Decoding the pivotal role of finance in driving EV adoption in India

While the lack of the entire EV ecosystem remains a major barrier for the segment, the hesitancy of the auto financers to offer loans for EVs also lurks as a significant challenge for industry.

Electric Vehicles(EVs) are believed to be the most viable solution for reducing the carbon footprint and dependency on fossil fuel across the globe and rightly so. In recent years, India has witnessed  a slew of EV launches ranging from scooters to SUVs by both automobile giants as well as innovative startups

According to the Society of Manufacturers of Electric Vehicles(SMEV), the registered association that represents the manufacturers of electric vehicles in India, the sale of electric vehicles in India is expected to touch a million units in the current year. 

This is nearly a five fold growth as compared to the sales figure of EVs in 2021 which stood at 2,33,971.Citing an encouraging response from the consumers, the government of India has also made a three fold hike in the budget for subsidy under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles(FAME II) scheme for the fiscal year 2023. The subsidy for the year is expected to reach Rs 2,908 crore as compared to Rs 800 crore in fiscal year 2021.

State governments across the country are also offering additional subsidies ranging from Rs 5000 to Rs 30,000 to potential EV buyers to drive the adoption of EVs in India.

Upfront financial challenges for the EV industry

Despite the optimistic numbers, EVs are still not mainstream in India owing to numerous bottlenecks. While the lack of the entire EV ecosystem remains a major barrier for the segment, the hesitancy of the auto financers to offer loans for EVs also lurks as a significant challenge for industry.

According to Mr Sohinder S Gill, Director-General of Society of Manufacturers of Electric Vehicles(SMEV), only 9 percent of EV two-wheelers get financed in India. This can be attributed to the nascency of EV technology and adoption which are preventing banks and non-banking financial companies(NBFC) from lending owing asset and business model risks.

The low confidence of financial institutions in bankrolling EVs also results in high-interest rates, low loan to value ratio resulting in high downpayment, short loan tenures as compared to conventional vehicles and limited financing options for EV buyers.

How FINAYO is addressing the persisting financial challenges

FINAYO's cutting edge platform harnesses Machine Learning and Artificial Intelligence for evaluating customer risk and asset assessment including the shelf life of parts in real-time and instill confidence in lenders for offering loans for EVs.The SaaS-based platform also offers customised loans as per the profile of an individual, enabling the potential customer with multiple options to choose from.

FINAYO's disruptive AI-powered platforms  including Asset Business Rule Engine and Lender Business Rule Engine enable the OEMs and lenders to furnish compelling loan offers to consumers for a convenient buying experience 

FI-MEN

The revolutionary FI-MEN solution by FINAYO allows a potential EV buyer to benefit from a host of loan offers in real-time for his preferred electric vehicle with just the scan of a QR code. FINAYO has collaborated with multiple EV showrooms in this regard and the consumers can avail of the loan offers after filling in loan-specific details. 

The solution is a testament to FINAYO's objective to mitigate the challenges associated with lending in the EV sector.

Another key advantage of FINAYO's platform includes enhanced customer acquisition for both the lenders and EV manufacturers as it bridges the gap between the financial institutions and EV buyers who are eyeing a financing option in real-time.

With the government of India pledging its support to significantly cut carbon emissions and increasingly rely on renewable sources at the COP 26 summit, a host of new encouraging policies to further propel the adoption of EVs in India are expected in the coming times.

The country's apex policy think tank, NITI Aayog will also establish a $300 million first-loss-risk sharing instrument along with the World Bank. The instrument will serve as a guaranteeing mechanism for banks and NBFCs in the event of payment delays on EV loans.

In such a scenario cutting edge SaaS-based platforms like FINAYO will play an active role in enabling the consumers with hassle-free, instant financing options in a matter of minutes. The automated platform leveraging state of the art technology will also expand opportunities and incentives for all segments of EV buyers in India. 

Commenting on FINAYO's commitment to propel the adoption of EVs in the country, Mr. Brajendra Singh Tomar, founder and ceo said, ''After comprehensive research in the EV financing space, FINAYO's proficient team identified the key challenges lurking in the domain and harnessed cutting-edge AI-powered technologies to develop FI-MEN. The industry-leading FI-MEN solution boasts India's first Asset Business Rule Engine for OEMs and Lender Business Rule Engine for banks and NBFCs to furnish competitive loan offers to prospective EV buyers conveniently and swiftly.''

''Our team at FINAYO is committed to investing in state of the art technologies to ease the lending process for EVs and contribute to the ambitious initiative of the Government of India to become a 100 percent EV nation by 2030,'' added Mr. Tomar.

With a firm dedication to augment the adoption of EV vehicles across the globe, FINAYO will soon be penetrating the markets of Southeast Asian Regions to replicate its success story in India.

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