Financing models driving electric commercial vehicle (e-CV) penetration in India

August 20, 2025 commercial vehicles, Financing 4 min read

Why Financing Models Matter:

Even when the total cost of ownership (TCO) is favourable, high upfront capex, battery risk, and uncertain resale values slow the adoption of electric commercial vehicles (eCVs). Financing structures, such as Operating Lease, Finance Lease, and Subscription (including Battery-as-a-Service), bridge this gap by aligning monthly outflows with revenue and shifting risk.

Operating Lease: – An Operating Lease in the context of electric commercial vehicles (eCVs) is a flexible financing model where the fleet operator or business uses the vehicle for a fixed tenure by paying periodic rentals, without owning it. This model reduces the high upfront cost burden of eCVs, as the leasing company retains ownership and is often responsible for maintenance, insurance, and battery performance guarantees. It enables operators to adopt the latest eCV technology with minimal capital investment, manage cash flows effectively, and upgrade to newer models at the end of the lease, thereby accelerating the penetration of eCVs in India’s logistics and mobility sector.

Finance Lease: – A finance lease in the context of electric commercial vehicles (eCVs) is a long-term financing arrangement where the fleet operator or end-user gains full economic ownership of the vehicle over the lease tenure, while the legal title remains with the lessor until the lease is completed. In this model, the lessee pays fixed monthly installments that cover the cost of the eCV along with financing charges, making it similar to a loan but without upfront capital blockage. At the end of the lease term, the lessee generally has the option to purchase the eCV at a nominal value or assume full ownership, which makes it attractive for businesses aiming to build asset ownership, enjoy tax benefits, and leverage the lower operating cost advantages of electric vehicles.

Subscription/BaaS: – The Subscription/Battery-as-a-Service (BaaS) model in electric commercial vehicles (eCVs) offers fleet operators and businesses a flexible, asset-light solution by eliminating the high upfront cost of vehicle ownership and battery purchase. Under this model, users pay a recurring fee for access to vehicles or batteries, which covers maintenance, charging, and upgrades, thereby ensuring predictable operating expenses and reduced financial burden. It allows fleets to scale quickly, optimize vehicle utilization, and adopt the latest battery technologies without worrying about depreciation or replacement costs. This model is particularly attractive for logistics, last-mile delivery, and shared mobility operators, as it aligns with their need for efficiency, lower total cost of ownership, and faster adoption of sustainable transport solutions.

Model	Key Features	Ideal For	Risk Allocation
Operating Lease	– Off balance sheet (Ind AS 116: right-of-use asset) – 3–5 years – Maintenance + insurance bundled – Residual value risk on the lessor 3PLs, corporate fleets, and marketplaces needing flexibility	3PLs, corporate fleets, marketplaces needing flexibility	Tech & resale risk with lessor
Finance Lease	– On-balance sheet (ownership intent) – 4–6 years – Lowest financing cost – Residual & performance risk on lessee	Large fleets, long-term contracts, PSUs	Operator takes battery & resale risk
Subscription / BaaS	– Pure Opex model – 12–36 months – Vehicle + battery + energy + service – Battery swapping / fixed battery subscription	MSMEs, last-mile logistics, gig operators	OEM/operator takes battery risk; user pays fixed fee