Unlocking value of EVs through asset lifecycle management, customised finance solutions 

The accelerating adoption of electric vehicles (EVs) represents a paradigm shift in transportation and a unique set of challenges and opportunities.  In this dynamic landscape, asset lifecycle management (ALM) emerges as a strategic approach crucial to maximising the value of assets from acquisition to disposal.
 
The Importance of Asset Lifecycle Management

The inflection points at which electric vehicles find themselves in India demand innovative solutions to overcome barriers hindering widespread adoption.  One of the primary challenges is the upfront higher cost associated with EVs, primarily driven by the expensive lithium-ion batteries.To address this bottleneck, ALM comes across as the key to unlocking the full potential of the EV market.
 
ALM allows for enhanced value extraction from EV assets by managing them across multiple users. By shifting the paradigm from ownership to usage.  This not only reduces the financial burden on consumers but also contributes to building circularity in the usage of resources.

The traditional linear asset ownership model is no longer sufficient; instead, the focus should be on optimising asset utilisation, thus ensuring that the entire lifecycle value of an asset is maximised.
 
Mitigating the Upfront Cost Barrier

The high cost of lithium-ion batteries is a well-known deterrent to EV adoption. Additionally, the lack of locally available materials for manufacturing these batteries adds another layer of complexity.  Herein lies the need for specialised financiers who possess the capability to understand the intricacies of battery life. Through innovative financing solutions grounded in ALM, this will alleviate the upfront costs for users, making EVs more accessible and affordable.
 
Environmental Considerations and Waste Management

Moreover, the environmental impact of battery-electric vehicles (BEVs) cannot be ignored. The disposal of batteries poses a significant challenge, leading to concerns about e-waste management.

As a responsible society, we must recognise the importance of addressing this issue.  ALM allows us to manage asset risks and provides a framework for tracking and managing e-waste effectively. Repurposing and recycling batteries increase circularity in resource usage, aligning with sustainable practices. 
 
Collaboration for Success

Collaboration with traditional financiers is crucial to realising the full potential of ALM in the EV ecosystem. With their expertise in credit underwriting, traditional financiers can partner with specialised entities. This collaborative approach enables the management of asset risks across diverse users and use cases, resulting in a win-win scenario for all stakeholders.

The win-win scenario is multifaceted.  Customers benefit from a pay-per-use model, paying only for what they use, enhancing affordability. The optimised utilisation of assets leads to increased efficiency. At the same time, the ability to recycle and repurpose batteries contributes to circularity in resource usage. Simultaneously, traditional financiers can focus on their core competency of credit underwriting, leaving asset risk management to specialists.
 
Way Forward

However, regulatory support is essential to tap into ALM's potential in the EV sector fully. Policies supporting battery leasing and swapping, normalisation of GST between EVs and Gliders (EVs) with separately sold batteries, demand-based incentives for leasing models, and battery repurposing and recycling are imperative.  These measures will create an enabling environment for effectively
implementing ALM strategies.
 
As we navigate the EV revolution in India, the role of a specialised financier goes beyond mere funding.  It involves spearheading innovative solutions, such as ALM, to propel the industry forward.

By addressing the challenges associated with upfront costs, battery management, and resource circularity, we not only enhance the adoption of electric vehicles but also contribute to a sustainable and responsible future for transportation in India.

Sandeep Divakaran is the CEO of Greaves Finance. Views expressed are his own.