Chennai: While rising fuel prices are sparking renewed interest in EVs, customers lining up for these products face financing hurdles as auto financiers hesitate to fund EVs due to They have no resale value for these vehicles.
In the absence of such a risk assessment, EV financing is happening from company to company and product to product, with the big players tying down the financiers using their own credibility.
“It is true that there are doubts among funders about electric vehicles, particularly e-two wheels, and currently only 9% of e-two wheels are financed,” said Sohinder Singh Gill, CEO of the Society of Manufacturers of Electric vehicles. Electric vehicle dealers say that only a couple of funders like Hero Fincorp and IDFC First Bank and Karur Vysya Bank are offering competitive rates and up to 80% financing. And some OEM partnerships with lenders are helping finance flow for buyers. Automotive financing sources said the risk factor in this segment is that both the products and the companies are new.
“Generally, the customer’s creditworthiness and the vehicle’s resale value (in the event of a loan default) determine the tenure, rate and availability of the loan,” said a financier. Dealer sources say that in the absence of an established vehicle resale history, rates vary from 10% to 22% -23% depending on the product, company and customer risk profile.