India’s electric mobility landscape is experiencing a significant change where electric commercial vehicles (e-CVs) are beginning to become the backbone for logistics, last-mile delivery, and urban mobility. With rapid growth in e-commerce, the growing move towards sustainable freight, and strict emission norms across India, e-CVs are becoming more widely accepted across all industries. Despite the technology readiness and the demand potential from consumers for e-CV’s, one crucial bottleneck has hindered the speed of adoption – electric commercial vehicle financing.
Compared to conventional fleets powered by internal combustion engines (ICE), e-CVs have steep upfront costs, uncertainty related to batteries, and uncertainties around residual value. As a result, financiers have applying caution, while operators are being tentative. Meanwhile, disruptive forms of electric commercial vehicle financing are contributing as the enablers of growth, mitigating affordability and increasing confidence among fleet operators, SMEs, and gig workers.
The article discusses the five main financing pathways that could define the future of e-CVs in India.
1. Leasing Structures: Operating Lease & Finance Lease
Leasing solutions have been one of the key trends in electric commercial vehicle financing.
Operating Lease: In this model, businesses lease the e-CV without taking ownership. Management of the ownership, insurance, and sometimes battery warranties, and maintenance of eCVs becomes the leasing company responsibility. This reduces capital expense, and therefore gives businesses such as 3PLs, e-commerce fleets, and corporate operators who wish to decarbonize access to e-CVs, without capital burden.
Finance Lease: This long-term lease works similarly to having ownership. The lessee pays fixed payments and will typically have the option to buy it at the end of its lease term for a nominal fee. It is broadly accepted practice for large fleets or long contractors to use finance leases because they offer the best potential to build your asset base for tax purposes.
Why it matters: Some sources say leasing already contributes to about 50% of electric commercial vehicle financing in India. Other sources highlight that leasing reduces cash flow pressure, alleviates battery risks, and provides fleet flexibility to the user leading the user to prefer lease over ownership.
2. Subscription and Battery-as-a-service Models
There is another breakthrough in the financing of electric commercial vehicles from subscription-based ownership to battery-as-a-service (BaaS).
When subscribing to vehicles, the operator is billed on a monthly basis, or on a per-kilometer basis, so the operator does not have to purchase both chassis and battery. This asset-light model lowers barriers to entry for MSMEs, delivery operators, and gig workers alike.
- Vidyut Tech offers a subscription-style model: buyers purchase the vehicle chassis and pay per kilometer only for battery usage, with the battery retained by Vidyut and covered under a lifetime warranty—reducing upfront investment and improving affordability.
- SUN Mobility, with a network of 600+ battery swapping stations nationwide, delivers a BaaS (Battery as a Service) model. Users pay only for energy consumed, ensuring predictable operating expenses while avoiding battery maintenance and depreciation concerns.
Consequently, by removing the largest cost component (battery) from the upfront purchase payment and thus allowing for a subscription and BaaS model to make the above financing options mainstream for electric commercial vehicle financing to small scale operators.
3. Battery Financing, Flexible EMIs & Risk Mitigation
General auto loans often do not meet the special demands of e-CV operators. This is why new electric commercial vehicle financing methods like battery financing, flexible EMIs, and risk-sharing are clicking with investors.
Battery Financing: Non-Banking Finance Companies (NBFCs) such as Mufin Green Finance, among others, now offer loans just for batteries, which take up 30-40% of the entire e-CV cost. This lessens the up-front burden, and it makes ownership even less capital-intensive.
Flexible EMIs & usage-based models: Some financiers link EMIs to the amount of use of the vehicle, meaning repayments are aligned with earnings. Meaning, electric commercial vehicle financing becomes more sustainable for gig workers and SMEs.
First Loss Default Guarantee (FLDG): Startups and collaboration with the OEM-financers offer lenders partial guarantees in case of a default. Furthermore, FLDG also lowers risk exposure for banks and NBFCs encouraging them to build their EV lending positions.
Not only do these models bring access to new groups and communities but they share risk among multiple stakeholders while ensuring that electric commercial vehicle financing in traditionally underserved areas continues to grow.
4. Traditional Loans & Government Incentives
While innovation is taking the spotlight, conventional loans continue to make up a significant portion of electric commercial vehicle financing in India.
Banks like SBI, HDFC Bank, Axis Bank, and IDFC First, along with NBFCs like Mufin, are now offering loan products specifically for EV financing. Bank interest rates vary from 8.75%–11.5%, with tenures of up to 7 years and LTVs of 85–90%. NBFCs are charging slightly higher rates (12%–20%), but they are critical for encouraging last-mile EV adoption with products like battery loans and loans for drivers who are unable to verify their credit profiles.
Moreover, support from Government is also important. The FAME II scheme is no longer in effect, but we are now guided by state-level EV policies. Delhi’s extended EV policy offers ₹30,000 for light electric commercial vehicles like e-rickshaws, e-carts and other forms, that include exemption for road tax, registration charges, general and scrappage differential. While Maharashtra’s 2025 EV Policy offers ₹1 lakh incentive for light electric commercial vehicles e.g. e-rickshaws, and up to ₹20 lakh subsidies for electric buses (M3/M4 category).
Market incentives offered by states, together with competitive bank financing practice will provide a great basis for fast tracking electric commercial vehicles finance across India.
5. Fintech & Startup Innovations
The latest wave of electric commercial vehicle financing is being driven by fintechs and startup-led NBFCs. Through alternative data, digital tools, and customized products, they are reaching underrepresented customer segments.
- Revfin is underwriting loans for drivers with no formal credit histories by using psychometric analysis and non-traditional credit data. The company has disbursed ₹1,000 crore plus in EV loans and also participates in NITI Aayog’s Shoonya initiative.
- Ascend Capital has financed more than 8,000 e-CVs and raised ₹50 crore to grow. Its income-sensitive underwriting allows the company to ensure affordability for low-income borrowers.
- Rupyy (the fintech arm of CarDekho) embed financing right into the vehicle listings, and plans to enter asset-backed leasing for light commercial EVs.
These players are redefining electric commercial vehicle financing, through technology and localized lending practices filling the void where banks will not go.
Leading Players in e-CV Financing
| Category | Key Players & Contributions |
|---|---|
| Banks | SBI, HDFC, Axis Bank, IDFC First – EV loans with 8–11.5% interest, up to 7-year tenure, 90% LTV |
| NBFCs (Traditional) | Mufin Green Finance – battery-only loans, dedicated EV products |
| Leasing Firms | EV OEM partnerships, fleet leasing providers |
| Fintech Startups | Revfin – ₹1,000+ cr disbursed, NITI Aayog Shoonya; Ascend Capital – 8,000+ e-CVs financed, ₹50 cr raised |
| Digital Auto Platforms | Rupyy (CarDekho) – financing embedded in listings, planning asset-backed leasing |
| Impact Lenders | Caspian Debt – focus on green & social enterprise financing |
Conclusion
The pathway to a sustainable transport ecosystem in India depends on the strength of financing for electric commercial vehicles, not just technology or policy. Businesses of all sizes are able to engage in the transition to EVs through innovative financing options—whether that is leasing, subscription, battery only loans, or fintech underwriting.
In the absence of these types of models for financing electric commercial vehicles, subsidies are not going to be enough. Financing is the real vehicle of adoption, lowering upfront barriers, distribution of risk and repayment aligned with revenue.
The future will be mixed solutions—banks, NBFCs, fintechs, and OEMs together bundling financing products for electric commercial vehicles; with e-commerce, logistics, and urban mobility growing, they are further promoting stable growth of models that will ensure rapid e-CV adoption, particularly in Tier-2 and Tier-3 cities.
In short: Financing is not just supporting India’s electric commercial vehicle market—it is driving it.
Benefits of Innovative Financing Models
| Stakeholder | Benefit |
|---|---|
| Large Fleets | Lower capex via leasing, predictable OPEX through BaaS |
| SMEs / MSMEs | Flexible EMIs, subscription-based models reduce entry barriers |
| Gig Workers | Psychometric underwriting, usage-based repayments improve accessibility |
| Banks/NBFCs | Risk-sharing via FLDG, growing EV market opportunities |
| Government | Faster EV adoption, achievement of clean mobility targets |