17 Aug 2024
Ashok Leyland is the second-biggest commercial vehicle maker in India. It has targeted the sale of around 500 electric and LNG trucks by the end of 2024.
This comes at a time when e-commerce giants like Amazon and Flipkart and large logistics firms aim to meet their Environmental, Social, and Governance (ESG) goals. There is a surge in demand for greener trucks, especially last- and middle-mile transportation solutions.
Growing Demand for Electric and LNG Trucks
The Indian market will see exponential growth in electric and LNG trucks. Estimated sales are likely to be 4,000 to 5,000 units by the end of this financial year. Ashok Leyland is likely to corner a good share of the market. This would translate into the company selling about 500 trucks running on alternate fuels, comprising electric and LNG variants.
Official Statement by the President of MHCV
Sanjeev Kumar, President of Medium and Heavy Commercial Vehicles (MHCV) at Ashok Leyland, recently shared his insights at the company’s two-day 'Mini Expo' in Mumbai. The event showcased the latest innovations in Ashok Leyland's MHCV segment, and Kumar addressed the challenges and opportunities in the electric truck sector.
"The biggest challenge for electric trucks is managing the total cost of ownership," said Kumar. He explained that while companies like Amazon and Flipkart are driving the demand for zero-emission vehicles to meet their ESG targets, the high cost of electric trucks remains a significant barrier.
High Costs of Electric Trucks Versus Diesel Trucks
At present, electric trucks are sold at considerably higher prices than their diesel counterparts. For instance, the 300kWh LFP battery in the Ashok Leyland AVTR 55T electric tractor EV supports 185 kilometres of range and costs Rs 1.39 crore. The equivalent diesel variant is available for just Rs 45 lakh. The Ashok Leyland Boss 14T EV provides a 230 km range and costs Rs 1.01 crore. Its diesel version costs Rs 25 lakh.
Most of these price differences come from expensive battery technology, which significantly changes fleet operators' total cost of ownership. However, companies that lean toward ESG compliance are willing to invest in these eco-friendly alternatives. Moreover, companies are putting up the required charging infrastructure, and charger point operators are authorized to install chargers.
Ashok Leyland's Modular Approach to Electric Trucks
According to Kumar, Ashok Leyland's modular approach to electric truck design is helping the company stand out in the market. "We are seeing growing interest in electric trucks because our customers recognize that Ashok Leyland offers modular products that meet global standards," Kumar stated. This modularity allows the company to tailor its trucks to different market needs, enhancing the appeal of its products.
Challenges in the Indian MHCV Market
Despite all the optimism on electric and LNG trucks, multiple challenges are staring at the face of the Indian MHCV market. Growth in the segment came down to just 0.7% in FY24 from 30.7% in FY22 and 28.7% in FY23. Ashok Leyland, however, remains bullish on the future prospects of the category.
According to Kumar, the commercial vehicle segment witnessed an unexpected growth of 10% in the first quarter of FY24 and exceeded expectations. He opines that as a new government assumed office, business activities resumed, and tenders were issued.
Commodity Prices and Future Prospects
One positive factor for the commercial vehicle industry is the easing of commodity prices, which will help Ashok Leyland keep costs in control. Hopefully, these lower-cost conditions will allow OEMs to pass along these savings to customers and boost demand through competitive pricing in Electric Commercial Vehicles and conventional fuel-class trucks, Kumar said.
Ashok Leyland continues to innovate and adapt to changing times, and the company is confident about its strategy. According to the company, its focus on alternate-fuel vehicles is one reason for setting an ambitious sales target in 2024.
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