Are Financing Issues Ailing the Electric Vehicle Industry? Consensus is that banks and financial institutions have a big role to play in encouraging EV adoption in India

At a time when the government is focusing on localizing production of electric vehicles (EVs) in India, financing of projects is turning out to be the biggest hurdle. "The upfront costs are very high and thus financial re-engineering is very important for e-mobility," said Vinit Bansal, CEO and founder of EV Motors India, while speaking at the EVCon India conference.

According to him, "banks and financial institutions have a big role to play" as e-mobility in India would be challenging without the support of the financial institution. Bansal—whose firm builds and operates charging stations for EVs—also highlighted issues that need to be dealt with to improve mass adoption of electric vehicles.

Moderating a panel during the conference, Kavan Mukhtyar, partner and leader at PwC, too agreed that "the key to the puzzle (expanding EV fleet) lies" in resolving financial bottlenecks. He, however, added that apart from financial re-engineering, business model renovation can also address the financial issues.

According to Mukhtyar, the problem may have a solution through shared mobility space. It can increase viability as the volumes will grow and prices will go down. This will encourage electric vehicle adoption among users.

Funding pace

According to Vineet J. Mehra, founder of DOT, which is a logistics provider that uses electric vehicles for transport, while funding and investment in the electric vehicle space is picking up pace in India, banks need to step up further. Recently, EV mobility start-up BluSmart raised $3 million from Deepika Padukone's KA Enterprises, JITO Angel Network, Kalpavriksh Trust (Centrum VC Fund), Survam Partners, family office of Hero Group's Suman Kant Munjal and others.

Banks are also stepping up on initiatives in the green mobility business. In April, State Bank of India reduced the rates of auto loans for EVs. Buyers were offered a discount of 20 basis points on the interest paid on the loan. Apart from this, the loan repayment period is also longer under this scheme.

While speaking at the event, Vignesh Nandakumar, partner at Lightstone Aspada, explained vehicle loan business in India is one of the largest markets and the reason behind it is that users understand the need for vehicles. According to him, the government needs to consider what it can do in that front.

He also added that government subsidies should be made available to both manufacturers and consumers to boost EV adoption in India.