From loans to leasing to 'as-a-service' model: EV finance

The EV Finance segment in India is flourishing with new concepts and processes:

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It is an accepted fact that EV, or electric vehicle, financing sector offers a huge scope for those players who are willing to innovate in fields such as capital creation, distribution and underwriting. Many experts believe new players in the sector can with the correct mix of financial planning and operational expertise create profitable businesses. The new trends include Battery-as-a-Service (BaaS), standalone loans for battery purchase and operating leases. Some of the ideas floated include 'access' against 'ownership', making use of data for better credit and purposeful partnerships between banks, NBFCs and OEMs.

BATTERY LOANS

A key concept that has gained prominence is battery loans. Vehicle maker MG Motor has concluded an agreement with Axis Bank where vehicle loans are separated from the cost of batteries, thereby reducing purchase cost of the vehicle. Loans for batteries are offered on longer tenures. There are also concepts like 'battery subscriptions', which is a pay-per-use model and which is immensely beneficial for fleet operators. In addition, there is operating lease model, which is a part of the priority sector lending, and a subscription model, which is combining access and maintenance and making use of embedded finance.

Some estimates have put the EV financing market in India at $2.37 billion in 2025 and this is projected to touch $19.97 billion by 2030 - which is a 53.15% CAGR.

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