Fully Electrifying Delivery Vehicles: Insights from Shenzhen

The topic of urban freight is more important today than ever before. We have seen and experienced firsthand the role of urban delivery vehicles throughout the COVID-19 pandemic as people have relied more heavily on door-to-door delivery services for food, home, and business goods, often through online shopping.

However, these services come with a cost. Globally, light- and medium-duty freight vehicles account for nearly half of overall road freight CO₂ emissions, which are only expected to increase as demand for e-commerce continues to grow. They also have a significant, localized health impact with an estimated 181,000 premature deaths globally due to the emissions from diesel vehicles in 2015.

The consequence of not addressing the potential health impacts of air pollution is growing even more severe, with new research showing that air pollution may increase our susceptibility to COVID-19 and associated outcomes. As a result, states, cities, and business and industry leaders around the world are looking for solutions on how to address the emissions and air pollution associated with buying and delivering goods to our homes and businesses.

Looking to Shenzhen

To help identify and inform the design of these solutions, Rocky Mountain Institute (RMI) has been working in the City of Shenzhen, a city on the southeastern coast of China that is a world leader in the adoption of electric vehicles. We have evaluated the policies and market dynamics that have led to the adoption of more than 70,000 electric logistics vehicles (ELVs) in the city as Shenzhen aims to reach full electrification of urban logistics in the coming years.

We share our insights and key findings in a six-volume report series: Putting Electric Logistics Vehicles to Work in Shenzhen. This series follows on and complements our initial foundational report, A New EV Horizon: Insights from Shenzhen’s Path to Global Leadership in Electric Logistics Vehicles, which RMI published in June 2019. It builds on our work from 2019 by providing a detailed assessment of the policies, charging infrastructure deployment, technology, and market development advances critical to achieving full utilization of electric logistics vehicles.

The series consists of the following reports:

• Summary Volume: Charting a Path to Fully Electrifying Goods and Logistics Delivery
• Background Volume: Setting the Stage for Full Utilization of ELVs in Shenzhen
• Policy Volume: Utilization Subsidies as a Lever to Accelerate the ELV Market
• Infrastructure Volume: Enabling EV Utilization through Well-Planned Charger Deployment
• Vehicle Quality Volume: Identifying Pain Points in ELV performance That Reduce Utilization
• Business Model Volume: Improving Utilization of ELVs through Innovations in Business and Ownership Models 

Each report contains specific insights based on the experience and lessons drawn from Shenzhen. And while every city and nation has specific circumstances, the analysis, in particular the Summary Volume: Charting a Path to Fully Electrifying Goods and Logistics Delivery report, shows how the lessons from Shenzhen can be applied to other cities. This gives the report series relevance to global leaders, including state and city governments, logistics delivery and retail goods industries, and the financial sector.

The key insights from our work relevant to these leaders include:

• Full logistics electrification is possible. Shenzhen’s experience shows that a rapid transition to the use of EVs in urban logistics is feasible and, with the proper policy framework, vehicle operators will rapidly electrify.
• Policy must evolve as logistics electrification progresses. As the low-hanging fruit of logistics electrification is picked, policy makers must be prepared to pivot towards harder use cases. Doing so will change how cities approach vehicle incentivization and infrastructure deployment. Being able to dynamically adjust policy to the needs of distinct market segments as they electrify is critical to success.
• Growing an ELV fleet is a necessary but insufficient condition for logistics electrification. Policy makers often set EV targets in terms of share of sales or share of fleet. Getting EVs into the hands of operators is the first step in full logistics electrification but not the only step. Cities must also ensure that ELVs are able to displace the use of fossil fuel vehicles.
• Encourage innovation and entrepreneurialism in the supporting ecosystem. ELVs present the market with new challenges and opportunities and enabling the market to meet those challenges is key to the success of logistics electrification. Cities can support innovation in multiple ways, including engaging with industry to support innovative pilots that support proof-of-concept for new approaches to logistics electrification.

The reports and the included insights are based on a robust modeling effort utilizing data from nearly 50,000 electric logistics vehicles operating in and around the city of Shenzhen. We used telematics data from these vehicles, provided at 30-second intervals, coupled with machine learning and data mining techniques.

This data enables us to answer questions about the utilization and use patterns of ELVs, charging behavior, vehicle technologies and maintenance issues, and implications for ownership models. We supplemented this data analysis with a robust set of dialogues and surveys of industry stakeholders, such as rental companies, fleet and vehicle operators, charging station operators, and suppliers.

This analysis is the latest release of a multi-year effort working in Shenzhen and as part of a global initiative to develop data-driven solutions to support city, state, regional, and industry leaders in setting a path to achieve 100% vehicle electrification.

Download the new Putting Electric Logistics Vehicles to Work in Shenzhen report series.