Fintechs and NBFCs that provide financial services to customers are very few in India and they are concerned about resale value, as there is currently no secondary market for electric vehicles. With government assistance and private investment, India’s electric vehicle industry has the potential to become one of the world’s largest and most dynamic marketplaces. At present time India needs EV Financing options as soon as possible.
Today, the world is on the verge of a transformation. More and more sustainable practices are being implemented as a result of increased knowledge and readiness to take action on climate change. One of them is the transformation of the automobile sector with the acceptance of electric vehicles. Electric vehicles can reduce air pollution to a large amount by emitting fewer greenhouse gases into the environment, making them a vehicle of choice for many.
Know About Electric Vehicles Market in India
EV sales are growing over the world today, thanks to improvements in battery infrastructure and pricing, as well as government regulations and schemes that encourage them. According to CEEW, total registered EV sales in India for the period April to November 2021 were 1.98 lakh-plus units, with a month-on-month rise of 17% in the electric two-wheeler market.
How Electric Vehicles are transforming the Indian Automotive Sector?
The year 2021 can be regarded as a watershed moment for the electric vehicle industry. The epidemic initially hampered demand for electric vehicles, but demand began to rise in the first six months. Sales are currently anticipated to have climbed by 355 percent year over year, marking an excellent start to the new era of electric vehicles.
In India, the government’s support in the form of incentives and subsidies, such as the FAME II and PLI (Production Linked Incentive) schemes, has aided new start-ups in entering the market with innovative models and features, such as the Bounce Infinity, which introduced the first-ever scooter with a swappable battery. This government drive, combined with rising demand, has prompted many more corporations to invest in better EV infrastructure.
For example, after evaluating growing mobility patterns and the EV space’s growth potential, larger firms like Reliance Jio and BP have partnered with Blusmart, an EV riding platform, to build up EV charging stations across the country. Indian Oil Corporations have also made headlines by announcing plans to build tens of thousands of charging stations.
EV producers are also investing extensively to keep up with increasing technology breakthroughs and digitization. The software and hardware of electric vehicles would be completely transformed by digitalization, making them more convenient with new features such as vehicle health monitoring, autonomous navigation control, battery management systems, and driver support programs. Aside from that, the collaboration between established companies and start-ups may have a favorable impact on EV sales in the next years.
Indian EV Industry need financing support
While India is still in the process of transitioning to electric vehicles, the industry faces several hurdles. High technical costs, infrastructure availability, low loan-to-value ratios, and limited specialized financing choices are some of the major challenges to EV adoption.
Fintechs and NBFCs that provide financial services to customers are few in the country because they are concerned about resale value. After all, there is currently no secondary market for electric vehicles. Funding is often approximately 80%, with a rate of interest 150-200 basis points higher than ICE vehicles.
The interest rate is high since the risk connected with these automobiles is considerable. Another issue is that the battery must be replaced every 2-4 years because constant use reduces its efficiency, necessitating its replacement, unlike ICE vehicles, which do not require any significant component replacement. This would be a problem for both new and existing gamers to solve.
One-third of electric vehicles are sold out due to financing and that this number may rise to 100% if the correct financing solutions are available. Customers’ financial inclusion can only be ensured if EV becomes more commercialized and becomes more integrated into families’ and businesses’ daily lives.
Despite the current excitement around EVs, with Ola’s introduction of electric scooters and Ather’s development to satisfy the ever-growing demand, various fintech and NBFCs have become active, realizing the potential of the EV market to supply consumers with creative financing options.
India is on its way to becoming self-sufficient and the world’s largest vehicle market. Electric car demand has been fast expanding, and buyers now have a wide range of options to select from.
We should also keep in mind that the EV sector’s growth is a function of technological acceptance, which means that the more we open ourselves up to adopting the technology, the larger the market will become, which will open up additional financing options. With government assistance and private investment, India’s electric vehicle industry will grow to be one of the world’s largest and most dynamic marketplaces.
So this was all about why its very high time that Indian needs EV financing options. What do you think about is debate, share your thoughts with us.
The content of this article is taken from INC24