How Affordable Credit can Accelerate EV Adoption Beyond Metros
Organisations that successfully develop affordable and accessible EV financing for Tier 2 and Tier 3 markets will build highly profitable businesses while making meaningful contributions to India's sustainable transportation transformation.
August 13, 2025. By News Bureau
India's electric vehicle revolution is gaining substantial momentum with registrations nearly crossing 2 million units in 2025. This transformative growth continues to herald a multitude of exciting opportunities as the government doubles down on its commitment to becoming a net zero emissions economy by 2070. With a promise to subvert the damage imposed by ICEs and fossil fuels, India is championing a pan-nation EV credit movement that aims to permeate beyond the metros and tier-1 centers.
To that end, electric vehicles are attempting to achieve price parity with their internal combustion engine (ICE) counterparts across multiple segments. Electric two-wheelers, which led the Indian EV market with roughly 1.2 million units sold – holding 60 percent of the EV market – now deliver compelling value propositions. The foundation for mass adoption is solid, with financing emerging as the critical enabler to accelerate penetration across India's diverse markets. With EV adoption currently standing at 10.67 percent in Tier 2 and tier-3 cities, the opportunity ahead is significant as these regions are gearing up to play a big role in India’s EV shift. The future is electric, and accessible credit is our key to unlocking it.
Rising Prosperity Fuels Growing Demand
Tier 2 and beyond populations are experiencing a steady growth in income that has further ignited a robust demand for both electric two-wheelers and three-wheelers. This positive demographic shift aligns perfectly with increasing awareness about the superior durability and lower total cost of ownership that electric vehicles deliver. For families earning within the INR 25,000–INR 40,000 per month bracket, the promise of reduced fuel costs and minimal maintenance makes EVs highly attractive investments.
The total cost of ownership advantage becomes particularly compelling in smaller cities where moderate daily commute distances and improving charging infrastructure create ideal conditions for electric mobility. Enhanced vehicle durability, supported by advanced battery technology and robust manufacturing standards, has effectively addressed earlier concerns. These converging factors are generating a strong underlying demand, especially in value-conscious markets beyond metros where long-term savings resonate strongly with the masses.
Opportunities in the Credit Landscape
The current credit environment presents a tangible set of both challenges and opportunities. Operating expenses across large geographical spans require its fair share of innovative approaches. However, they also represent untapped markets endowed with enormous potential. The key lies in developing efficient and super-scalable solutions that can serve customers across vast rural and semi-urban areas while maintaining the necessary cost-effectiveness.
The substantial presence of informal economy participants beholds numerous bright prospects that can pioneer new underwriting approaches. Today, countless gig workers, small traders, farmers, and entrepreneurs who comprise the most dynamic segments of India's economy represent the rapidly increasing potential of its flourishing EV market. Their financial needs, which require different assessment methodologies than traditional models do, have swiftly opened the doors for innovative lending solutions.
Digital Infrastructure Enables Innovation
Thanks to India's timely digital transformation, it stays armed with the necessary tools and capabilities to address these opportunities. Government initiatives like the Prandhan Mantri Jan Dhan Yojana have successfully formalised deposits for over 530 million Indians by creating robust foundations for modern credit assessment. Real-time banking behavior evaluation through account aggregator frameworks and digital transaction platforms offers unprecedented insights into customer financial patterns.
That’s not all. Progressive fintech platforms are successfully expanding beyond traditional credit scoring by incorporating an array of alternative data sources. UPI transactions, mobile wallet patterns, utility payments, and behavioral analytics create comprehensive financial portraits of customers previously considered ‘unscorable.’ This innovative approach is rapidly bringing millions into the formal credit ecosystem.
Forward-thinking digital lending platforms are introducing a plethora of flexible and customer-centric credit products designed specifically for diverse market segments. Seasonal EMI structures for agricultural communities and adaptive payment schedules for gig economy workers are successfully making EVs accessible across varied economic profiles.
Technology Transforms Operations
Real-time monitoring through advanced vehicle telematics is revolutionising the lending experience for both customers and financiers. GPS tracking, usage analytics, and vehicle health monitoring provide valuable insights that enhance service quality while reducing operational complexity. This technology enables proactive customer support and streamlined asset management.
Telematics data empowers the development of sophisticated, personalised risk models that go beyond traditional financial metrics. Lenders can now consider actual usage patterns, responsible driving behavior, and proactive maintenance practices to design more accurate and fair pricing models. Such a comprehensive approach enables better customer experiences and healthier portfolio performance.
The Affordability Revolution
Declining sourcing and collection costs are also engendering opportunities to offer increasingly attractive terms to customers. Innovative co-lending partnerships between original equipment manufacturers and fintech firms are adeptly combining manufacturing scale with digital lending agility to deliver superior customer value.
These strategic partnerships are making electric vehicles accessible to broader customer segments. Embedded finance platforms are streamlining customer journeys through integrated solutions, from instant Aadhaar-based KYC to immediate disbursals, customised EMI options, and comprehensive insurance bundling; all delivered and powered on the back of new-age and intuitive digital interfaces.
Building a Thriving EV Ecosystem
The transformation is gaining massive momentum also through the collaborative efforts ensuing across manufacturers, financiers, and policymakers. Developing clear residual value frameworks and expanding resale market activities are considerably reducing risk perceptions while extending additional customer benefits and market confidence. Moreover, manufacturers are embracing integrated approaches that seamlessly combine vehicle sales with financing solutions. These customer-centric strategies are particularly effective in reaching new markets where customers appreciate comprehensive and simplified purchase experiences.
Accelerating Toward Success
As we look ahead, India's electric vehicle market is surely positioned for exponential growth, with strong technological capabilities in an environment that exhibits competitive pricing and an ever-burgeoning demand. Thus, the opportunity to bridge the financing gap represents one of the most significant business and social impact opportunities in India's mobility sector.
Climate-focused financial institutions are uniquely positioned to lead this transformation. By developing sophisticated, data-driven credit models that incorporate local insights and innovative credit indicators, they can serve previously underserved customers while building sustainable yet profitable businesses.
The success of India's EV revolution will be measured by how effectively electric mobility benefits reach every region of the country. As affordable credit becomes increasingly accessible, India moves closer to achieving an inclusive and scalable green mobility ecosystem that supports the nation's net-zero ambitions.
The Promise Ahead
The opportunity is extraordinary. Organisations that successfully develop affordable and accessible EV financing for Tier 2 and Tier 3 markets will build highly profitable businesses while making meaningful contributions to India's sustainable transportation transformation. This convergence of digital infrastructure, innovative financial products, and growing market demand naturally devises conditions that prove ideal for sustained success. India's electric vehicle future holds high promise and affordable credit is the veritable catalyst that will accelerate adoption across every corner of the nation to drive prosperity while simultaneously advancing environmental goals.
-Sanket Kothari, Head Policy and Risk, Ecofy
To that end, electric vehicles are attempting to achieve price parity with their internal combustion engine (ICE) counterparts across multiple segments. Electric two-wheelers, which led the Indian EV market with roughly 1.2 million units sold – holding 60 percent of the EV market – now deliver compelling value propositions. The foundation for mass adoption is solid, with financing emerging as the critical enabler to accelerate penetration across India's diverse markets. With EV adoption currently standing at 10.67 percent in Tier 2 and tier-3 cities, the opportunity ahead is significant as these regions are gearing up to play a big role in India’s EV shift. The future is electric, and accessible credit is our key to unlocking it.
Rising Prosperity Fuels Growing Demand
Tier 2 and beyond populations are experiencing a steady growth in income that has further ignited a robust demand for both electric two-wheelers and three-wheelers. This positive demographic shift aligns perfectly with increasing awareness about the superior durability and lower total cost of ownership that electric vehicles deliver. For families earning within the INR 25,000–INR 40,000 per month bracket, the promise of reduced fuel costs and minimal maintenance makes EVs highly attractive investments.
The total cost of ownership advantage becomes particularly compelling in smaller cities where moderate daily commute distances and improving charging infrastructure create ideal conditions for electric mobility. Enhanced vehicle durability, supported by advanced battery technology and robust manufacturing standards, has effectively addressed earlier concerns. These converging factors are generating a strong underlying demand, especially in value-conscious markets beyond metros where long-term savings resonate strongly with the masses.
Opportunities in the Credit Landscape
The current credit environment presents a tangible set of both challenges and opportunities. Operating expenses across large geographical spans require its fair share of innovative approaches. However, they also represent untapped markets endowed with enormous potential. The key lies in developing efficient and super-scalable solutions that can serve customers across vast rural and semi-urban areas while maintaining the necessary cost-effectiveness.
The substantial presence of informal economy participants beholds numerous bright prospects that can pioneer new underwriting approaches. Today, countless gig workers, small traders, farmers, and entrepreneurs who comprise the most dynamic segments of India's economy represent the rapidly increasing potential of its flourishing EV market. Their financial needs, which require different assessment methodologies than traditional models do, have swiftly opened the doors for innovative lending solutions.
Digital Infrastructure Enables Innovation
Thanks to India's timely digital transformation, it stays armed with the necessary tools and capabilities to address these opportunities. Government initiatives like the Prandhan Mantri Jan Dhan Yojana have successfully formalised deposits for over 530 million Indians by creating robust foundations for modern credit assessment. Real-time banking behavior evaluation through account aggregator frameworks and digital transaction platforms offers unprecedented insights into customer financial patterns.
That’s not all. Progressive fintech platforms are successfully expanding beyond traditional credit scoring by incorporating an array of alternative data sources. UPI transactions, mobile wallet patterns, utility payments, and behavioral analytics create comprehensive financial portraits of customers previously considered ‘unscorable.’ This innovative approach is rapidly bringing millions into the formal credit ecosystem.
Forward-thinking digital lending platforms are introducing a plethora of flexible and customer-centric credit products designed specifically for diverse market segments. Seasonal EMI structures for agricultural communities and adaptive payment schedules for gig economy workers are successfully making EVs accessible across varied economic profiles.
Technology Transforms Operations
Real-time monitoring through advanced vehicle telematics is revolutionising the lending experience for both customers and financiers. GPS tracking, usage analytics, and vehicle health monitoring provide valuable insights that enhance service quality while reducing operational complexity. This technology enables proactive customer support and streamlined asset management.
Telematics data empowers the development of sophisticated, personalised risk models that go beyond traditional financial metrics. Lenders can now consider actual usage patterns, responsible driving behavior, and proactive maintenance practices to design more accurate and fair pricing models. Such a comprehensive approach enables better customer experiences and healthier portfolio performance.
The Affordability Revolution
Declining sourcing and collection costs are also engendering opportunities to offer increasingly attractive terms to customers. Innovative co-lending partnerships between original equipment manufacturers and fintech firms are adeptly combining manufacturing scale with digital lending agility to deliver superior customer value.
These strategic partnerships are making electric vehicles accessible to broader customer segments. Embedded finance platforms are streamlining customer journeys through integrated solutions, from instant Aadhaar-based KYC to immediate disbursals, customised EMI options, and comprehensive insurance bundling; all delivered and powered on the back of new-age and intuitive digital interfaces.
Building a Thriving EV Ecosystem
The transformation is gaining massive momentum also through the collaborative efforts ensuing across manufacturers, financiers, and policymakers. Developing clear residual value frameworks and expanding resale market activities are considerably reducing risk perceptions while extending additional customer benefits and market confidence. Moreover, manufacturers are embracing integrated approaches that seamlessly combine vehicle sales with financing solutions. These customer-centric strategies are particularly effective in reaching new markets where customers appreciate comprehensive and simplified purchase experiences.
Accelerating Toward Success
As we look ahead, India's electric vehicle market is surely positioned for exponential growth, with strong technological capabilities in an environment that exhibits competitive pricing and an ever-burgeoning demand. Thus, the opportunity to bridge the financing gap represents one of the most significant business and social impact opportunities in India's mobility sector.
Climate-focused financial institutions are uniquely positioned to lead this transformation. By developing sophisticated, data-driven credit models that incorporate local insights and innovative credit indicators, they can serve previously underserved customers while building sustainable yet profitable businesses.
The success of India's EV revolution will be measured by how effectively electric mobility benefits reach every region of the country. As affordable credit becomes increasingly accessible, India moves closer to achieving an inclusive and scalable green mobility ecosystem that supports the nation's net-zero ambitions.
The Promise Ahead
The opportunity is extraordinary. Organisations that successfully develop affordable and accessible EV financing for Tier 2 and Tier 3 markets will build highly profitable businesses while making meaningful contributions to India's sustainable transportation transformation. This convergence of digital infrastructure, innovative financial products, and growing market demand naturally devises conditions that prove ideal for sustained success. India's electric vehicle future holds high promise and affordable credit is the veritable catalyst that will accelerate adoption across every corner of the nation to drive prosperity while simultaneously advancing environmental goals.
-Sanket Kothari, Head Policy and Risk, Ecofy
Please share!
If you want to cooperate with us and would like to reuse some of our content,
please contact: contact@energetica-india.net.
please contact: contact@energetica-india.net.
Next events
Last interviews
Anoop Anand
President – Motion High Power
Digitalisation is Key to Sustainable Energy, Explains ABB’s Anoop Anand
Ankit Mathur
Co-founder and CEO
Carbon Markets Can Transform Rural Clean Energy, Says Greenway Grameen's Ankit Mathur
Manjula Girish
Business Head, EV Charging and Photovoltaic Inverter Division
She Matters: More Women in Decision-Making Roles Key to India’s Energy Transition
Vivek Bhide
Regional President (India) and Group Transformation Officer
John Cockerill to Expand Electrolyser and Green Steel Projects in India, Says Vivek Bhide
Dr. Mini Govindan
Senior Fellow, Social Transformation & CSR
She Matters: Women’s Participation Vital to Shaping India’s Clean Energy Future
Follow us