EV Leasing Business in India in 2024
Electric vehicles (EVs) are the future of transportation, as they offer a clean, green, and cost-effective alternative to conventional vehicles. However, EV adoption in India faces several challenges, such as high upfront costs, limited range, and inadequate charging infrastructure. To overcome these barriers, EV leasing is emerging as a viable option for both consumers and businesses, who can enjoy the benefits of EVs without owning them.
What is EV leasing?
EV leasing is a form of vehicle financing where the customer pays a fixed monthly fee to use an EV for a specified period, usually ranging from one to five years. The customer does not have to pay any down payment, maintenance, or insurance costs, as these are covered by the leasing company. The customer also has the option to return, renew, or buy the EV at the end of the lease term.
Why is EV leasing attractive in India?
EV leasing offers several advantages for the Indian market, such as:
✅ Affordability: EV leasing reduces the initial cost of acquiring an EV, as the customer only pays a fraction of the vehicle’s price as the monthly fee. This makes EVs more accessible and affordable for a larger segment of the population, especially the middle class and the youth.
✅ Flexibility: EV leasing gives the customer the flexibility to choose the EV model, duration, and mileage that suits their needs and preferences. The customer can also switch to a different EV or a conventional vehicle at the end of the lease term, depending on the availability and affordability of EVs in the future.
✅ Convenience: EV leasing eliminates the hassle of owning and maintaining an EV, as the leasing company handles the servicing, repairs, and battery replacement. The customer also does not have to worry about the depreciation or resale value of the EV, as they do not own it.
✅ Sustainability: EV leasing promotes the adoption of EVs, which reduces the carbon footprint and air pollution caused by conventional vehicles. EV leasing also encourages the development of a circular economy, where the EVs are reused and recycled at the end of their life cycle, rather than discarded as waste.
How is EV leasing different from buying an EV?
Buying an EV involves paying the full price of the vehicle upfront or in installments, along with the registration, insurance, and maintenance costs. The customer owns the vehicle and can use it as long as they want, but they also bear the risk of depreciation and obsolescence. Buying an EV also requires a higher initial investment, which may not be feasible for many customers.
Leasing an EV involves paying a monthly fee for using the vehicle for a fixed period, without any ownership rights or responsibilities. The customer can return, renew, or buy the vehicle at the end of the lease term, depending on their preference and convenience. Leasing an EV also requires a lower initial investment, which makes it more attractive for many customers.
What are the opportunities and challenges for EV leasing in India?
According to a report by RBSA Advisors, India’s market for electric vehicles is predicted to grow at a CAGR of 90% in this decade and reach $150 billion by 2030. EV leasing is expected to play a key role in this growth, as it provides a feasible and attractive solution for EV adoption. However, EV leasing also faces some challenges, such as:
✅ Regulatory uncertainty: The Indian government has taken several initiatives to promote EV adoption, such as tax incentives, subsidies, and the FAME II scheme. However, the regulatory framework for EV leasing is still unclear and inconsistent, as different states have different policies and regulations for EV registration, taxation, and incentives. This creates confusion and uncertainty for both the leasing companies and the customers and hampers the growth of the EV leasing market.
✅ Lack of awareness and trust: EV leasing is a relatively new and unfamiliar concept for many Indian consumers, who are used to owning and driving their own vehicles. Many consumers are unaware of the benefits and features of EV leasing and may have doubts and misconceptions about the quality, performance, and safety of EVs. Therefore, EV leasing companies need to create awareness and trust among the consumers, and educate them about the advantages and convenience of EV leasing.
✅ Competition and differentiation: The EV leasing market in India is becoming increasingly competitive, as more players enter the space, offering similar products and services. Some of the prominent EV leasing companies in India are Gensol Engineering, Autovert, ETO Motors, Orix Auto, and Myles. These companies need to differentiate themselves from each other, and offer unique and innovative solutions that cater to the diverse and evolving needs and preferences of the customers.
What are the trends and innovations in EV leasing in India?
EV leasing in India is witnessing some interesting trends and innovations, such as:
✅ Leasing for personal use: While EV leasing was initially focused on the commercial and fleet segments, it is now expanding to the personal and individual segments, as more consumers opt for EV leasing as a smarter and cheaper way of accessing EVs. For example, Tata Motors advocates leasing as a smarter way of accessing its Nexon EV, at a price cheaper than traditional car EMIs. A new electric Nexon that costs Rs 13.99 lakh ex-showroom can be leased for a monthly payment of Rs 47,900 for 18 months, Rs 44,900 for two years and Rs 41,900 for three years.
✅ Leasing for shared mobility: EV leasing is also enabling the growth of shared mobility platforms, such as ride-hailing, carpooling, and bike-sharing, which offer convenient and affordable transportation options for the urban population. For example, Ola Electric, which recently launched its S1 and S1 Pro electric scooters, has partnered with Orix Auto to offer a flexible and attractive leasing option for its customers. The customers can lease the Ola S1 for Rs 2,999 per month and the Ola S1 Pro for Rs 3,199 per month, with a refundable security deposit of Rs 11,999.
✅ Leasing for electric three-wheelers: Electric three-wheelers are one of the fastest-growing segments in the EV market, as they offer a low-cost and eco-friendly mode of transport for the last-mile connectivity. EV leasing is facilitating the adoption of electric three-wheelers, especially among the low-income and informal sector workers, who otherwise face difficulties in accessing finance and credit. For example, ETO Motors, a Hyderabad-based EV startup, offers electric three-wheelers on lease to drivers, who can pay a daily rental of Rs 250-300, and earn Rs 600-800 by providing passenger and cargo services.
EV leasing is a promising and potential business opportunity in India, as it addresses the major challenges and barriers to EV adoption, and provides a win-win situation for both the customers and the leasing companies. EV leasing can also contribute to the social and environmental goals of the country, by reducing the dependence on fossil fuels, and improving the air quality and public health. However, EV leasing also requires a supportive and stable regulatory environment, a robust and reliable charging infrastructure, and a strong and positive customer perception, to achieve its full potential and scale. EV leasing is not just a business, but a movement, that can transform the transportation landscape and the energy sector in India.