TapFin, founded in 2023, is a sustainability platform driving India’s green economy by addressing barriers in clean mobility and renewable energy. Backed by $4M from Elevar Equity, it offers solutions like financing, insurance, and demand aggregation to accelerate EV adoption. With a seasoned leadership team, TapFin aligns with India’s Net Zero goals, creating accessible and impactful sustainable solutions.
In a recent interview, Abdullah interacted with Terniza Berry, Co-Founder & COO of TapFin in which he discussed about the availability of EV financing options evolved in India over the last few years, government policies and incentives play in making EV financing more accessible, Indian EV financing ecosystem compare to global standards, key challenges faced by financial institutions in providing loans for EV purchases, factors like resale value and battery degradation impact the willingness of lenders to finance EVs, What initiatives can further incentivize financial institutions to offer competitive loans for EVs, advancements in battery technology and longer vehicle life cycles impact EV financing trends in India.
1. How has the availability of EV financing options evolved in India over the last few years?
Over the last few years, the availability of EV financing options in India has seen gradual improvement, though challenges persist. Government initiatives like FAME III have played a critical role by offering subsidies and tax incentives, directly reducing the cost of EV ownership. These measures, coupled with increasing awareness among financial institutions, have encouraged banks and NBFCs to finance EVs. Despite these advances, EV financing still has a long way to go. Concerns around resale value, and perceived risks often lead to FIs not lending at favorable terms to the EV ecosystem. At TapFin, we are actively bridging these gaps by creating tailored financial solutions and fostering collaboration between stakeholders, helping to unlock India’s EV market potential while aligning with its clean energy goals.
2. What role do government policies and incentives play in making EV financing more accessible?
Government policies and incentives are instrumental in making EV financing more accessible in India. Initiatives like FAME and state offered subsidies, have helped to lower the upfront cost of EV ownership especially for the smaller form factors. These measures have made EVs more affordable for individual and small fleet buyers. Tax exemptions on loans for EVs, GST reductions on EV purchases, and initiatives to support charging infrastructure development further enhance accessibility. Government-backed collaborations with banks and NBFCs incentivize the introduction of favorable lending terms, such as lower interest rates and extended loan tenures. Policies also encourage innovative financing models like green bonds, which help mobilize institutional capital at reduced costs. Through regulatory clarity and fiscal incentives, the government is supporting the growth of a robust ecosystem for EV financing, ensuring it aligns with India’s broader clean energy and sustainability goals.
3. How does the Indian EV financing ecosystem compare to global standards?
India’s EV financing ecosystem is growing but still lags behind global standards. Mature markets like Europe and the US offer substantial support through subsidies of up to €10,000 and low-interest loans driving higher EV adoption. In India, initiatives like the FAME scheme, with capital allocated for EV incentives, have boosted demand, particularly in the two- and three-wheeler segments, which make up 80% of EV sales. However as per India Electric Vehicle Report 2023 financing penetration remains low at 10–15%, compared to 40% in developed countries.
The challenge of financing EV infrastructure like batteries and charging points is also critical. With a target of 1.5 million public charging stations by 2030, securing funds for this infrastructure is vital. Many investors hesitate to finance charging stations due to concerns over utilization rates and ROI.
TapFin is collaborating with financial institutions, OEMs, and other players in the ecosystem like CPOs, battery manufacturers etc. to foster innovative green financing solutions, for charging stations and battery-swapping models. TapFin is positioned favorably to build a scalable EV financing ecosystem that integrates vehicle purchases with charging infrastructure, paving the way for a sustainable mobility future by 2030.
4. What are the key challenges faced by financial institutions in providing loans for EV purchases?
Financial institutions in India face several challenges when providing loans for electric vehicle (EV) purchases. They perceive EVs as riskier than internal combustion engine (ICE) vehicles, resulting in lower loan-to-value (LTV) ratios, shorter tenures, and higher interest rates. Additionally, there is a lack of long term reliable data on EV performance, including range, maintenance needs, and asset life, which complicates risk assessment.
The scarcity of charging infrastructure, the uncertain resale value of vehicles and batteries—due to undeveloped secondary recycling markets—adds another layer of complexity. Moreover, without certification standards for tracking battery health, lenders find it challenging to evaluate the longevity and reliability of EVs.
Lastly, financial institutions must invest significantly in technology and data management to comply with regulatory requirements, which include collecting and analyzing client data to demonstrate adherence to standards.
5. How do factors like resale value and battery degradation impact the willingness of lenders to finance EVs?
Factors like resale value and battery degradation significantly influence lenders’ willingness to finance electric vehicles. Unlike internal combustion engine (ICE) vehicles, EVs have a relatively nascent market, making their long-term resale value harder to predict due to lack of long term historical data and trends. This uncertainty increases the perceived risk for lenders, who rely on resale value as collateral in case of default. Lower confidence in resale prices translates to higher interest rates or stricter loan terms for EV buyers.
Battery degradation further compounds this issue, as it directly impacts the vehicle’s performance and market value. Concerns over battery lifespan, replacement costs, and evolving battery technologies deter lenders from offering competitive financing products. Without robust data on battery reliability and maintenance costs, lenders hesitate to extend favorable terms.
6. What innovative financing models (e.g., battery-as-a-service or subscription models) are being explored for EVs in India?
Innovative financing models like battery-as-a-service (BaaS) and subscription models are transforming EV ownership in India by addressing the high upfront costs and concerns around battery longevity. In the BaaS model, consumers purchase the EV without the battery, significantly reducing the initial cost. Instead, they pay a monthly subscription fee for battery usage, which usually covers charging and maintenance. This not only lowers financial barriers but also mitigates concerns about battery degradation and replacement costs, making EV ownership more attractive. Subscription models offer a flexible, pay-as-you-go approach, allowing users to access EVs without outright ownership. These plans often bundle services like insurance, maintenance, and charging infrastructure, catering to fleet operators and individual users alike.
Additionally, shared ownership models and leasing options are gaining traction, particularly among businesses looking to adopt EVs for their fleets. These models spread the costs over time, making EV adoption financially viable for companies.
At TapFin, we have actively collaborated with stakeholders to design and scale innovative solutions, ensuring affordability and accessibility for consumers while supporting India’s clean mobility goals.
7. What initiatives can further incentivize financial institutions to offer competitive loans for EVs?
To incentivise financial institutions to offer competitive loans for electric vehicles (EVs), several key initiatives can play a critical role. First, government policies such as expanded subsidies and tax incentives can lower the financial risk for both consumers and lenders. Programs like FAME have already helped make EVs more affordable, and offering financial institutions tax breaks for lending to EV buyers could encourage them to offer more favorable terms. Second, creating centralized data-sharing platforms on EV performance, battery life, and resale trends can provide lenders with the data they need to assess risk more effectively. With better data, financial institutions can create tailored financing options with more favorable terms,, similar to conventional ICE loans. Third, offering green bonds or guaranteed buy-back programs by OEMs could mitigate concerns over EV resale values and battery degradation, further reducing perceived risks for lenders. These financial instruments would encourage banks and non-banking financial companies to provide more competitive financing packages. Lastly, fostering partnerships between OEMs, FIs, and energy providers can lead to bundled financing solutions, combining vehicle cost, charging infrastructure, and warranties into comprehensive packages, something that TapFin is pioneering. This collaborative approach has helped to make EV financing more accessible and attractive to TapFin’s partners – consumers and financial institutions.
8. How will advancements in battery technology and longer vehicle life cycles impact EV financing trends in India?
Advancements in battery technology and longer vehicle life cycles will have a transformative impact on EV financing trends in India. As battery performance improves, with greater energy density and longer lifespans, concerns over battery degradation and replacement costs will decrease. This will reduce the perceived financial risk for lenders, enabling them to offer more favorable terms, similar to traditional vehicle financing models. Emergence of re-purposing or second use life models for used batteries, will also help lenders determine the net outflow that a customer can expect at the time of replacing a battery. The increasing reliability of batteries also means that resale values for EVs will stabilize, further boosting lender confidence.
As a result, financial institutions will likely offer more favorable terms, attracting both consumers and fleet operators to EV financing options. Additionally, with longer vehicle life cycles, EVs will become a more attractive investment for consumers, as their total cost of ownership decreases over time. This will encourage broader market adoption and further drive demand for competitive financing solutions.
For TapFin, these advancements offer an opportunity to refine financing models based on improved data, making financing more accessible and cost-effective. The evolving battery technology landscape will play a crucial role in building a more sustainable and profitable EV financing ecosystem in India.
9. How does EV financing contribute to achieving India’s sustainability and carbon neutrality goals?
EV financing plays a key role in helping India meet its sustainability and carbon neutrality goals by accelerating the adoption of electric vehicles (EVs). The transportation sector is a major contributor to carbon emissions, and shifting to EVs is essential for reducing pollution and reliance on fossil fuels. Accessible financing options, government subsidies, and flexible payment terms, lower the barriers for individuals and businesses to adopt EVs. This increased adoption directly supports India’s carbon neutrality goals by decreasing emissions from traditional vehicles. Moreover, EV financing contributes to building a sustainable mobility ecosystem by driving demand for renewable energy sources and charging infrastructure. As more consumers and fleet operators embrace EVs through financing, it aligns with India’s long-term sustainability objectives, including achieving Net Zero emissions by 2070. TapFin’s innovative financing solutions are designed to support this transition, making clean mobility more accessible and aligned with India’s sustainability goals.
10. What measures can be taken to make EV financing more inclusive for lower-income groups?
To make EV financing more inclusive for lower-income groups, several measures are crucial. First, subsidized loans and government incentives can reduce the upfront cost of EVs, making them more affordable for underserved communities. Programs like FAME schemes have laid the groundwork, but expanding them to target lower-income buyers would drive wider adoption. Additionally, offering microfinance options with flexible repayment terms can make EVs more accessible, enabling individuals from low-income backgrounds to pay smaller monthly installments.
Combining these with pay-as-you-go models or low EMI schemes can significantly reduce financial barriers. Another important measure is Battery-as-a-Service (BaaS), which separates the battery cost from the vehicle, lowering the initial purchase price. This model allows consumers to pay a monthly fee for battery usage, easing financial strain. Finally, financial literacy and awareness programs can help lower-income groups understand available financing options and make informed decisions.
At TapFin, we are committed to creating such inclusive EV financing solutions for MSMEs, start-ups, entrepreneurial households, individuals etc. that leads to income and employment generation opportunities, driving both affordability and accessibility to support India’s clean mobility transition.
11. How does TapFin’s business model create value for the EV ecosystem, particularly for startups and MSMEs, and what sets it apart from traditional financing solutions?
TapFin’s business model is anchored in a Technology led full-stack approach that seamlessly integrates financing with other value added essential services, creating a comprehensive ecosystem for the electric vehicle (EV) market.
Barring a few traditional players, the EV ecosystem is being built up by startups, micro, small, and medium enterprises (MSMEs), challenger OEMs, infrastructure players like Battery manufacturers, CPOs etc.
At TapFin, we aim to bring them all together, offer curated and relevant solutions that meet their diverse requirements. This will not only have a significantly positive impact on the environment but also help in generating employment and income and promoting entrepreneurship.
Beyond financing, TapFin offers bundled services such as insurance, demand aggregation, fleet management solutions, simplifying the entire EV lifecycle for MSMEs and start-ups and helping them access EVs and related services at competitive rates. Through this diversified approach, TapFin captures value from various aspects of the sustainability ecosystem, ensuring steady revenue generation while contributing to environmental sustainability and economic growth in underserved sectors.