India’s push towards electric mobility is picking up speed, but one vital gear in this machine is still grinding: the pre-owned EV market.
While we have a booming ICE (internal combustion engine) used car market, rising eco-consciousness, and growing urban adoption of EVs, unfortunately the EV resale ecosystem continues to be significantly under-developed. The outcome of this is that EV buyers today struggle to anticipate what the depreciation curve for their EV asset will look like and invariably, reality under-delivers significantly against their expectations.
The reasons for these are several and it is critical for us to understand these better because unfortunately, there is no quick solution to this complex problem.
Global Headwinds, Local Ripples
In mature markets like the US and UK, used EV prices have dropped sharply. This is the outcome of a rapid flood of off-lease vehicles and faster-than-expected tech upgrades making older EVs feel obsolete overnight.
India, though a few years behind in volume, is eerily aligned in vulnerability. In a market where buyers are heavily resale-conscious, such global signals threaten to dampen EV enthusiasm. If the afterlife of an EV is riddled with uncertainty, its first life suddenly looks a lot less appealing, especially for a cost-sensitive audience.
A Small Pool, Even Smaller Confidence
Currently, EVs have just made a 3.25% penetration in India, with petrol vehicles still commanding the majority. Beyond low supply, this is a concern of lower trust. Without standardized battery health metrics, reliable diagnostics, or OEM-backed resale programs, used EVs remain high-risk buys. Battery degradation is opaque, battery replacement is expensive and uncertain, service options are limited, and parts, particularly for imported models, are neither localized nor easily available.
This results in an awkward paradox: even though used EVs should theoretically fill the affordability gap for aspirational buyers, they instead offer poor value. And with no refurbishment or buyback ecosystems in place, these vehicles often end up stranded assets.
Fragmentation and Policy Challenges
India’s policy framework for EVs, while enthusiastic, remains skewed towards new vehicle purchases.
New electric vehicles benefit from a reduced 5% GST rate, yet once resold, they fall under an 18% GST slab for dealers, equating them with polluting petrol and diesel vehicles. In a market where affordability is key and early EV adopters are already seeing accelerated depreciation, this tax mismatch feels counterintuitive and dampens dealership participation.
High-Cost, Low-Localization Trap
India’s pre-owned EV market is still in its early innings, facing structural challenges rooted in low localization of high-cost components such as lithium-ion batteries, traction motors, inverters, and on-board chargers, many of which remain below 40% localized. While final assembly is increasingly happening in India, most subcomponents are still imported, pushing up costs and limiting the availability of affordable repairs and diagnostics for second-hand EVs.
This current gap translates to limited refurbishment options, uncertain resale values, and weaker confidence among buyers, insurers, and financiers. Without the robust aftermarket and remanufacturing networks that support ICE vehicles, used EVs struggle to hold long-term value.
But there’s momentum: PMP incentives and supplier interest have pushed localization of smaller parts beyond 50%. As diagnostics, refurb, and sub-system manufacturing mature, a circular EV economy is within reach.
Financing – what’s that?
Used car financing has always been more expensive and significantly more challenging to avail than a new car loan since more financial institutions think of it less as an asset-backed loan and more as a personal loan. For EV assets the situation is even worse – getting a used EV loan is almost impossible for most buyers and hence they are left with the only option of using an expensive personal loan or dipping into their savings. Either way, this results in significant compression of used EV pricing.
The Case for a Common Denominator
Amid this maze of gaps, in financing, diagnostics, certification, policy, and repair, what the market really needs is a unifier. A neutral aggregator who can step in to standardize battery health checks, offer buyback options, aggregate supply, enable financing, and connect stakeholders across the value chain. Such a player wouldn’t just build trust, they’d build predictability. And predictability is the foundation of any thriving resale market.
In Beta, Not Broken
India’s pre-owned EV market is ultimately not faltering due to a lack of demand, it’s facing growing pains as the supporting ecosystem catches up. The challenge lies not at the ends of the value chain, but in the middle: evaluation, repair, and financing.
Today, an EV that cannot be easily diagnosed or refurbished becomes difficult to price, insure, or underwrite, and that uncertainty erodes buyer confidence. However, this is less a dead-end and more a transition phase. As localization of critical components improves and aftermarket services develop, and there are multiple sale and resale cycles for the vehicles, the path to a robust and trustworthy pre-owned EV market is well within reach. As we think about the way forward, we need to recognise that the ICE (internal combustion engine) used car market has taken decades to get to the point where today, with 4.5 lakh used cars sold per month, it is 1.6 times the size of the new car market. In this time, multiple cycles of sale and re-sale have been completed, across models, across cities and simultaneously, the ecosystem has evolved across service, maintenance and financing.
It is therefore inevitable that the EV used car market will also get there, but it is critical to think about how the current industry participants can accelerate this process because unfortunately, we don’t have decades to make the transition to sustainable transportation given the pace of climate change.
To accelerate this process, all participants whether financiers or OEMs or an independent participant, will need to figure out how to solve the challenges of EV ownership across the lifecycle of the asset and, instead of waiting for the ecosystem to evolve, they will need to think about how they can build a full-stack solution for their customers that cuts across financing, repair, second-life and more. This is the need of the hour.
