Energy

Electric vehicle financing in India to touch USD 50 billion by 2030

India’s plans to transition to electric mobility require investments to the tune of USD 266 billion but significant barriers have to be overcome in adoption and financing
<p>Electric vehicle penetration is expected to rise rapidly in India (Photo by Justin Kase / Alamy)</p>

Electric vehicle penetration is expected to rise rapidly in India (Photo by Justin Kase / Alamy)

India’s clean mobility transition will require a cumulative capital investment of INR 19.7 trillion (USD 266 billion) in electric vehicles (EVs), charging infrastructure and batteries over the next decade, a new report has estimated.

The report — Mobilising Electric Vehicle Financing in India — says that the domestic market for financing EVs will be INR 3.7 trillion (USD 50 billion) by 2030, which is about 80% of the current size of India’s retail vehicle finance industry that is worth INR 4.5 trillion today.

India’s EV ecosystem has so far focused on overcoming adoption hurdles associated with technology cost, infrastructure availability and consumer behaviour, said the report by the government think tank Niti Aayog and US-based Rocky Mountain Institute (RMI).

Financing is the next critical barrier that needs to be addressed to accelerate India’s electric mobility transition, the report said.

“The need of the hour is to mobilise capital and finance towards EV assets and infrastructure,” said Amitabh Kant, CEO, NITI Aayog. “As we work towards accelerating the domestic adoption of EVs and push for globally competitive manufacturing of EVs and components like advance cell chemistry batteries, we need banks and other financiers to lower the cost and increase the flow of capital for electric vehicles.”

The EV ecosystem must design solutions to address barriers across policy, technology, economics and behaviour to support the adoption of EVs in India, the report said. Simultaneously, reengineering vehicle finance and mobilising public and private capital will be critical.

India consumers currently face several challenges, such as high interest rates, high insurance rates and low loan-to-value ratios. To address these challenges, the report has identified a toolkit of 10 solutions that financial institutions such as banks and non-banking financial companies (NBFCs), as well as the industry and government can adopt in catalysing the required capital.

“Re-engineering vehicle finance and mobilising public and private capital will be critical to accelerating the deployment of the 50 million EVs that could be plying on India’s roads by 2030,” said Clay Stranger, senior principal at RMI. “These solutions represent high-leverage areas for interventions in finance, and we believe that many are relevant beyond India.”

The suggested solutions include financial instruments such as priority-sector lending and interest-rate subvention. Others are related to creating better partnerships between equipment makers and financial institutions by providing product guarantees and warranties.

A developed and formal secondary market can improve the resale value of EVs and improve their bankability, the report said.

“The identified barriers within EV finance need to be tackled in structured manner with innovative financing models,” said Randheer Singh, senior specialist at NITI Aayog.

The report said investment in India’s transition to electric mobility has the potential to create significant economic, social, and environmental benefits for the country. As the economics of EVs continue to improve, new business models and financing instruments gain acceptance, and government programmes drive early adoption and promote domestic manufacturing, India’s EV market is poised for growth in the coming decade.

In the runup to the 26th UN Climate Change Conference of the Parties (COP26), India has been participating in the COP26 Zero Emission Vehicle Transition Council. The world’s largest and most progressive automotive markets are working together to accelerate the global transition to zero emission vehicles, in line with the goals of the 2015 Paris Agreement.

The future size of India’s vehicle market is large and its plans for manufacturing and adoption of EVs and EV components are ambitious. It remains to be seen if the South Asian nation is able to meet its targets.

-->
Cookies Settings

Dialogue Earth uses cookies to provide you with the best user experience possible. Cookie information is stored in your browser. It allows us to recognise you when you return to Dialogue Earth and helps us to understand which sections of the website you find useful.

Required Cookies

Required Cookies should be enabled at all times so that we can save your preferences for cookie settings.

Dialogue Earth - Dialogue Earth is an independent organisation dedicated to promoting a common understanding of the world's urgent environmental challenges. Read our privacy policy.

Cloudflare - Cloudflare is a service used for the purposes of increasing the security and performance of web sites and services. Read Cloudflare's privacy policy and terms of service.

Functional Cookies

Dialogue Earth uses several functional cookies to collect anonymous information such as the number of site visitors and the most popular pages. Keeping these cookies enabled helps us to improve our website.

Google Analytics - The Google Analytics cookies are used to gather anonymous information about how you use our websites. We use this information to improve our sites and report on the reach of our content. Read Google's privacy policy and terms of service.

Advertising Cookies

This website uses the following additional cookies:

Google Inc. - Google operates Google Ads, Display & Video 360, and Google Ad Manager. These services allow advertisers to plan, execute and analyze marketing programs with greater ease and efficiency, while enabling publishers to maximize their returns from online advertising. Note that you may see cookies placed by Google for advertising, including the opt out cookie, under the Google.com or DoubleClick.net domains.

Twitter - Twitter is a real-time information network that connects you to the latest stories, ideas, opinions and news about what you find interesting. Simply find the accounts you find compelling and follow the conversations.

Facebook Inc. - Facebook is an online social networking service. China Dialogue aims to help guide our readers to content that they are interested in, so they can continue to read more of what they enjoy. If you are a social media user, then we are able to do this through a pixel provided by Facebook, which allows Facebook to place cookies on your web browser. For example, when a Facebook user returns to Facebook from our site, Facebook can identify them as part of a group of China Dialogue readers, and deliver them marketing messages from us, i.e. more of our content on biodiversity. Data that can be obtained through this is limited to the URL of the pages that have been visited and the limited information a browser might pass on, such as its IP address. In addition to the cookie controls that we mentioned above, if you are a Facebook user you can opt out by following this link.

Linkedin - LinkedIn is a business- and employment-oriented social networking service that operates via websites and mobile apps.