How to Make Finance Cheaper, More Accessible for EVs in India

EV financing in India is currently hindered by asset and business model risks, leading to higher interest rates and larger down payments compared to internal combustion engine vehicles. The document estimates that India's EV transition will require 19.7 trillion Indian rupees (US$266 billion) in cumulative capital investment over the next decade, with a potential financing market size of 3.7 trillion rupees (US$50 billion) by 2030. To address these barriers, the author suggests a toolkit including priority sector lending, interest rate subventions, product guarantees, risk-sharing mechanisms, and the development of a secondary market.

• Electric vehicles (EVs) are viewed as riskier to finance than internal combustion engine vehicles due to asset risk (technology, policy, manufacturing, and resale) and business model risk (customer profile, utilization, and maintenance). This results in banks and non-banking financial companies (NBFCs) in India charging higher interest rates and requiring larger down payments.
• The cumulative capital investment required for India's EV transition over the next ten years is estimated at 19.7 trillion Indian rupees (US$266 billion) for batteries, charging infrastructure, and vehicles. By 2030, the EV financing market in India could reach a size of 3.7 trillion rupees (US$50 billion).
• The document proposes five financial instruments to increase EV affordability and reduce risk: including EVs in Priority Sector Lending (PSL) to incentivize banks; interest rate subventions (already used in Delhi); OEM-provided product guarantees and warranties; risk-sharing mechanisms such as partial credit and utilization guarantees; and the creation of a secondary market through battery repurposing and buyback programmes.

APA

RMI (2021). How to Make Finance Cheaper, More Accessible for EVs in India. https://rmi.org/resources/how-to-make-finance-cheaper-more-accessible-for-evs-in-india/

Chicago

RMI. How to Make Finance Cheaper, More Accessible for EVs in India. 2021. https://rmi.org/resources/how-to-make-finance-cheaper-more-accessible-for-evs-in-india/.

Wikipedia

{{cite report |author=RMI |title=How to Make Finance Cheaper, More Accessible for EVs in India |date=10 February 2021 |url=https://rmi.org/resources/how-to-make-finance-cheaper-more-accessible-for-evs-in-india/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2021how, author = {{RMI}}, title = {{How to Make Finance Cheaper, More Accessible for EVs in India}}, institution = {RMI}, year = {2021}, month = feb, url = {https://rmi.org/resources/how-to-make-finance-cheaper-more-accessible-for-evs-in-india/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }