Electric vehicles face financial hiccup with lenders reluctant to offer loans
Chennai: As rising fuel prices spur renewed interest in electric vehicles, customers lining up for these products face funding hurdles as auto financiers are reluctant to finance electric vehicles due to the lack of resale value of these vehicles.
In the absence of this risk assessment, the financing of electric vehicles is done from company to company and product to product, with the big players tying up the financiers using their own credibility.
âIt is true that financiers are hesitant about electric vehicles, especially electric two-wheelers and currently only 9% of electric two-wheelers are funded,â said Sohinder Singh Gill, CEO of the Society of Electric Vehicle. Manufacturers. Electric vehicle dealers say only a few financiers like Hero Fincorp and IDFC First Bank and Karur Vysya Bank offer competitive rates and financing of up to 80%. And some OEM reconciliations with lenders facilitate the financial flow for buyers. Auto finance sources have stated that the risk factor in this segment is that the products as well as the companies are new.
âUsually, the creditworthiness of the customer and the resale value of the vehicle (due to default) determine the term, rate and availability of the loan,â said one financier. Dealer sources indicate that in the absence of an established vehicle resale history, rates range from 10% to 22% to 23% depending on the product, company and customer risk profile.