Can Smarter EV Financing Make Sustainable Mobility More Inclusive?

India’s electric mobility story is no longer simply about reducing emissions or replacing the internal combustion engine. It is increasingly about who gets access to the transition.

Electric vehicles are becoming a more visible part of India’s mobility landscape, particularly in the two and three-wheeler space. India sold more than 12.8 lakh electric two-wheelers in 2025, representing about 6.3 percent of total two-wheeler sales.

Yet the next phase of adoption cannot be driven by vehicle availability alone. For millions of consumers, small businesses, delivery workers and commercial drivers, the decisive question is not whether an EV makes economic sense over its lifetime. It is whether they can avail feasible  financing for the vehicle to begin with.

That makes financing one of the most important, and perhaps least discussed, pieces of India’s sustainable mobility transition.

Affordability gap is more complicated than the sticker price

An EV can offer lower running and maintenance costs, but its upfront economics can still be difficult for a borrower with limited liquidity. This is relevant in commercial mobility, where a vehicle is not simply an asset but the source of income.

For a three-wheeler driver, an EV may reduce daily fuel expenditure substantially. But higher upfront payment, unfamiliar lending standards or battery life considerations can make it harder to obtain the loan. The irony is that the very customers who stand to benefit significantly from lower operating costs are the ones facing the greatest barriers to financing.

Traditional vehicle finance is heavily reliant on well established assumptions around resale value, vehicle life and operating patterns. EVs add variables such as battery degradation, technology shifts, residual values and the still very young used-EV market. NITI Aayog has raised these issues in the past, noting that in the case of commercial EV lending, financiers face higher asset and credit risk, including uncertainty regarding battery performance and recovery value in the event of default.

Financing needs to understand the economics of the vehicle

The next generation of EV finance will need to evaluate the economics of use, not just the borrower.

For a commercial EV, daily kilometres, route patterns, charging availability, earnings potential and battery utilisation can provide a much clearer picture of repayment capacity than conventional underwriting alone. Digital transaction histories and cash-flow data can potentially help lenders assess customers who may not fit neatly into traditional credit profiles.

A driver with limited formal credit history may nevertheless have other data points that bolster their borrowing profiles and may have other sources of income. Better data can help lenders distinguish between a genuinely risky borrower and an underserved one.

The opportunity is therefore to build financing products around the way EVs actually operate.

Flexible repayment structures could align EMIs more closely with cash flows, product warranties and asset life for commercial users. Financing may include warranties on batteries and service packages.

Partnerships between OEMs, financiers, fleet operators and charging networks could reduce uncertainty around vehicle uptime and maintenance.

The objective should not be to make credit indiscriminately easier. It should be to make risk more measurable.

Residual value will become increasingly important

One of the biggest missing pieces in EV financing is a reliable secondary market.

If lenders cannot confidently estimate what an EV will be worth three or four years after purchase, they are likely to compensate by pricing in additional risk. That ultimately reaches the customer through higher financing costs or stricter eligibility requirements.

Battery-health certification, standardised vehicle histories and stronger resale ecosystems could therefore have an impact far beyond the used-car market. They could lower uncertainty at the point of first purchase.

Inclusion should be measured by access, not just adoption

India's EV transition will be meaningful only when electric mobility becomes accessible beyond affluent urban consumers.

The Reserve Bank of India’s 2025 Priority Sector Lending framework expanded the scope of eligible renewable-energy activities and continues to provide a channel through which credit can support environmentally important sectors.

But policy support alone cannot build an inclusive financing ecosystem.

Banks, NBFCs and specialised EV financiers will need to develop deeper expertise in the economics of different EV segments. For instance, a commercial EV driver in a Tier II or Tier III city should not necessarily be assessed using the same parameters as a driver operating in a Tier I city. Their income patterns, asset type, asset utilisation and repayment capacity are fundamentally different.

The real opportunity lies in moving from vehicle finance to mobility finance, understanding the asset, the borrower and the income it generates as one connected ecosystem.

If smarter underwriting can reduce perceived risk, financing costs can fall. If financing costs fall, adoption can move beyond early adopters. And if adoption reaches commercial and mass-market users at scale, the environmental benefits of electrification become far more consequential.

The future of sustainable mobility, therefore, may not be determined only by better batteries or more affordable vehicles. It may also depend on whether the financial system becomes smart enough to understand the people, businesses and economics behind the transition.

Karamveer Singh Dhillon is Co-founder and CEO of Perpetuity Capital. Views expressed are the author's personal.