Driving India’s EV Revolution: The Role of Financial Institutions

India's transition towards sustainable transportation is gaining pace, with commercial electric vehicles (EVs) playing a central role. From last-mile delivery to heavy cargo operations, commercial EVs are transforming the logistics landscape. Financial institutions, including banks, NBFCs (non-banking financial companies), and fintech firms, are becoming critical enablers of this transition. Their growing interest in financing commercial EVs stems from the sector's untapped market potential, advanced data transparency, and innovative financing models that address the needs of EV operators. The commercial EV segment in the country is expanding rapidly, driven by government policies and an increasing focus on sustainable logistics. Projections suggest that the EV financing market will require between INR 45,000 to 55,000 crore by 2026, highlighting the immense opportunities in this space. These developments underscore a shift, as alternative financiers step up to cater to underserved regions and address gaps in traditional banking.

Addressing Financing Challenges

Traditional banks have often been cautious in financing light commercial vehicles (LCVs), citing risks associated with non-prime customer profiles. This reluctance is not unique to EVs but extends to the broader commercial vehicle space, where operators often lack the creditworthiness favored by banks. However, the growing demand for commercial EVs has prompted a broader shift among financiers to develop solutions tailored to the unique needs of this market. Innovations such as leasing, battery subscriptions, and buyback schemes help lower the upfront costs of EV ownership, aligning with the cash flow cycles of fleet businesses. These models make the transition to EVs financially viable, reducing barriers to adoption.

The increasing use of data-driven insights has further strengthened financiers’ confidence in supporting EVs. Advanced telematics systems and real-time data monitoring allow financial institutions to assess vehicle performance, battery health, and residual value with greater accuracy. This transparency ensures better asset tracking and management, enabling financial institutions to make informed decisions. For EV operators, these tools offer reassurance and flexibility, further easing the path to adoption.

Innovative Financing Models in Action

New financial products are reshaping the commercial EV landscape. Subscription-based battery models and flexible leasing arrangements are helping operators’ lower upfront costs while retaining operational flexibility. International examples, like NIO’s Battery-as-a-Service in China, provide a blueprint for success, demonstrating how decoupling battery ownership from vehicles can enhance affordability. In India, similar approaches are emerging, allowing businesses to adopt EVs without straining their finances. These innovations are making commercial EVs accessible to a broader audience.

Investing in EVs is more than an environmental decision—it’s an economic opportunity. Financial institutions supporting EV adoption contribute to India’s clean energy goals while unlocking avenues for growth. Commercial EVs drive job creation, foster technological innovation, and build resilient infrastructure. Policies and production-linked incentives further encourage institutions to back EV-related ventures, ensuring mutual benefits for the economy and the environment.

Collaborating for the Future

The growth of EV adoption in India depends on collaboration among financial institutions, manufacturers, and policymakers. With 77% of vehicles in India financed, financiers play a crucial role in shaping the mobility landscape. AI-driven analytics and advanced data tools can streamline loan processes, customize financial products, and improve risk assessments. Combined with supportive policies, these innovations can scale financing solutions to meet diverse stakeholder needs and position financial institutions as key enablers of India’s EV revolution.

As India transitions to a greener future, financial institutions have the chance to lead the way. Beyond profitability, their role in advancing EV adoption demonstrates a commitment to sustainable growth and environmental responsibility. By actively supporting the transformation of India’s mobility sector, they are paving the way for a more inclusive and sustainable future.

The thoughts in this article are attributed to Rohit Gattani, VP - Growth and Vehicle Financing at Euler Motors