India’s transition to Electric Vehicles (EVS) will require a cumulative capital investment of 266 billion dollars (Rs 19.7 lakh crore), according to a new report Mobilising Electric Vehicle Financing in India’.
The report by NITI Aayog and Rocky Mountain Institute (RMI) pointed out that the EV sales penetration has the potential to be about 70 percent in 2030. It identifies a market size of 50 billion dollars (Rs 3.7 lakh crore) for the financing of EVs in 2030, about 80 per cent of the present size of India’s retail vehicle finance industry, worth 60 billion dollars (Rs 4.5 lakh crore).
NITI Aayog CEO Amitabh Kant said that there was an urgent need to mobilise capital and finance towards EV assets and infrastructure. “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,” he said.
Noting that the End-users currently faced several challenges like high interest rates, high insurance rates and low loan-to-value ratios, the report has come up with ten solutions that financial institutions such as banks and non-banking financial companies, as well as the industry and government can adopt in catalysing the required capital. The ten solutions recommended include financial instruments such as priority-sector lending and interest-rate subvention. It also includes solutions to creating better partnerships between OEMs and financial institutions by providing product guarantees and warranties. Another solution put forth is development of secondary market.
Rocky Mountain Institute Senior Principal Clay Stranger said that re-engineering vehicle finance and mobilising public and private capital would be critical to accelerating the deployment of the 50 million EVs that could be plying on India’s roads by 2030.