Leasing options help improve Electric Vehicle (EV) penetration in India
Vehicle subscription and leasing model hasn’t yet really picked up in Asian countries like India, but a growing number of companies are now offering leasing options to help boost the mass adoption of electric vehicles (EVs). The cost of ownership of electric vehicles is high and many people won’t make a shift in India if the cost remains high compared to traditional vehicles.
In the past couple of years, various startups, mobility solution providers as well as financiers have announced the availability of customized leasing options allowing customers to have an EV for their personal use for a monthly fee, without owning it. In the nascent EV market of India, leasing options are being seen as a game changer.
Industry experts are of the view that providing more and more leasing options will help increase EV penetration appreciably in the short term as customized options allow people to reap the benefits of an EV without worrying about hassles of payments like registration fees, maintenance charges, insurance fee, and road tax. In short, an individual can have an EV with zero down-payment.
Startups like Autovert, mobility services providers like ETO Motors, Orix Auto, and lenders like Greaves Finance and Mahindra Finance are some of the many companies that are already offering EV leasing schemes. Automobile manufacturers like Tata Motors Limited and MG Motor Limited are also quite bullish on leasing. According to a recent survey, leasing is currently contributing nearly 20 per cent to the demand for their Tata motors and MG Motors’ EVs.
As the upfront cost to own an EV is significantly higher than owning a conventional internal combustion engine (ICE), banks or other lenders are often reluctant to give loans. Moreover, it is a new segment. Thus, in such a situation, leasing is the best option for customers to have an EV. It is perhaps for this very reason that consumers are increasingly preferring “usership” via subscription and leasing model to own an EV.
Mohammed Turra, head of leasing at Mahindra Finance, said, “Leasing is a sweet spot for EVs, nudging more consumers to buy them. In the commercial EV segment, at least 50% of the fleet operators have started using leasing and we are offering customized structured packages with flexibility towards leasing.”
In August this year, sales of EVs in India grew 10 per cent month-over-month to 28,919 units, but this segment is still far behind the segment of ICEs. As per data compiled by the Council on Energy’s Centre for Energy Finance, EVs account for just 2 per cent of all vehicles sold in the country in August. However, experts are confident that the leasing model will help a lot in increasing EV penetration.