Leasing options build highway to EV adoption : Tech News

The vehicle subscription and leasing model may not have really picked up in India, but in the nascent electric vehicle market, big bets are being placed on it to be a game changer.

A number of startups, mobility solution providers and financiers have come up with customised options that allow customers to have a vehicle for their personal use for a monthly fee, without owning it. These schemes come with zero down payment and no hassle of paying for insurance, road tax, registration or maintenance.

Startup Autovert, mobility services providers ETO Motors, Orix Auto and Myles, and lenders Mahindra Finance and Greaves Finance are among companies that have launched leasing schemes for EVs. Automakers such as Tata Motors and MG Motor are also bullish on leasing, which is currently contributing 15-20% to the demand for their electric vehicles.

For EVs where the upfront cost to own a vehicle is high, and banks are reluctant to give loans as it is a new segment, consumers are increasingly preferring “usership” through subscription and leasing over ownership, according to industry executives.

Leasing will help increase EV penetration significantly in the short term, said Tarun Mehta, a cofounder of electric scooter maker Ather Energy. “Since the upfront cost on EV is higher, and with consumers upgrading more often, leasing offers that flexibility of ownership,” he added.

Autovert, a Bengaluru-based financing platform, was the country’s first to focus exclusively on leasing EVs. It works with Ather Energy to lease two-wheelers. Mahindra Finance, an old economy company, leases commercial as well as passenger EVs.

“Leasing is a sweet spot for EVs, nudging more consumers to buy them. In the commercial EV segment, at least 50% of the fleet operators have started using leasing and we are offering customised structured packages with flexibility towards leasing,” said Mohammed Turra, Mahindra Finance’s head of leasing.

Tata Motors advocates leasing as a smarter way of accessing its Nexon EV, at a price cheaper than traditional car EMIs. A new electric Nexon that costs Rs 13.99 lakh ex-showroom can be leased for a monthly payment of Rs 47,900 for 18 months, Rs 44,900 for two years and Rs 41,900 for three years. For this, Tata Motors has partnered with Orix Auto Infrastructure Services.

“With banks not readily financing EVs, leasing becomes a suitable option for the consumer,” ETO Motors chief executive NK Rawak said.

While this model is finding an increasing number of takers, people with frequent intercity job transfers and expatriates form a large chunk of customers for leasing companies.

“These tools not only make affordability easier, but also give peace of mind on residual sales price,” said Rajeev Chaba, the India head at MG Motor.

EV sales in India rose 10% from a month earlier to 28,919 units in August, accounting for 2% of all vehicles sold in the country for the first time, according to data compiled by policy body Centre for Energy Finance at the Council on Energy, Environment and Water. State and central government incentives have helped boost demand as these bring down the on-road cost of EVs and make them at par with petrol or diesel-powered vehicles in some states.