EV Financing as a High-Growth Lending Segment for Green NBFC’s

What was once an emerging trend is now clearly visible across the mainstream news cycle: electric vehicles are rapidly gaining ground in India. The evolving customer preferences for EVs are fueled by their desire for environmental sustainability and long-term cost efficiency. This invariably coincides with the measures deployed by the government to achieve its sustainability targets by 2030.

Mass sustainable adoption is well on its way towards becoming a critical part of India’s future, with shifting customer preferences dictating the direction in which the market is headed. In 2025 alone, EV sales hit a record high of 2.3 million units, accounting for 8% of all new vehicle registrations. 72% of these sales come from electric two-wheelers alone. Overall, future EV forecasts look bright for the country.

A USD 200 Billion Opportunity Backed by Scale

India’s electric mobility transition represents a USD 200 billion economic opportunity by 2030, spanning vehicles, batteries, charging infrastructure, and financing, creating a substantial long-term lending opportunity for green-focused NBFCs across consumer, commercial, and fleet segments. So, what does all this indicate? That the potential of mass sustainability in India is tremendous.

However, for this potential to be fully realized, a robust and scalable capital infrastructure is essential. While policy support has helped catalyze early adoption, the next phase of growth will depend on the private sector stepping in with deeper financial products, innovative lending structures, and risk-calibrated schemes to support EV adoption at scale. 

This is where important financial institutions like NBFCs have risen to the challenge. With a rising need for EV loans and capital for both private and commercial, NBFCs like Ecofy that offer innovative green financing solutions and flexible financial models for both individuals and enterprises can fill this gaps.

EV Adoption Is Accelerating Faster Than Perception

According to the NITI Aayog’s 2025 report on India’s electric mobility transition, domestic EV sales have surged significantly, rising from just 50,000 units in 2016 to 2.08 million units in 2024, with total EV stock reaching 5.45 million vehicles. While this represents only about 7.6% of total vehicle sales, it underscores the rapid acceleration of electrification across segments and highlights the scale of capital and financing needed to achieve the national target of 30% EV penetration by 2030.

E-commerce being as huge as it is, the most prominent adopters within the e-commerce and food delivery space are transitioning to electric vehicles. At the same time, a growing number of mid-sized logistics companies, urban freight operators, and shared mobility platforms are actively electrifying their delivery and transport fleets to reduce operating costs, improve asset utilization, and meet sustainability-linked procurement requirements. 

All-in-all, commercial demand is emerging as one of the strongest drivers of EV adoption in the country. And EV and sustainability-linked loans, especially in commercial and fleet segments, have demonstrated strong utilization, predictable cash flows, and improved risk profiles.

Improving Risk Profiles Are Strengthening the Lending Case

As EV adoption scales across use cases, risk dispersion improves and portfolio performance becomes more stable. Higher utilization, predictable operating cash flows, and growing borrower familiarity with EV assets are steadily improving the risk-return profile of EV-linked lending.

With demand-side momentum accelerating, the availability and depth of capital markets are becoming equally critical to sustaining EV adoption at scale.

Green Capital Markets Are Deepening in Parallel

As highlighted by the Climate Bonds Initiative, India’s sustainable debt market has expanded rapidly in recent years, reflecting growing investor appetite for climate-aligned assets. By the end of 2024, cumulative issuance of green, social, sustainability, and sustainability-linked debt crossed USD 55.9 billion, driven largely by green bonds aimed for clean energy and transport.

The issuance of sovereign green bonds totaling INR 477 billion has played a critical role in setting pricing benchmarks and strengthening market confidence, creating a more supportive funding environment for lenders and platforms focused on electric mobility and sustainability-linked financing.

How is this translating into action? Financial institutions and corporations are increasingly using sustainability-linked and green finance instruments to fund electric mobility, clean energy, and climate-aligned infrastructure projects, where asset visibility and cash-flow predictability are improving. At the same time, clearer regulatory oversight from SEBI and the RBI, along with the development of green taxonomies and disclosure frameworks, is helping build a more credible, transparent, and investable ecosystem for lenders focused on sustainability-linked assets.

NBFCs Are Moving from Pilots to Core Portfolios

Meanwhile, several Indian NBFCs have already begun integrating green lending into their core portfolios, particularly in electric vehicle financing, renewable energy, and sustainability-linked enterprise loans. Several large and mid-sized non-banking financial institutions have expanded their exposure to electric vehicles and clean-energy assets, particularly across consumer and commercial segments, while maintaining stable asset quality and healthy margins. This trend signals growing lender confidence in EV-linked portfolios as underwriting models mature and asset performance becomes more predictable.

From Policy-Led Adoption to Scalable Lending

As EV infrastructure matures, the risk in EV investment is reduced and opportunity is increased.

Expect clearer asset performance data, stronger operating economics across commercial EV use cases, and greater standardization in underwriting and risk assessment. As these fundamentals strengthen, the perceived risk in green lending will continue to decline, and what was once seen as a policy-driven or concessionary segment is increasingly emerging as a scalable, profitable lending opportunity that extends well beyond traditional asset classes.

Sustainability and EV-linked finance are all but inseparably linked at this point. And all of it is backed by policy support, commercial demand, and a widening market. Ultimately, EV financing is no longer a question of intent or ideology; it becomes a question of execution. The demand is visible, the policy direction is clear, and the economics are steadily improving. 

The next phase of green lending will belong to the institutions that can build repeatable, transparent, and scalable models around EVs, without losing discipline on risk.

Signals from the Ground Point to Long-Term Viability

Across the EV ecosystem, closer engagement between lenders, OEMs, and mobility operators is translating into faster adoption cycles, stronger borrower intent, and improved clarity on asset performance. Together, these fundamentals signal a lending environment that is increasingly resilient, scalable, and environmentally sustainable.
 
NBFCs that build early expertise in underwriting, partnerships, and product innovation within this space are likely to play a defining role in financing India’s transition to a greener economy. That’s the direction in which things are headed, and it’s for the best.

Kartik Gupta is the Head of Autovert. Views expressed are the authors’ personal.