With rapid development in EV production, what can help advance the industry in terms of financing?
The electric vehicles industry has been seeing a significant uptake for the last few years as the demand of these vehicles is continuously soaring. In India, EVs sales, excluding e-rickshaws, grew by 20 percent at 1.56 lakh units in 2019-20 largely driven by two-wheelers, according to Society of Manufacturers of Electric Vehicles (SMEV). While the numbers are growing relentlessly, EVs account for a small fraction of vehicles on the road. This is significantly owing to production, technical limitations and financing. Additionally, insufficient charging infrastructure, reliance on battery imports, high vehicle prices are also creating roadblocks in the development of the EV industry.
Industry experts believe that 2020 is the year of electric vehicles that are already taking off. But manufacturing EVs at scale is indispensable and just as critical as the quality and performance of an individual vehicle. Despite having production strategy ready, automotive giants are still struggling with manufacturing and selling more EVs, be it infrastructure or financing.
Most OEMs are now turning to Fintech and establishing partnerships with fintech startups to boost their EV sales. Hero Electric, for instance, recently joined hands with Autovert Technologies. The partnership will provide Hero Electronic customers with subscription-based financing plans, starting at INR 2,999 a month. With these subscription plans, customers can avail of the vehicle itself, along with bundled services such as comprehensive insurance, service and maintenance, loyalty bonuses and lucrative upgrade options.
There is no surprise that the fintech industry has developed at a steady pace in the last decade. And the evolution of new crop of startups, MSMEs and payment banks has changed the face of traditional banking and other financial services.
FinTech Drives Capital Opportunities in the EV Industry
According to Hitachi Research Institute, the digitalization of financial flows using FinTech links capital providers and users directly, enabling low-cost fundraising, account settlement, and collections. The industry, by working with commercial flows and logistics, is enabling transactions that are smaller, higher-frequency, and more diversified. While financing is a big challenge in the EV segment, OEMs looking for capital will now have access to financing through the FinTech.
BattRE, a Jaipur-based EV startup, recently announced its alliance with AI-driven EMI financing platform ZestMoney to offer customers with affordable and transparent credit to purchase BattRE scooters. Customers can book any BattRE electric scooter by availing financing options from ZestMoney. They can even get access to financing with no previous CIBIL score through ZestMoney.
Moreover, fintech companies have a crucial role to play in the EV sector, particularly in small commercial two- and three-wheeler segments. According to the head of auto finance HDFC Bank, Ashok Khanna, HDFC bank will finance as and when vehicles are introduced. However, the back has to see how many customers are eligible for a ₹15-lakh car.