Tamil Nadu

Finance companies not keen to fund e-vehicles

Photograph used for representational purposes only

Photograph used for representational purposes only   | Photo Credit: G. P. Sampath Kumar

Since many insurance companies are not including the value of the battery in their policies for electric vehicles, finance companies are reluctant to finance their purchases, an expert said

Most insurance companies are not including the value of the battery in their comprehensive policies for electric vehicles, as a result of which, finance companies are not keen to finance purchases of e-vehicles, T.R. Achha, President, Federation of Indian Hire Purchase Association (FIHPA) said.

The Chennai-based federation, as a Trade Body, has nearly 1,000 members and takes care of the interests of automobile hire purchase financiers transacting business all over India.

“For the sale of vehicles, financing is very important. 95% of vehicles in India are bought through finance. When we finance a vehicle, we look at whether we can get back our money and insurance is one of the key considerations,” Mr. Achha said.

When it comes to e-vehicles, the battery accounts for a major portion of the cost. For instance, if the vehicle cost is ₹2 lakh, the battery cost comes up to ₹80,000 or more, he pointed out. “The feedback from most of our members is that since insurance companies are not taking into account the value of battery in their plans for e-vehicles, they are not keen to finance the vehicles,” Mr. Achha said.

Mr. Achha said that FIHPA has written to the Insurance Regulatory and Development Authority (IRDA) on the issue and is also planning to write to the Ministry of Surface Transport. He pointed out that the issue has become important with companies such Bajaj and TVS Motor launching their e-vehicles recently.

V. Sumantran, chairman of Celeris Technologies, and former vice-chairman of Ashok Leyland, pointed out that it is an early issue. “The issue is coming up due to lack of awareness and uncertainty over what will be the value of battery, two or three years down the line -- whether it will be 25% or 75% of its value in three years? The good news is that because of better technologies, battery life is improving and degradation of batteries is slower. So as we progress, the issue would be addressed,” he said.

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Printable version | Feb 17, 2020 9:23:56 AM | https://www.thehindu.com/news/national/tamil-nadu/finance-companies-not-keen-to-fund-e-vehicles/article30682439.ece

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