Powering the Charge: The Pivotal Role of Financing Institutes in India’s Electric Vehicle Market Growth
India’s electric vehicle (EV) market is accelerating at an unprecedented pace, fueled by a potent mix of government policies, consumer demand, and technological innovation. Over the last 24 months (March 2023 to March 2025), the market has witnessed transformative growth, with EV sales surging across segments—two-wheelers, three-wheelers, and commercial fleets—and projections estimating the market size to hit USD 2.37 billion in 2025, growing at a staggering CAGR of 53.16% to reach USD 19.97 billion by 2030. Yet, this electrifying revolution owes much of its momentum to an unsung hero: financing institutes.
From traditional banks to non-banking financial companies (NBFCs) and venture capital (VC) firms, these institutions are not just funding the future—they’re shaping it. Here’s how they’ve driven the Indian EV market over the past two years and why they’re key to its continued ascent.
The EV Financing Landscape: A Catalyst for EV Adoption
The Indian EV market’s growth over the last 24 months has been underpinned by a robust financing ecosystem. With EVs often carrying a higher upfront cost than their internal combustion engine (ICE) counterparts, accessible and affordable financing has become the linchpin for widespread adoption.
Traditional banks like State Bank of India (SBI), ICICI Bank, and Karur Vysya Bank have stepped up with tailored loan products, such as SBI’s ‘Green Car Loan,’ offering lower interest rates and flexible repayment terms for EV buyers.
Meanwhile, NBFCs like Shriram Transport Finance Company (STFC) and Poonawalla Fincorp have emerged as agile players, providing bespoke financing solutions for commercial EV fleets and last-mile delivery vehicles—segments that have seen explosive growth since March 2023.
Data from the Electric Mobility Financiers Association of India (EMFAI), formed in 2023, underscores this shift. Over the past two years, the number of EV finance players has swelled from four to over a dozen, with disbursements rising 50% to approximately INR 1,000 crore (USD 120 million) by mid-2024. This influx of capital reflects a growing confidence in EVs’ long-term viability, driven by lower operating costs, supportive policies like FAME-II, and rising fuel prices that make electric two-wheelers and three-wheelers increasingly attractive.
Venture Capital: Charging Up Innovation
While banks and NBFCs have greased the wheels of EV purchases, venture capital firms have supercharged the ecosystem by injecting funds into innovative startups over the last 24 months. VC investments have targeted not just EV manufacturers but also critical sub-segments like battery technology, charging infrastructure, and financing platforms—unlocking new growth avenues.
Take RevFin, a Delhi-based EV financing startup, as an example. In late 2023, it secured USD 5 million in debt funding, enabling it to expand its reach to over 300 towns and finance electric three-wheelers for underserved communities.
Similarly, Vidyut Tech, a Bengaluru-based digital lending platform, raised USD 4 million in December 2023, blending equity and debt to offer low-interest EV ownership plans for commercial fleet operators. These investments highlight a VC focus on scalable, tech-driven financing models that democratize access to EVs.
Beyond financing, VCs have powered infrastructure and technology.
Charge Zone, a charging network provider, bagged USD 19 million from British International Investment (BII) in April 2024 to deploy over 1,500 super-charging stations by mid-2025—a move poised to alleviate range anxiety and boost EV adoption.
Meanwhile, battery-focused startups like Log9 Materials (USD 40 million Series B in 2023) and Metastable Materials (undisclosed Seed round in 2023) have drawn VC interest for their innovations in energy storage and recycling, addressing a critical bottleneck in the EV value chain.
Cumulatively, EV-related startups in India have attracted over USD 2.6 billion in funding since 2023, with VC firms like Sequoia Capital, Orios Venture Partners, and Avaana Capital leading the charge. This capital influx—up from USD 1.8 billion in 2022—signals a shift from OEM-centric investments to a broader ecosystem play, where financing, charging, and battery tech are seen as high-growth opportunities.
Bridging the Gap: Challenges and Solutions
Despite this progress, challenges persist. Over the last 24 months, EV loans have remained 5–14% costlier than ICE vehicle loans, with interest rates hovering at 24–25% for electric two- and three-wheelers compared to 20–21% for their fossil-fuel counterparts.
This gap stems from perceived risks—uncertain resale values, unproven technology, and a nascent secondary market—making lenders cautious. Additionally, the high cost of capital for smaller NBFCs (600–800 basis points above banks) trickles down to borrowers, slowing adoption among price-sensitive consumers.
Financing institutes have responded with innovation. Green bonds, championed by entities like SIDBI in collaboration with philanthropies like the Shell Foundation, have emerged as a tool to lower capital costs and distribute risk. Since 2023, these instruments have mobilized institutional capital for EV financing, with SIDBI’s USD 6 million risk-sharing facility exemplifying how blended finance can bridge funding gaps. Meanwhile, fintech startups like Finayo and Embifi have leveraged AI and blockchain to digitize lending, streamlining loan approvals and reducing overheads—efforts that gained traction in 2024 as EV sales soared.
Government collaboration has also played a role. Over the last two years, initiatives like interest subventions in states like Delhi and Kerala, alongside NITI Aayog’s push for credit guarantees with SBI, have lowered financing costs, signaling a market ripe for investment.
The Road Ahead: A Marketing Opportunity
For financing institutes, the Indian EV market is not just a growth story—it’s a branding goldmine. As EV adoption accelerates—evidenced by 944,126 electric two-wheeler sales and 632,485 three-wheeler sales in FY 2023-2024—banks, NBFCs, and VCs can position themselves as enablers of a sustainable future. Campaigns highlighting “green loans” or “zero-emission financing” resonate with environmentally conscious consumers, while partnerships with OEMs like Hero Electric, Ather Energy, and Ola Electric offer co-branding opportunities that amplify reach.
The numbers speak volumes: with an estimated INR 3.7 lakh crore (USD 44 billion) EV finance market by 2030, institutions that act now—be it through competitive rates, innovative products, or strategic investments—will claim pole position. VC firms, in particular, can market their role as ecosystem builders, funding not just vehicles but the infrastructure and technology that make EVs viable.
So, what’s next: Financing the Future
Over the last 24 months, financing institutes have evolved from passive lenders to active architects of India’s EV revolution. Banks and NBFCs have unlocked consumer access, while VC firms have fueled innovation, collectively driving a market poised to redefine mobility. As the Indian EV landscape charges toward a sustainable horizon, one thing is clear: those who finance the journey will power the destination. For stakeholders in this space, the message is simple—invest today, thrive tomorrow.
