EV finance firms advance at full speed with global capital in the driver’s seat
- ByStartupStory | October 10, 2022
To accelerate the adoption of two- and three-wheelers with electric motors, sustainability-focused funds like Northern Arc Capital, Delta Corp Holdings, and Incofin Investment Management are investing in Indian fintech companies that specialise in EV financing.
Some of the fintech companies that have received equity or debt funding from organisations like Northern Arc Capital, Shell Foundation, Delta Corp Holdings, Incofin Investment Management, Matrix Partners India, Prime Venture Partners, 9Unicorns, and Better Capital — international and regional funds that support green initiatives — include Rev Fin, OTO, Mufin Finance, and Three Wheels United. According to experts, these collaborations aim to provide loans for EV purchases to those who are underbanked and unbanked.
A few months ago, the UK-registered charity Shell Foundation, Northern Arc, and Liquiloans coordinated a fundraising effort to generate $100 crore in debt for the digital e-mobility lending platform Revfin. According to Sameer Aggarwal, founder and CEO of RevFin, this will enable the company to grow its e-rickshaw financing operations in additional states including Assam, Madhya Pradesh, Rajasthan, and Punjab.
According to Aggarwal, “the most recent inflow of capital will help us strategically overcome a number of obstacles in the EV financing industry.” “We have established connections with all of the main e-rickshaw OEMs and are also aiming to move forward our next equity raise,” the company said after experiencing a monthly disbursement growth of more than 5X.
These collaborations are essential for global funds to meet their sustainability objectives.Bama Balakrishnan, Chief Operating Officer of Northern Arc Capital, said, “We are cooperating with RevFin for financing electric transportation, a fast evolving sector that may assist cut carbon emission and lead to sustainable development.
The Incofin India Progress Fund similarly provided Series A capital of 45 crore to Mufin Green Finance this month.The business has assisted in financing the acquisition of EVs in nine States totaling 160 crore. Along with financing the purchase of vehicles, Mufin Green Finance also provides funding for EV charging stations and battery top-up loans.
Last month, the financier for two-wheelers OTO raised 6 crore from the venture debt company Stride Ventures. Nearly a year ago, OTO raised $6 million in Series A funding, which was led by Matrix Partners India. Additionally, Delta Corp Holdings led a $10 million Series A fundraising round for Three Wheels United (TWU). Despite some reductions in car costs, the absence of accessible financing options for low-income consumers prevents a faster uptake of EVs.
According to Rohit Mehta, Managing Director of Akasa Finance, “India’s EV adoption rate is growing slowly, partly because they are not priced on a par with conventional vehicles and come at a premium.” It has an impact on purchasing choices. Meanwhile, reputable non-bank lenders continue to be wary about financing to this area of the automotive sector. The fintech companies are working to close that gap.
According to Sumit Chhazed, CEO and cofounder of OTO, “We are able to fulfil financing requirements with various EMI choices, making the purchase more easier.”
The largest two- and three-wheeler manufacturers in India, including Hero MotoCorp, TVS Motor, Bajaj Auto, and Suzuki, have partnerships with OTO. In comparison to other banks, the platform offers EMIs that are 35% lower.
By 2030, when 30% of private automobiles, 70% of commercial vehicles, and 80% of two- and three-wheelers are anticipated to use the electric powertrain, India’s EV financing industry is likely to be worth $50 billion (4.1 lakh crore).
According to venture capital firm Blume, sales of electric two-wheelers in India are predicted to increase by 24 times their current levels by 2030, reaching 17.69 million units, up from a volume of 0.75 million this year.
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