Beyond Cars: The Untapped Potential for Commercial EVs in India
Jasbir S Juneja
India’s push for net-zero emissions by 2070 and a reduction in fossil fuel dependence is leading personal and commercial users towards clean energy sources – evident in the consumer inclination towards electric vehicles (EVs). In 2024 alone, Indians purchased nearly 20 lakh EVs. Over a third of these were commercial EVs – spanning the two, three, and four-wheeler and bus categories. This number is projected to go up to 35 lakhs by 2030, reinforcing the interest of business owners in realising efficiency, profitability, and sustainability through EV usage.
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A combination of policy support, design improvements, shifting corporate imperatives, and financial innovation is fuelling this growth – and more businesses are recognising the promise of electric mobility.
In India’s rapidly changing industrial landscape, there is a gamut of opportunities for businesses to ride the EV wave. As EV adoption rises, an ecosystem of financial institutions is also emerging to enable this growth.
Quick commerce and logistics are early EV adopters – and more are catching up
Food delivery platforms, quick commerce, cab aggregator services, and intracity logistics are increasingly incorporating EVs into their operations. For these businesses, the relatively high upfront costs of EVs are offset by the gradually lowering total cost of ownership (TCO) over time, owing to the reduced operation and maintenance costs of these automobiles. Economies of scale also work in their favour.
Corporate employee mobility is another space where EV adoption is on the rise. Irrespective of their core focus, corporations are taking steps towards sustainability in their processes. Switching to EV fleets for employee transport goes a long way in improving their ESG outcomes.
Vehicles for more specialised purposes – such as forklifts, pallet movers, airport luggage carriers – are also making the EV transition. This shift has come about through the collaboration between original equipment manufacturers (OEMs) and fleet operators. EVs have completely replaced their ICE counterparts and become the industry standard in aviation, logistics, and cargo movement.
The versatility of applications has propelled leading manufacturers to develop modular designs (particularly for e3W), enabling these to be used for a variety of purposes across sectors such as shipping, cold storage, and food delivery. While these advancements are taking certain sectors to the next stage of sustainable growth, a significant opportunity lies untapped in rural and semi-urban logistics, water transport in coastal areas, construction, and agricultural machinery.
Fuelled by a growing battery-swapping network (expected to grow to 1,30,000 by 2030), fast charging stations, and schemes such as the PM Surya Ghar Yojana that enable solar-powered charging at home, the concentration of EVs is only expected to grow steadily in the coming years.
Driving up EV adoption calls for innovative financing models
Banks typically offered vehicle loans for EVs at the outset. Their approach, however, was a cautious one, due to concerns around the reliability of the then-emergent technology, high upfront costs, and limited consumer awareness. Financial institutions have since evolved to offer more flexibility, tailoring products for various use cases and borrower archetypes, and simplifying access to commercial EVs.
Commercial EV operators can be individual vehicle owners or fleet operators. The financing needs of each of these vary significantly by their scope of operation. Of these, individual drivers and small fleet owners (usually <10 vehicles) are marked by lower operating capital, limited or no credit histories, and a focus on affordability and flexible repayment schedules. Large fleet owners tend to prioritize cost efficiency, long-term savings, and fleet-wide operational optimization.
Products by new-age fintech players like Revfin, Akasa Finance, and Ecofy account for these distinctions, and cater to small-to-medium businesses and eco-conscious enterprises (in the case of Ecofy). Their models involve psychometric underwriting, customized/equipment-specific insurance, zero down payment, and varying loan tenures.
The Central and State governments’ impetus to electric mobility manifests in the form of lower GST rates and registration fees for EVs, incentives for manufacturing and R&D, and capital subsidies for expanding charging infrastructure.
The next big shift will come from customizing finance for commercial EV owners
Despite these innovations, most financiers are cautious about commercial EV lending, which makes access difficult for individual and small operators. Their concerns are primarily around missing resale options, residual value of the automobile, battery degradation, overall product quality, and ambiguous or absent credit histories of borrowers.
As the EV ecosystem matures, players in this space are expected to address these concerns gradually. For instance, Revshaala by Revfin is a facility that refurbishes vehicles to extend their lifespan and roadworthiness. As the first generation of EVs reaches the end of their lifecycle, resale markets will also be established. Residual value guarantees and battery health certification in such markets could instill confidence in EV ownership as an asset, rather than a liability. The growth of battery-as-a-service models (as offered by the likes of NIO in China) could facilitate separate battery leasing, reducing upfront costs for vehicle owners.
Lenders could ascertain the creditworthiness of individual or small fleet owners through alternative means – such as telematics-based assessments, psychometric evaluations, and battery performance-linked financing.
Venture capital firms and new-age lending organisations have a crucial role to play here. These institutions can enhance this nascent ecosystem with capital infusion, de-risking mechanisms, and public-private partnerships.
Commercial EV adoption in India does not rest on vehicle sales alone. It benefits from the concerted efforts of manufacturers, financiers, and policymakers, whose contributions to R&D, scaling charging infrastructure, and innovative ownership models will eventually pave the way for a cleaner and more efficient mobility landscape.
How can financial institutions make the most of the EV surge in commercial segments? Our latest report explores consumer archetypes, growth drivers, and potential whitespaces in detail.