Startups and Financiers rethink EV funding models for commercial adoption in India
The Times of India
.
Traditionally considered too risky by mainstream lenders, the commercial EV market is now seeing innovative financing structures tailored to the needs of small fleet operators and individual buyers—many of whom lack formal credit histories.
Among the most significant changes are
battery subscription models
,
flexible EMI plans
based on vehicle usage, and first-loss guarantee (FLDG) arrangements with non-banking financial companies (NBFCs). These models aim to align financing terms with the operational and cash flow realities of EV ownership.
Changing dynamics for startups
Startups like VidyutTech are pioneering a separation of battery and chassis financing. "In an internal combustion engine (ICE) vehicle, fuel is a recurring expense. In an EV, the battery—comprising 30–40 per cent of the vehicle cost—is essentially prepaid fuel," explained Xitij Kothi, co-founder of VidyutTech. The company offers fixed EMIs for the chassis and a per-kilometre charge for battery usage, mimicking fuel payment patterns and reducing upfront costs.
Lenders such as Mufin Green Finance are also shifting focus. With an asset under management (AUM) of ₹1,100 crore, the company has deployed more than ₹800 crore into
EV financing
, largely for battery-specific loans. "Many customers pay upfront for the vehicle body and finance just the battery," said Dhiraj Agrawal, Chief Business Officer at Mufin. Its battery loan book currently stands between ₹70–80 crore and is expected to expand as adoption grows.
Flexible, usage-based EMI models are helping drivers with irregular incomes stay current on payments. "About 35–40 per cent of our customers have no formal credit history," said Kothi. "We rely on physical verification, co-applicants, and viability assessments before extending loans."
To de-risk such lending, many startups are also entering FLDG partnerships with NBFCs—absorbing part of the default risk to encourage lenders to support newer borrower profiles.
As these models gain traction, experts believe they could significantly broaden access to commercial EVs, particularly among small fleet operators and independent drivers, further accelerating India's
transition to cleaner transportation
.
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