Rates for electric passenger vehicles are competitive with ICEs and sometimes even lower. E-two wheelerHowever, the rates are always higher depending on the brand and the credit profile of the customer.
“Captive NBFCs and banks offer green loans for e-PV as cheap as 0.1%.” ICE Financing “In e-two wheelers, the rates vary by 1-4% depending on the product and brand,” said Rajat Mahajan, partner, Deloitte India.
Currently, interest rate on loans for petrol and diesel passenger vehicles ranges between 9.3% and 10.3%. Rate of interestWhile the rates on ICE two-wheelers are 16-20%. Among EVs, cars and SUVs come at 8.5-9.5% while e-two-wheelers come at 18-22%.
But that's not the important part. Financiers and dealers, off the record, admit that EV financing is lower than ICE, even when both are from the same automotive brand.
“Since EV is an emerging sector, banks and NBFCs have been cautious in financing as they do not understand how EV batteries work (life, replacement/repair) and are waiting for a strong secondary/resale market to develop,” said Karthikeyan Srinivasan, chief executive officer, IndoStar Capital Finance.
This explains the difference in financing penetration between ICE and e-two-wheelers. “Currently, petrol two-wheeler financing penetration is over 80%,” said Nikunj Sanghi, MD, JS Fourwheels, Hero MotoCorp and M&M dealers. “Financing penetration of e-two-wheelers has increased from 15-20% about 18 months ago to 40-45% now, with 80% of financing coming from banks,” said Mahajan.
EV financing has also seen a rate revision in the past one year. For instance, public sector Indian Overseas Bank has raised interest rates for EV four-wheelers by 25 basis points to 8.65-10.15% from 8.4-9.9% a year ago, as the repo-linked lending rate was revised. However, its interest rate on EV two-wheelers remains the same at 11%. The bank also offers a 0.2% interest rebate for e-four-wheelers “to promote clean energy and environment”, said Ajay Kumar Srivastava, MD and CEO of IOB. L&T Finance has also raised rates on EV financing by 1-1.5 percentage points in a year. “Currently, it is 8.5-9.5% (flat). This range is due to different risk profiling of customers,” the spokesperson said.
In commercial vehicles, where EV adoption is higher than PV, rates have not changed much and EVs are more competitive than ICEs. Reason: Captive NBFCs. Mahesh Babu, CEO of Switch Mobility, said: “We leverage the synergies of Hinduja Leyland Finance, the financing arm within our group, using the financial infrastructure to offer competitive financing options to customers.”