How fintech can present progressive financing options to India’s EV sector

By Sameer Aggarwal

Electric three wheeler, popularly often called e-rickshaw, has left trendy electrical automobiles and bikes far behind on the bumpy, dusty Indian roads. The Society for Manufacturers of Electric Vehicles estimates that there are over 1.75 million electrical three-wheelers on Indian roads as in opposition to a mere 8,000 electrical automobiles. It can be estimated that the Indian e-rickshaw market, at a CAGR of 9%, will contact $5 billion by 2025 and these figures are an affidavit of development and viability of the Electric Vehicle (EV) business in India.

The e-rickshaw has been adopted on a big scale in states like Delhi, Rajasthan, Uttar Pradesh, Bihar and West Bengal, the place it has changed ICE (Internal Combustion Engine) three-wheelers. There are two causes for the e-rickshaw’s widespread success – one, it gives a noiseless, and pollution-free first and last-mile connectivity for passengers and items supply and two, the owner-drivers of e-rickshaws earn about Rs 25000 per 30 days, a 3X improve of their common month-to-month revenue, thereby enhancing their life and social standing.

Despite this success story, many challenges are limiting the expansion of the EV business within the electrical three-wheeler market like excessive manufacturing price, far-flung nature of the market, low credit score provide to its potential consumers and different technical limitations. Here, the Fintechs, with their innovative options, have stepped up their contribution to the expansion of the sector.

Fintech options for the EV business

Fintechs supply pace, ease and attain to the EV business. A extra symbiotic relationship between the 2 sectors may also help the latter increase 10X-20X of the current development.

  • Credit provide options for potential consumers – Access to finance for getting e-rickshaw is troublesome for the customer. Traditional financers avoid this sector as a typical borrower is difficult to underwrite as he’s typically semi-literate, does not have a credit score historical past and resides in geographies which can be unserviceable and economically unviable.

Despite these points, a number of lending firms like Revfin, Vedika, Pooja Finance, and Manappuram are actively and efficiently offering finance to this market. They have discovered options by way of digital applied sciences, and so they leverage the excessive smartphone penetration within the nation. These digital lending platforms use a mix of data-driven instruments like machine studying algorithms (MLAs) and nontraditional knowledge instruments like psychometrics, SMS and biometrics to make their underwriting selections. This additionally eliminates a lot human intervention, which inturn makes any geography, even small cities with restricted gross sales, viable to offer credit score.

  • Digital fee options – Fintechs wish to drive digital funds within the business e-rickshaw first/last-mile supply phase. As most drivers are smartphone outfitted, they will obtain fare/fee of their e-wallets in addition to pay their EMIs.
  • Other progressive digital options – Embedded IOT gadgets assist lenders and insurers to maintain observe of automobiles, restrict the vary of car motion by way of geo-fencing or immobilize automobiles in case of theft. These gadgets additionally give an understanding of driver productiveness, which may then be optimized for greater productiveness in the end translating into extra revenue and higher administration of money owed for the owner-driver.
  • Fintechs supporting the EV ecosystem – Fintechs are taking part in a major position in growing the ecosystem for electrical automobiles, by way of tie-ups with insurance coverage suppliers; partnerships with battery producers to finance substitute batteries; creating an instalment-cum-subscription mannequin to make it simpler for consumers to purchase the car.

The pandemic has propelled reverse migration which is able to improve the employment demand in small cities. Growing e-commerce in these areas with a spiraling want for hyperlocal deliveries and first/final mile connectivity will make the demand for EVs excessive within the close to future. A wholesome mixture of digital applied sciences of fintechs, eCommerce gamers, insurers, along with help from the federal government, spell a incredible time of development for the EV sector in India.

(
The author is Founder & CEO, RevFin)

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