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India's electric vehicle financing industry projected to be worth Rs 3.7 lakh crore in 2030: RMI and NITI Aayog report

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New report proposes toolkit of solutions to lower cost and increase finance for electric vehicles

NEW DELHI, Jan. 30, 2021  /PRNewswire/ — NITI Aayog and Rocky Mountain Institute (RMI) today released the report 'Mobilising Finance for EVs (Electric Vehicle) in India'. The report highlights the role of finance in the India's transition to EVs and analyses that the transition will require a cumulative capital investment of USD 266 billion (Rs 19.7 lakh crore) in EVs, charging infrastructure, and batteries over the next decade.

The report also identifies a market size of $50 billion (Rs 3.7 lakh crore) for the financing of EVs in 2030 – about 80 percent of the current size of India's retail vehicle finance industry, estimated to be worth about Rs 4.5 lakh crore (USD 60 billion) today.

“The need of the hour is to mobilise capital and finance towards EV assets and infrastructure,” said Amitabh Kant, CEO, NITI Aayog. “As we work to accelerate domestic EV adoption and push for globally competitive manufacturing of EVs and components such as advance cell chemistry batteries, we need banks and other financiers to step up to lower the cost and increase the flow of capital for EVs.”

India's EV ecosystem has so far focused on overcoming hurdles to adoption associated with technology cost, infrastructure availability, and consumer behaviour. Financing is the next critical barrier to accelerate India's electric mobility transition.

End users currently face several challenges such as high interest rates, high insurance rates, and low loan-to-value ratios.

To address these challenges, NITI Aayog and Rocky Mountain Institute have identified a toolkit of 10 solutions that financial institutions such as banks and non-banking financial companies (NBFCs), as well as industry and government can adopt in catalysing the required capital.

“Reengineering vehicle finance and mobilising public and private capital will be critical to accelerating the deployment of the 50 million EVs that could be plying on India's roads by 2030,” said Clay Stranger, Senior Principal, Rocky Mountain Institute. “These solutions represent high-leverage areas for interventions in finance, and we believe that many are relevant beyond India.”

The 10 solutions recommended in the report include financial instruments such as priority sector lending and interest rate subvention. Others are related to creating better partnerships between original equipment manufacturers (OEMs) and financial institutions by providing product guarantees and warranties. Furthermore, a developed and formal secondary market can improve the resale value of EVs and improve their bankability.

Recommendations beyond finance include digital lending, business model innovation, fleet and aggregator electrification targets, and the creation of an open data repository for EVs.

The report further determines that investment in India's transition to electric mobility has the potential to create significant economic, social, and environmental benefits for the country. As the economics of EVs continue to improve, new business models and financing instruments gain acceptance, and government programmes drive early adoption and promote domestic manufacturing, India's EV market is poised for growth in the coming decade.

The report can be accessed on the following links:

Available at NITI Aayog:
https://www.niti.gov.in/

Available at Rocky Mountain Institute:
www.rmi.org/insight/mobilizing-finance-for-evs-in-india/

Available at RMI India:
www.rmi-india.org/insight/mobilising-finance-for-evs-in-india

About NITI Aayog

The National Institution for Transforming India, also called NITI Aayog, is the premier policy think tank of the Government of India, providing both directional and policy inputs. While designing strategic and long-term policies and programmes for the Government of India, NITI Aayog also provides relevant technical advice to the Centre and states. An important evolutionary change from the past, NITI Aayog acts as the quintessential platform of the Government of India to bring states to act together in national interest, and thereby fosters cooperative federalism.

About Rocky Mountain Institute

Rocky Mountain Institute (RMI)-an independent nonprofit founded in 1982-transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost- effectively shift from fossil fuels to efficiency and renewable. Rocky Mountain Institute published India Leaps Ahead: Transformative Mobility Solutions for All with NITI Aayog in May 2017, and works with various other central government agencies like NITI Aayog, Ministry of Housing and Urban Affairs, and Department of Heavy Industry to support India's transition to clean, shared, and connected mobility.

 

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