Unseen Legal and Financial Barriers Impeding EV Leasing Growth
As operational risks continue to grow, EV leasing companies witness financial roadblocks, particularly around battery economics. Under Battery-as-a-Service (BaaS) models, which are key to affordable EV adoption, fragmented policies and inconsistent financing norms cause financial friction and cut deep into leasing margins.
May 02, 2025. By News Bureau
On the surface of its progress, legal and financial complexities affect the profitability of EV leasing operators, stalling the momentum before it reaches its peak. Commenting on the real-world scenario, Himanshu Gupta, Founder & CEO of Lawyered, said, "Leasing companies have given a strong push in getting more EVs on the road. By taking care of the upfront costs, they’ve made it much easier for both individuals and businesses to make the shift to electric. But now, as the sector grows, it’s starting to hit roadblocks because of the external factors around them.”
Legal Loopholes Causing Unexpected Costs and Risks
In an EV leasing environment, legal ownership structures pose one of the biggest challenges in day to day operations. In India, leased vehicles are registered under the leasing company’s name. Despite no direct control over the vehicle’s use, it makes them liable for traffic violations, impoundments, and documentation errors.
"The financial side is already a balancing act, but the real strain comes from legal and compliance issues. Leasing companies often find themselves responsible for traffic violations and their consequences. This showcases a gap in the system setup, thinning business margins," he added.
Furthermore, EV operators often grapple with delays in insurance claims often due to complicated liability questions, blurring the lines between ownership and responsibility. Hence, instead of focusing on scaling operations, companies find themselves caught in a web of risk mitigation and legal firefighting.
"To ensure widespread scalability and EV adoption in India, we have to make sure the systems supporting leasing are just as smart as the technology on the road. Helping these operators manage legal hurdles more smoothly is essential to keeping the momentum going,” he added.
Battery Costs and Policy Gaps Bites Margins
As operational risks continue to grow, EV leasing companies witness financial roadblocks, particularly around battery economics. Under Battery-as-a-Service (BaaS) models, which are key to affordable EV adoption, fragmented policies and inconsistent financing norms cause financial friction and cut deep into leasing margins.
Talking about the economics of EV leasing, Anagh Ojha, Co-founder & CTO of Urja Mobility said, "While EV adoption is accelerating at a rapid pace, the economics of EV leasing, especially under BaaS models are quietly undermined by fragmented state-level policies, uncertain residual value frameworks, and inconsistent battery financing norms.”
In India, batteries account for nearly 40 percent of the EV’s cost, yet current GST structures levy 18 percent on standalone batteries vs. 5 percent on EVs—an anomaly that squeezes profitability in leasing models. Besides, the lack of standardized insurance and depreciation guidelines for leased batteries makes it a cumbersome process and it also reflects clearly why fleet operators face 8-10 percent erosion of margin.
“We believe building a scalable BaaS infrastructure that’s compliant, cost-efficient, and financially viable can be the key to mass adoption. But for EV leasing to thrive, we need cohesive policy reforms and green financing frameworks that understand battery economics, not just vehicle ownership," he added.
It is critical to address the hidden legal liabilities and create a supportive financial framework as without systemic changes, operators will spend more time navigating red tape than growing the ecosystem.
please contact: contact@energetica-india.net.
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