India EV financing trends for 2024

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As the automotive industry undergoes a monumental shift towards sustainability and cleaner energy, the rise of Electric Vehicles (EVs) has become a focal point for consumers and manufacturers. The surge in EV adoption has not only transformed how we perceive transportation but has also sparked innovations in financing methods. Looking forward to 2024, several compelling trends are expected to shape the EV financing landscape, writes Brajendra Singh Tomar, co-founder and CEO of Finayo.

Government Incentives and Support

Governments worldwide have increasingly incentivised EV adoption through subsidies, tax credits, and grants. In 2024, this trend is projected to intensify, with more countries introducing or expanding existing incentive programs. These incentives aim to make EVs more affordable, driving higher consumer demand and encouraging financial institutions to offer specialized EV financing packages.

Flexible Financing Options

To accommodate the diverse needs of consumers, financial institutions are likely to introduce more flexible financing options for EVs. Lease-to-own models, extended loan terms, and tailored payment plans could become prevalent. Additionally, some lenders might offer incentives such as lower interest rates or reduced down payments for EV purchases.

Flexible financing options for electric vehicles cater to diverse preferences and financial needs. One prevalent avenue is through Electric Vehicle Loans, where traditional auto loans offered by NBFCs present a standard method for EV acquisition. These loans for electric 2Ws and 3Ws, varying in terms and interest rates contingent upon credit scores and down payments, typically amount to INR 120,000 with an interest rate of 17.5% over 21 months, yielding an approximate monthly payment of INR 7464.

Additionally, EV manufacturers collaborate with financiers, endorsing favourable financing deals at lower interest rates facilitated by buyback or re-sale support in case of default, encouraging purchases. For example, a standard auto loan of INR 120,000 at a 16% interest rate for 24 months leads to a monthly payment of about INR 6600.

Leasing options also thrive in the EV market; lease financing enables lenders to finance a large number of electric vehicles to leasing companies, offering subscription-based models to EV customers. An illustrative instance involves a lease term of 12 months with a flexible monthly lease payment of INR 5000 tailored to the EV customer’s requirements.

Additionally, subsidy-based financing models, pioneered by select Fintech startups, extend EV financing with subsidy benefits. For instance, a loan of INR 120,000 at a 16% interest rate for 24 months yields a monthly payment of approximately INR 6600, with a 2% interest subsidy, ultimately reducing the EMI to INR 6400 after the subsidy.

Collaborations and Partnerships

Collaboration between automakers, financial institutions, and technology companies is expected to flourish. These partnerships may result in innovative financing solutions, such as bundled packages that combine EV purchases with charging infrastructure or insurance plans, streamlining the entire ownership experience.

Rise of EV-Specific Financial Products

Given the unique nature of EV ownership, financial products specifically tailored for EVs are likely to emerge. This could include battery leasing options, warranties covering battery degradation, or insurance plans designed to address EV-related concerns, contributing to greater confidence among potential buyers.

Increased Focus on Charging Infrastructure Financing

Alongside EVs, the need for a robust charging infrastructure is crucial. Financing for charging stations and networks is expected to gain traction in 2024. Financial institutions might offer specialized loans or investment opportunities to develop and expand charging infrastructure.

Data-Driven Financing Models

Leveraging the abundance of data generated by EVs, financial institutions may adopt data-driven models for risk assessment and pricing. Utilizing vehicle data to assess performance, maintenance history, and battery health could result in more accurate financing terms tailored to individual vehicles.

Transition to Sustainable Financing Practices

With the emphasis on sustainability, financial institutions might prioritize funding EV projects or initiatives aligned with environmental goals. This could lead to the development of green financing frameworks dedicated to supporting EV-related ventures or eco-friendly transportation solutions.

In conclusion, 2024 is poised to be a transformative year for EV financing, characterized by innovative approaches and collaborative efforts. The convergence of technological advancements, supportive government policies, and evolving consumer preferences is expected to drive the evolution of financing models, making electric mobility more accessible and enticing for consumers.

As the EV market evolves, staying informed about these financing trends will be essential for prospective buyers and industry stakeholders navigating the electrified road ahead.

Author

Brajendra Singh Tomar, co-founder and CEO of Finayo

Brajendra has nearly a decade of experience in the EV finance industry. His background includes work with various banks, HFCs, and NBFCs, where he gained experience in credit risk management, business analytics, and MSME lending. Brajendra co-founded Finayo, a QR-enabled unified B2B Lending Technology, streamlining lending processes for lenders and EV dealers. He holds a B.Tech in Chemical Engineering from NIT Srinagar.

Also read: EV financing is a hardcore collection business- Pankaj Gupta, Mufin Green Finance