New Delhi: Electric cars are being promoted in India to reduce air pollution, but they are proving to be very expensive to manufacture and sell in the market. Electric vehicles are selling at much higher prices in the market as compared to vehicles that run on conventional fuels, petrol and diesel. It is also subsidized by the government for its purchase, while financial assistance is provided by the government for its construction through a special scheme for entrepreneurs. Still, that being said, financing electric vehicles in India remains a major challenge.
Alternatives are needed to reduce construction costs and prices
A report released on Monday by the Confederation of Indian Industry (CII) said financing for electric vehicles in India remains a challenge. In such a scenario, it is imperative to introduce an alternative that can help bring down production costs and bring electric vehicles (EVs) at par with conventional internal combustion engine (ICE) vehicles in price and value. The report, prepared in collaboration with OMI, is part of a series of reports on the ‘Roadmap for Future Mobility 2030’. The report also calls for the introduction of a ‘scrap’ policy based on the need to scrap end-of-life vehicles (ELVs).
19.7 lakh crore is required for charging points and batteries
Let us say that on March 9, 2009, a report on financing electric vehicles in India was also released by NITI Aayog and Rocky Mountain Institute (RMI) India. This report analyzed that to set up charging points for electric vehicles in India, an incremental capital investment of $266 billion (Rs 19.7 lakh crore) is required over the next decade.
3.7 lakh crore is required for funding by 2030
A report by NITI Aayog and Rocky Mountain Institute India has identified a $50 billion (Rs 3.7 lakh crore) market for electric vehicle financing in 2030, more than 80 percent of the current size of India’s retail vehicle financing industry. India’s current retail vehicle financing industry is valued at $60 billion (Rs 4.5 lakh crore).
What is the challenge?
India’s electronic vehicle ecosystem is yet to overcome technological cost, infrastructure availability and consumer sector barriers. Right now users are facing many challenges. These challenges include high interest rates, high insurance rates and low loan-to-value ratios. To address these challenges, NITI Aayog and RMI have identified a toolkit of 10 solutions that industry and governments and banks and non-banking financial institutions (NBFCs) can adopt to raise the required capital.
Demand for financing of 20 lakh vehicles over five years
According to a report presented on March 23, 2023, Revfin Services, a digital platform that provides payments for electric vehicles, claims that India aims to finance 20 lakh vehicles over the next five years. The company wants to achieve three to four times growth every year. The company’s chief executive officer (CEO) and founder Sameer Agarwal said the Indian electric vehicle industry is poised for rapid growth. The company is confident of meeting its target and will continue to raise funds through debt and equity for this purpose. From a long-term perspective, we have taken a strong position in EVs and are committed to financing 2 million electric vehicles over the next five years, Agarwal said.
Disbursement of loan at 15% rate
Sameer Aggarwal, CEO of RevFin Services, said monthly disbursements are increasing at a rate of around 15 per cent on a monthly basis. It has quadrupled in the last one year. If we continue like this, we will achieve this goal. The company aims to finance 50,000 electric vehicles by 2023-24. Over the past 51 months, the company has paid for 17,118 electric vehicles.
