In Conversation with Karmveer S Dhillon - Speaking about how finance is accelerating India's EV Revolution

1 How do government incentives such as tax credits or subsidies influence the EV financing marketGovernment incentives in India play a vital role in making EVs financially accessible to consumers and businesses thus driving growth in the EV financing market By reducing acquisition costs associated with purchasing an EV supporting infrastructure and encouraging green finance incentives such as FAME II EMPS Subsidies PMEDrive Vehicle scrappage policy and PLI schemes are making EV financing increasingly viable for all including manufacturers lenders and borrowers As a result they accelerate Indiarsquos transition to sustainable mobility2 How do you evaluate the residual value of an EV versus a traditional gasolinepowered vehicleThe residual value of an EV is one of the more complex aspects of our underwriting process Unlike traditional gasolinepowered vehicles where the depreciation and second hand markets are wellestablished EVs have a different set of influencing factors The residual value of an EV depends heavily on battery life technological obsolescence and the broader marketrsquos adoption rate of electric mobilityWhile EVs may have had steeper depreciation in the past their residual value is stabilizing due to technological advances longerlasting batteries and fast charging batteries We are currently piloting a LBLM for health and residual analysis of Perpetuity Capitals existing financed vehicles and second use vehicles which we are looking to finance We have tie ups with brokers and other platforms including turno where we will be financing used EVsAs EVs become mainstream and more charging options are available we expect the gap in residual values between EVs and traditional cars to narrow significantly3 How do you tailor financing options for different customer segments such as individual consumers versus fleet ownersAt Perpetuity Capital we understand that individual consumers and fleet owners have vastly different financial needs and expectations For individual consumers the focus is typically on affordability and longterm financing options that align with personal budgets We offer flexible terms and lower down payments for firsttime EV buyers and captive users making the transition to electric easierFleet owners on the other hand prioritize scalability total cost of ownership and operational efficiency For this segment we provide structured financing options that account for bulk purchases longer amortization schedules and the potential for government rebates and schemes on fleet electrificationWe also collaborate with fleet operators to offer tailored leasing or financing solutions including refinancing of existing fleets helping them unlock capital needed for working capital4 What impact do changing interest rates have on the affordability of EV financingInterest rates play a pivotal role in the affordability of all forms of vehicle financing and EVs are no exception When rates are low it becomes easier for consumers and businesses to finance highercost EVs lowering the barrier to entry However with rising interest rates as wersquove seen recently the cost of borrowing increases which can make EVs less affordable The problem is Institutional capital isnt comfortable with the risks associated with EVsWe mitigate this by offering fixedrate financing options that protect borrowers from fluctuations in interest rates over the loan term Additionally we focus on AMC contracts at the time of purchase to offset any costs associated with ownership and maintenance of the vehicle5 How do ESG Environmental Social and Governance factors influence your companyrsquos financing decisionsEnvironmental Social and Governance ESG criteria are embedded in our corporate strategy and play a significant role in our decisionmaking process We believe that promoting sustainable finance is not just a business opportunity but a responsibility Financing EVs is inherently aligned with our ESG goals as it directly contributes to reducing carbon emissions and promoting cleaner mobility in the countryWe evaluate our loan portfolios for environmental amp social impact ensuring that a significant portion is directed toward clean mobility and financial inclusion From a governance perspective we maintain transparency in how we allocate funds to ESG initiatives and engage with stakeholders to ensure compliance with evolving environmental regulationsBy integrating ESG considerations into our financing models we not only promote sustainability but also create longterm value for both our customers and investors6 What role do partnerships with EV manufacturers dealerships or charging infrastructure providers play in your business modelPartnerships are a cornerstone of our business strategy Collaborating with EV manufacturers allows us to offer exclusive financing schemes that lower the cost of ownership for our customers We often work with manufacturers to offer bundled financing that includes vehicle purchase insurance and battery chargers providing a more holistic solution for consumersSimilarly partnerships with dealerships help streamline the loan approval process enabling a seamless experience for buyers We have developed an app for dealers to onboard customers along with our sales executives so we can reduce our overall TAT Moreover we are working with OEMs to integrate APIs so our tech stack can directly pull data once a vehicle is financed and is on road no need for an external IoT device These partnerships are essential for creating a comprehensive ecosystem that not only supports EV adoption but also adds value to our customers at every touchpoint7 What unique risks do you associate with financing electric vehicles and how do you mitigate themFinancing EVs has two inherent risks a product risk and a credit risk On the credit side we have developed our own tech stack that enables customers especially new to credit segment NTC to access credit A segment that is typically overlooked by Banks and traditional lenders Through our techstack we analyze 30 data points that give us a risk score If a customer meets our criteria he gets an approval immediatelyOn the product side we ensure we have a finance tie up with OEMs that covers the asset during the period of warranty and also negotiate a subvention which helps us account for the risk incase of a product defect One of the unique risks associated with EV financing is the uncertainty surrounding battery life range anxiety and replacement costs Battery technology is evolving rapidly but a premature battery failure or the high cost of replacement could impact the vehiclersquos residual value and the borrowerrsquos ability to repay the loanTo mitigate this risk we use a combination of extended warranties extended tenures allowing borrowers time incase of any mishap and datadriven valuation models that account for battery health including measuring SOH and battery cycles to reasonably estimate its useful life8 What innovations in financial services do you think will be most transformative for EV adoptionI think 2 things one is figuring out the useful life of an EV and refinancing it will open up a broader financial services market than one that already exists today There is currently no second buyer of EVs at least on the passenger side On the ICE side of things you have cars24Spinny etc which are used car platforms for ICE vehicles that are solving for that problem but nothing for EVsSecond driving patterns and behavior are yet to be factored into financing and insurance of a customer If you can find a correlation between driving patterns and credit risk you can drastically improve your underwriting process especially for commercial vehicles something which was not available for ICE commercial vehiclesDisclaimerThe information provided on the Website does not constitute investment advice financial advice trading advice or any other form of advice and you should not interpret any of the financial content as 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In Conversation with Karmveer S Dhillon - Speaking about how finance is accelerating India's EV Revolution

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Home / Buzz / Article / In Conversation with Karmveer S Dhillon - Speaking about how finance is accelerating India's EV Revolution

In Conversation with Karmveer S Dhillon - Speaking about how finance is accelerating India's EV Revolution

Other Articles

Mid-Day Fast