts a significant advantage in terms of daily mileage, leading to an already established TCO benefit when compared to the ICE vehicle. The substantial savings in operational expenses associated with its lower running costs render the adoption of E-3Ws a prudent choice.

EV rental companies also provide regular maintenance and timely on-road support (including replacement vehicles). High vehicle uptime is a key metric in the last-mile delivery segment, as it directly impacts the efficiency and reliability of the entire delivery process. 

Rental companies and fleet operators also enjoy reduced financing costs per vehicle compared to individual drivers. Furthermore, EV rental players relieve the delivery partners from the burden of battery replacement costs, which can be a significant expense after 2-2.5 years of operations. 

By virtue of having access to significant data (including routes, delivery points, traffic patterns, etc.), EV fleet operators can optimise their fleet utilisation by leveraging vehicle heatmaps. Data collected by these players may itself become a source of revenue for them. They can also enable charging infrastructure providers in selecting the correct locations and ensure commercial viability even at the currently lower vehicle base. 

E-MaaS players enjoy asset level IRR of more than 30 percent and need to scale up rapidly to unlock the benefits of EV usage in the e-commerce industry and create a positive impact on the value chain. The demand side of this segment and positive unit economics are well established now. The players are working to scale up the supply side of the equation, especially with the use of technology.

E-MaaS players in last-mile delivery need significant capital infusion and growth-stage Private Equity (PE) funds are warming up to the segment. EV rental and EV fleet operators alone are expected to raise around $500-700 million (Rs 4,123 crore to Rs 5,772 crore) over the next four years and will witness participation from PE funds across the spectrum. These equity investments must be matched up by at least 5x-6x debt lending, and banks and NBFCs also need to prepare themselves for this opportunity. 

EV rental companies also provide regular maintenance and timely on-road support (including replacement vehicles). High vehicle uptime is a key metric in the last-mile delivery segment, as it directly impacts the efficiency and reliability of the entire delivery process. 

Rental companies and fleet operators also enjoy reduced financing costs per vehicle compared to individual drivers. Furthermore, EV rental players relieve the delivery partners from the burden of battery replacement costs, which can be a significant expense after 2-2.5 years of operations. 

By virtue of having access to significant data (including routes, delivery points, traffic patterns, etc.), EV fleet operators can optimise their fleet utilisation by leveraging vehicle heatmaps. Data collected by these players may itself become a source of revenue for them. They can also enable charging infrastructure providers in selecting the correct locations and ensure commercial viability even at the currently lower vehicle base. 

E-MaaS players enjoy asset level IRR of more than 30 percent and need to scale up rapidly to unlock the benefits of EV usage in the e-commerce industry and create a positive impact on the value chain. The demand side of this segment and positive unit economics are well established now. The players are working to scale up the supply side of the equation, especially with the use of technology.

E-MaaS players in last-mile delivery need significant capital infusion and growth-stage Private Equity (PE) funds are warming up to the segment. EV rental and EV fleet operators alone are expected to raise around $500-700 million (Rs 4,123 crore to Rs 5,772 crore) over the next four years and will witness participation from PE funds across the spectrum. These equity investments must be matched up by at least 5x-6x debt lending, and banks and NBFCs also need to prepare themselves for this opportunity. 

Source: Express Mobility