Despite the growing adoption of EVs in India, the availability of accessible and affordable financing remains one of the major challenges for the widespread transition to e-mobility. From the perspective of financiers, lending for ICE two- and three-wheelers is a difficult business because the borrower profile consists of many new-to-credit customers who are learning to adapt to formal credit cycles and typically have a history of significant delays in payments. As a result, financiers are highly dependent on building robust collection systems to avoid delayed payments and are reliant on a secondary market to recover money in case of a default.
As identified in this report, in the case of electric two- and three-wheelers, financiers face higher risks emanating from
(1) counterparty
(2) product
(3) operations
(4) repossession
(5) residual risks compared with ICE vehicles
This report “De-Risking Lending for a Brisk EV Uptake: A Practical Guide on De-Risking Measures for Electric Two- and Three-Wheelers in India” by NITI Aayog, SIDBI, RMI and supported by the World Bank, Korea–World Bank Partnership Facility, and Korea Economic Development Cooperation Fund, involves discussion of mechanisms to address financing barriers and catapult the growth of the electric two- and three-wheeler market through a financing facility.
Access the complete report here
