Diesel trucks are one of the major contributors to air pollution.
India has 4 million heavy-duty trucks that emit nearly 450 million tonne CO2 every year. Liquefied natural gas (LNG)-powered trucks emit up to 30% less CO2 than the diesel ones, while cutting harmful particulate matter by up to 98% and sulphur oxides by up to 100%. India’s first LNG truck manufacturer, Blue Energy Motors, is a young startup which is steadily expanding. It now has 17-18 large customers who have started adding green trucks to their fleet for long-distance trucking. These include Nestle, Flipkart, Dalmia Cement, Tata Steel, Ultratech Cement, among others. In an exclusive interview with ET Prime, Blue Energy Motors CEO Anirudh Bhuwalka explains why heavy-duty LNG trucks are a green and sustainable alternative to diesel trucks. Edited excerpts.
So, why should we adopt LNG trucks in the heavy-duty segment?
In India, we are saving 30% to 40% CO2 [emission] with LNG trucks. That’s huge. It doesn’t solve the problem completely, but imagine, India has 4 million heavy-duty trucks generating close to 400 to 450 million tonne CO2 (every year). Now, if you are able to hypothetically move to LNG, you can impact almost 30% to 40% CO2 which is fundamentally a very large dent in the whole cleanup cycle.
What is the biggest challenge in heavy-duty trucking going green?
The holy grail of heavy-duty trucking, or commercial vehicles in general, is the total operating cost. The two key factors are: one, the capital cost upfront, and two, the total operating cost. These are the real challenges, because no matter how much we talk about clean energy and decarbonisation in a boardroom, reality hits when you sit in front of a customer. Even the biggest public-listed companies don’t want to compromise on their operating economy.
So, I realised that if we wanted to make a real dent and transition from fossil fuel to clean energy, the first thing we had to crack was: could we go green at the same cost as diesel? If we could do that, we’d have started the transition.
So, what is the strongest point in your sales pitch?
When we sell a truck to a logistics company, it needs to make money. So, when the logistics company goes to Ultratech, Dalmia Cement, or JSW, they will ask for a freight contract. That freight contract is currently given on the basis of diesel trucks. Our pitch is that the same freight contract that you’re giving on a diesel truck, give it at the same price for LNG trucks. So, for the customer, the cost is not changing. While freight cost is unchanged, we make you go green at the same cost as diesel.
Can you give us a comparison between CNG, LNG, diesel and electric options in terms of the green factor for heavy-duty trucks?
CNG and LNG are the same in the sense that both are natural gas. Only the form changes. One is liquefied and the other is gas.
For heavy-duty trucks, CNG is not an ideal solution because the tanks would become much bigger and bulkier. For heavy-duty trucks, we have to compare between diesel, LNG and electric.
Now when it comes to pollution, obviously electric is the best.
There is no question and I’ll give you the data. A heavy-duty truck ideally generates 150 tonne CO2 with diesel as fuel. With LNG, you generate 100 tonne CO2 per year. So, you save 50 tonne.
Electric (emission] is 0.
But you also need to go to the source of the energy, and then to the consumption of energy, track that cycle and then look at the comparison. So, if you use solar energy on electric, then it is the greenest product on planet Earth today.
LNG is a fossil fuel at the end of the day, though it is cleaner, it is only 40% cleaner. It is not 100% cleaner. Electric is 100% clean.
Then comes LNG and then comes diesel.
What is the cost differential between diesel, LNG and electric trucks?
Typically, a diesel truck would cost anywhere between INR35 lakh and INR40 lakh and LNG trucks go up to about INR65 lakh.
This differential gets covered over time because LNG fuel is cheaper than diesel.
LNG as a fuel is cheaper than diesel. Diesel is at about INR92/litre, LNG at around INR78/kg. Also, it has better fuel efficiency than diesel. So, while the upfront capital cost that the owner or buyer ends up paying for LNG is higher, his operating cost is substantially lower than diesel. Customers end up recovering the difference in capital cost in less than three years.
The cost differential between diesel and electric trucks is almost three times. If diesel trucks are selling at about INR35 lakh to INR40 lakh, electric trucks are at INR1 crore. This is a major constraint in terms of adoption of electric trucks in the heavy-duty segment. At three times the capital cost of diesel trucks, adoption is going to be slow in a developing market like India.
“While the upfront capital cost that the owner or the buyer ends up paying for LNG is higher, his operating cost is substantially lower than diesel.
Customers end up recovering the difference in capital cost in less than three years.”
What has been the toughest part of your
“While the upfront capital cost that the owner or the buyer ends up paying for LNG is higher, his operating cost is substantially lower than diesel.
Customers end up recovering the difference in capital cost in less than three years.”
We were the first to launch LNG when there was no ecosystem or understanding of LNG in the system. So, we had to build the entire ecosystem.
The first piece was the
— Anirudh Bhuwalka, CEO, Blue Energy Motors |
government. Initially, when we were building
LNG trucks, the
approving authority wasn’t fully aware of the technology available for trucks. It took some time to get them on board and orient them to look at LNG tanks for trucks. That was from the government side. Then, we had to build the confidence of the LNG gas suppliers like IOC or GAIL for putting up LNG stations.
The first LNG station came up in Nagpur. Today there are 23.
LNG is a gas that is stored at -125°C and you have to store it in cryogenic tanks. There’s a whole process on how to manage cryogenic gas. It’s not like diesel. There’s a complete technology and training required to manage LNG at the station. Service and support are equally important because LNG trucks require a different level of service and support compared to conventional trucks. LNG trucks’ engines heat up more than conventional trucks. Drivers, too, need to be trained.
Then, customers had to be apprised of the advantages of LNG.
Where do you stand at present in terms of manufacturing scale and adoption of LNG trucks?
We launched our first LNG truck in September 2022 and currently we have an installed capacity of 10,000 trucks at Chakan, Pune. We have now completed almost three years of LNG operations, and we now have over 650 trucks operating, making us the single largest player in the LNG sector. We plan to triple our sales to 3,000 LNG-powered trucks next financial year.
Now, we have almost every Fortune 500 company, or at least most of them from industries like metals, mining, FMCG, and e-commerce are adopting LNG for transportation. We’ve clocked more than 30 million kilometers and saved over 9,000 tonne of CO2.
“The first piece was the government. Initially, when we were building LNG trucks, the approving authority wasn’t fully aware of the technology available for trucks. It took some time to get them on board and orient them to look at LNG tanks for trucks.”
Please tell us about the partnership you have on the technology side?
The technology for LNG trucks is very robust and well-established.
The heart of the truck is the engine. When it came to LNG technology, we chose IVECO who are the pioneers in LNG in Europe. They have a division called FPT,
— Anirudh Bhuwalka, CEO, Blue Energy Motors
We have partnered with them to make an LNG-powered engine for the Indian market because in Europe and the US, normally the engine power for heavy-duty trucks is 450 horsepower and above. However, here in India, for heavy-duty trucks, predominantly the engine horsepower ranges between 250 and 350 horsepower. This is because if you increase the horsepower, beyond this range, the capital cost goes up exponentially and the truck would become unaffordable for the market.
Is Green Line Mobility Solutions an anchor customer?
With any new technology, you need an anchor customer because to demonstrate the technology you have to field it. You have to establish it, you have to mature it. With Green Line, which is an anchor customer, we were able to deploy the first trucks. Now of course we have opened it to all customers and we are retail-marketing it. CONCOR is our second big customer and now we have a pipeline of more than 300 customers who want to adopt LNG.
What are the current constraints on the adoption side?
If you would have asked me this question about a year ago, I would have told you that the network of gas stations is an issue.
[Earlier] one of the key challenges was the network, which is starting to get built now. Where we are today, you can practically go from Delhi to Chennai and the stations are already up and running. I think now with 23 stations up and running by next year or in the next three to six months, this 23 is going to become 50.
In heavy-duty trucks, market adoption is always very slow.
However, now we are starting to see that the demand is starting to slowly inch up. We now have almost 17 to 18 large customers who have started adopting green trucks in their fleet. This includes Nestle, Flipkart, Dalmia Cement, Tata Steel, Ultratech Cement, etc.
The second challenge is financing. Financiers have to warm up to financing LNG trucks. This is slowly starting to happen. And last but not the least, with any new technology, most people are on the fence, waiting, watching.
Ultimately, whatever you do, the capital cost is still higher than diesel. While it is not as high as INR1 crore, it is still higher than diesel trucks. So, adoption is going to be slow if it has to happen organically. If you want to fast-track adoption, the government can incentivise the same.
So, what’s the future for you?
With any new technology, especially for heavy-duty trucks, there is a seeding phase, the growth phase and then the maturing phase. We will complete the seeding phase by March, and then we will enter the growth phase.
