India is zooming ahead on the path to achieve electric mobility as more than 13 lakh e-vehicles have already hit the roads in the country. Electric car registrations increased three-fold in July and EV sales are expected to cross the one million mark in FY23. Powered by banks and NBFCs, India’s EV financing sector can achieve a market size of Rs 40,000 crore by 2025. Thanks to India’s recent negotiations with the World Bank, EV loans are set to become cheaper and easily available in India.
Protecting banks against defaults
The government is discussing a risk sharing mechanism with the World Bank, which means that banks will have an instrument to protect them from loan defaults. Banks will also be able to cut down the cost of providing EV loans, which will encourage people to go electric through EMIs. So far lenders have been holding themselves back from granting EV loans, since the cost of insuring them is high and resale values are low.
World Bank will reportedly create a billion dollar fund which will be available for all financial institutions, so that they get first-loss guarantees in case of loan defaults. This will provide a much needed boost for the Indian government’s plans to achieve net-zero status by 2070, and triple the investment in electric mobility to $20 billion by 2030.
Adoption yet to pick up
Factors such as the availability of little more than 2000 charging points for more than 13 lakh EVs, and higher cost had slowed down their adoption in India. Frequent incidents of electric vehicles catching fire on the road have also raised safety concerns, which have hit EV adoption in India.
Among other efforts to address concerns that slow down EV adoption, the Indian government is working on a battery swapping program. This means that instead of spending time at charging stations, EV owners will quickly get a fully charged battery in exchange for the discharged one.
