Global funds in the driver's seat, EV financing firms take full steam ahead

 Global funds in the driver's seat, EV financing firms take full steam ahead

Management is buying into Indian fintech firms that specialize in electric vehicle (EV) financing for faster adoption of two and three wheelers using electric powertrains.

Rev Fin, OTO, Muffin Finance and Three Wheels United are among the fintech firms that have secured equity or debt financing from Northern Arc Capital, Shell Foundation, Delta Corp Holdings, Incofin Investment Management, Matrix Partners India, Prime Ventures, among others. Partners, 9Unicorn and Better Capital - global and local funds that support green initiatives. Experts said the partnership seeks to provide loans for EV purchases for non-banking and under-banking.

A few months ago, digital e-mobility lending platform RevFin raised 100 crores in loans led by Northern Arch, Liquilons and Shell Foundation, a UK-registered charity. Sameer Agarwal, Founder and CEO, Revfin said that this will help Revfin expand the e-rickshaw financing business to newer states like Assam, Madhya Pradesh, Rajasthan and Punjab.

The latest inflow of funds will help us to overcome many hurdles in the EV financing sector in a structured manner to drive our next equity growth."

For global funds, these partnerships are also vital to achieving the sustainability goals.

We are partnering with Revfin to finance electric mobility, a rapidly growing segment that can help reduce carbon emissions and drive towards sustainable development,” said Bama Balakrishnan, Chief Operating Officer, Northern Arch Capital said.

Similarly, Muffin Green Finance raised Rs 45 crore in Series A funding this month from Incofin India Progress Fund.

Price affects EV purchase decisions

The company has helped procure electric vehicles worth Rs 160 crore in nine states. Muffin Green Finance finances bankrolling vehicle purchases in addition to EV charging stations and battery top-up loans.

Two-wheeler financier OTO last month raised Rs 6 crore from venture debt firm Stride Ventures. This round of financing comes almost a year after OTO raised $6 million in Series A funding led by Matrix Partners India. Three Wheels United (TWU) has also raised $10 million in Series A funding led by Delta Corp Holdings. The lack of affordable financing options for low-income consumers stands in the way of rapid EV adoption, despite some decline in vehicle costs.

Rohit Mehta, Managing Director, Akasa Finance, said, "India's EV adoption rate is increasing gradually, mainly because they are not priced at par with conventional vehicles and come at a premium. This influences purchase decisions." Established non-bank lenders, meanwhile, are still cautious about lending to this segment of the automotive industry. It is a gap that fintech firms are trying to fill.

Sumit Chhajed, CEO & Co-Founder, OTO said, “We have been able to meet the financial requirements with flexible EMI options, making purchases very easy.

OTO has tied up with some of the largest two wheeler and three wheeler companies in India like Hero MotoCorp, TVS Motor, Bajaj Auto and Suzuki. The platform offers 35% lower EMI as compared to other banks.

India's EV financing market will be worth $50 billion (₹4.1 lakh crore) by 2030, when 30% of private cars, 70% of commercial vehicles and 80% of two-wheelers and three-wheelers are expected to use electric powertrains.

Venture capital fund Bloom said sales of electric two-wheelers in India are expected to grow 24 times to reach 17.69 million units by 2030, up from the projected volume of 0.75 million this year.