Electric Vehicle Loans: Main Challenges You May Face | Auto News

EV Financing: Globally, the electric vehicle market has been experiencing significant growth, driven by several factors such as climate concerns, improvement in battery technology, and charging infrastructure development. Growing awareness of climate change and air pollution has led governments worldwide to implement stricter emissions norms. This has incentivized both consumers and automakers to transition towards electric vehicles, which produce fewer emissions than traditional internal combustion engine (ICE) vehicles. Easy financing options can accelerate EV adoption. To discuss more about EV financing, Karamveer Singh Dhillon, Co-founder and CEO of Perpetuity Capital, shared his thoughts with us.

EV Financing: Challenges & Solution

Dhillon said, “Electric vehicles tend to have a higher upfront cost compared to traditional internal combustion engine vehicles. This can be a barrier for consumers, especially in a price-sensitive market like India. While financing options for traditional ICE vehicles are widely available through banks and financial institutions, financing options specifically tailored for EVs are limited in India. This can make it challenging for consumers to secure affordable loans or leasing options for EVs.

“However, I feel that banks are uncertain about the product and the resale value of EVs which is why they are not ready to commit to the cause. Financial institutions or EV manufacturers could offer resale value guarantees or buyback schemes to mitigate the perceived risk associated with EV ownership. This can provide consumers and financers with peace of mind and reduce uncertainty about the long-term cost of owning an EV,” he added.

“We have currently boarded over 30 EV manufacturers. We have approximately 150 EV dealers, growing daily. We at Perpetuity Capital primarily aim to provide financing options to single-owner autorickshaw drivers and delivery drivers. Typically, these are people who are new to credit and are looking for financing to buy an asset in order to make a living,” Karamveer Singh Dhillon said.

Dhillon said, “This segment of society has limited access to formal credit and generally relies on local money lenders for financing, particularly in rural India. As a solution to this, we are looking to create a credit product that averts rural customers and migrant workers from predatory money lenders. However, assessing the financial creditworthiness of a borrower who lacks a credit history can be challenging but not impossible.”

How To Assess Creditworthiness Of Borrower?

“We have developed a proprietary scoring methodology that focuses on 35 alternative data points to analyze the creditworthiness of a borrower. This could include analyzing the borrower’s banking/UPI transactions, utility bill payments, rental agreement/payment history, and other non-traditional data points to gauge their current financial responsibility. We also focus on income verification and evaluation of a borrower’s lifestyle for customers who do not have a credit history,” he said.