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Non-bank lenders eye electric vehicle financing to grow business

Non-bank lenders are eyeing the electric two-wheeler space to grow disbursements. is tying up with Ola Electric which recently unveiled electric scooters ranging upwards of Rs 1 lakh. Hero Electric also partnered with two-wheeler life cycle management company Wheels EMI for offering easy financing options to customers.

“We believe that electric vehicle will be a big industry few years down the line and are taking efforts to expand base,” said Y S Chakravarti, MD, Shriram City Union Finance. “We are soon inking a tie up with Ola Electric, have tied up with Hero Electric and some original equipment manufactures.”

The non-bank lender has tied up with Okinawa, Ather Energy and Ampere. The two-wheeler financing segment is 26-27 per cent of its total loan portfolio.

Hero Electric has also collaborated with Wheels EMI to offer easy financing options for the purchase of electric two-wheelers in India.

“There is demand for flexible finance options, especially from rural India, as more and more customers today are enquiring and considering electric two-wheelers as their next upgrade,” said Sohinder Gill-CEO, Hero Electric

Hero Electric currently sells over 10,000 two-wheelers every month, of which 40% comes from rural pockets of India.

India’s electric vehicle (EV) financing industry is projected to be worth Rs 3.7 lakh crore in 2030, about 80 per cent of the current retail vehicle finance industry, according to a new report.

According to industry players major issues remain like financing challenges, high interest and insurance rates, low loan-to-value ratios, and limited specialized financing options.

“One of the major challenges have been around the quality of electric vehicles, if the vehicle stops running due to some quality issues, it impacts the collection of EMIs directly and there have been instances in the past that some of the financing partners had to face,” said Sumit Chhazed, Co-founder, OTO Capital which specialises in providing cost-efficient finance model for EVs.

“Another challenge is that the resale market is not yet established, hence if repossessed, it becomes difficult for financing partners to liquidate the asset at a desired value.”

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