Innovative Financing Models Boosting EV Adoption

New Delhi, Jul 18 (KNN) A surge of startups and financial institutions is reshaping how electric commercial vehicles (EVs) are financed in India, particularly for small fleet operators and independent drivers who often lack formal credit histories. 

Traditionally viewed as high-risk by mainstream lenders, the commercial EV segment is now opening up thanks to tailored funding solutions.

One standout innovation is the battery‑chassis separation model pioneered by firms like VidyutTech.

Customers pay a fixed EMI for the vehicle’s chassis, while the battery is charged on a per‑kilometre basis—mimicking fuel costs and significantly reducing upfront expenses. 

Other options gaining traction include battery subscription services and Battery-as-a-Service (BaaS) frameworks that also decouple ownership of the expensive battery component from the vehicle itself.

To support these models, NBFCs such as Mufin Green Finance have emerged with dedicated EV loan books—allocating over Rs 800 crore into battery-only lending, backed by innovative first-loss guarantee (FLDG) arrangements that absorb part of the default risk and attract lenders toward non-traditional profiles.

Complementing these startup-driven solutions, experts advocate for government-backed risk‑sharing schemes, such as credit guarantee programs or priority‑sector lending classification.

These public‑private structures could allow longer tenures and higher loan‑to‑value ratios, thereby lowering the borrower’s monthly burden and stimulating scale in last‑mile delivery and gig‑based mobility sectors.

Collectively, these models are bridging affordability and risk gaps—offering flexible financing aligned with cash flows, usage patterns, and vehicle economics.

As they mature further, they hold the potential to significantly expand access to commercial EVs across India, accelerating the nation's shift toward cleaner, sustainable transportation.

(KNN Bureau)