Why should financiers look at expanding customers via EV leasing | The Financial Express

Why should financiers look at expanding customers via EV leasing

As the financing market matures, lease models offer a lot of advantages for institutional buyers, like e-commerce and 3PL companies, with lesser capital expenditure and more flexibility. 

Why should financiers look at expanding customers via EV leasing
Saurav Kumar, Founder & CEO, Euler Motors.

EVs in India are currently a three-lakh crore opportunity, according to CRISIL, and commercial EVs have already become front runners in the space. EV leasing in the commercial space is a preferred format for faster electric penetration, and has gained salience amongst large institutional buyers.

As the financing market matures, lease models offer a lot of advantages for institutional buyers, like e-commerce and 3PL companies, with lesser capital expenditure and more flexibility. 

EVs have the highest market in the commercial segment, and institutional customers across e-commerce and 3PL companies form a major part of this pie. The lease model for EVs is one of the most attractive avenues for financiers to expand their institutional customer portfolio. It entails financiers offering EVs to customers via a lease/rent-based model.

This is a direct pull for customers who are looking at using an enormous EV fleet to support their delivery network, or those with a regional presence, freeing them of fixed asset liabilities, and no long-term hassles of taxes and overall upkeep. 

EV leasing lets customers easily work in an opex from a capex set up, with actually no need to tying up funds into fixed assets. Therefore, it limits the customer’s liability and expenditure towards overall fleet maintenance throughout the contract period. This becomes even more cost efficient for institutional customers that want to expand their delivery network with EVs, which offer much lower TCOs than ICEs. 

Moreover, there are multiple benefits why the asset light models are favoured by customers as it allows a flexible upgrade of EV fleet with a minimum lock-in period, as per the changing business requirements. Customers also get  GST input credits and tax related P&L benefits with leasing over direct purchases.

Policy support in the form of a 40% depreciation rate and 5% GST on EVs also makes leasing extremely profitable for financiers as well. For financiers, it also enables fixed cash flows with options to avail premiums from customers over the lease period.

Once a lease expires, it can easily be extended or the vehicle’s assets can be redeployed to other customers, enabling maximum utilization and profits throughout the vehicle’s life cycle. 

EV leasing has turned out to be a market enabler for EVs in India. It is opportune for the financing players to make headways and claim their early mover position. According to a market analysis, e-three wheelers made 47% of all three-wheelers sold in India in the last financial year, and this is just the beginning.

EV leasing augurs for a faster market penetration, and a sweet spot for both financiers, and customers, with its advantages and flexibility. 

The author is Saurav Kumar, Founder & CEO, Euler.

Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.

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