Outside Rajiv Chowk Metro station, a three-wheeler driver has been ferrying passengers in a CNG auto for over a decade. He had not heard of Delhi's new EV policy until it was explained to him. His response was immediate. "Electric gaadi lena itna aasaan thodi hai. Agar sasta loan mil jaye toh soch sakte hain. Warna purana auto chhodkar naya battery wala auto lena ka kya matlab hai,” he said. A new electric auto costs Rs 3-4 lakh. His daily earnings barely cover the household.
He isn't alone. Similar sentiments were echoed by many other auto drivers too who were unaware of the policy but got worried when told. From 1 January 2027, only electric three-wheelers will be registered in Delhi. Two-wheelers follow in April 2028. That is less than 18 months away for auto drivers, a deadline that does not account for the credit realities of the people it most directly affects.
Delhi's EV Policy 2026 offers purchase incentives of up to Rs 50,000 for electric three-wheelers in the first year, additional scrappage benefits of Rs 25,000, and plans to install over 30,000 public charging points with Rs 1,000 crore allocated for charging infrastructure. The intent is clear. The financing architecture to support it is a step behind.
The Credit Gap
The fundamental problem is structural. According to a report by RMI, interest rates for electric two- and three-wheelers are 5-14 per cent more expensive than their petrol and diesel equivalents. Even as NBFCs have emerged as the primary providers of organised credit in this segment. For a driver operating on daily cash flows, a higher EMI is a major inconvenience.
Ayush Lohia, CEO, Youdha said, “The biggest challenge is not the total cost of ownership — it is the upfront cost of acquisition. Most drivers depend on daily cash flows and informal financing. Even if an electric three-wheeler becomes cheaper over its lifetime, arranging the initial down payment or qualifying for a loan remains difficult.”
The creditworthiness problem is also well documented. Banks like SBI, Axis Bank and HDFC Bank provide EV loans at lower interest rates. But their credit schemes are focused on four-wheelers and premium two-wheelers. For buyers of e-autos and electric three-wheelers, most of whom are new to formal credit, banks have largely stayed away, leaving the space to NBFCs and fintech lenders who operate at a higher cost of capital. That higher cost passes through directly to the borrower.
Nikhil Khurana, Chief Investment Officer, Folks Funds, sees the gap clearly. Many buyers in this segment have thin credit files or informal income sources, making traditional underwriting models less effective. "For first-time buyers, gig workers, delivery riders and auto drivers, the issue is not only subsidy availability but down payment, EMI affordability, credit history and battery-risk perception. The policy direction is positive, but implementation will require dedicated EV finance products, credit guarantees, battery warranties, and fleet-linked repayment models,” he said.
Kailash Rathi, Business Head – Wheels and Head Partnerships, Ecofy, is more optimistic about where the ecosystem stands today. He noted, "Specialised green NBFCs, banks and fintechs have developed tailor-made loan approval systems and underwriting models for electric vehicles.” Rathi also added a critical qualifier. He said that financing could become a key bottleneck if access to credit does not keep pace with EV adoption, particularly for first-time borrowers, gig workers, and small fleet operators who fall outside traditional underwriting models.
What The Data Shows
According to a NITI Aayog report, batteries account for 30–40 per cent of an EV's cost, and up to 40–60 per cent in some segments, making electric vehicles significantly more expensive upfront than conventional vehicles. The report also notes that the absence of a mature used-EV market makes it difficult for lenders to assess residual values, leading to higher interest rates, lower loan-to-value ratios and shorter loan tenures.
Battery-as-a-Service models offer one structural fix. In a BaaS structure, consumers buy the vehicle without the battery and lease it instead. Under this model, the cost of an electric three-wheeler can fall from around Rs 4 lakh to Rs 2.5 lakh, with drivers paying a per-kilometre usage fee for battery access. It addresses the single largest barrier to first-time purchase, but it requires coordination between OEMs, battery providers, and lenders that the current ecosystem is still building toward.
What Needs To Change
Lohia frames the ask as a collective one. “Financing must become an integral pillar of the policy rather than an afterthought. Affordable credit, lower interest rates, flexible repayment schedules and faster loan approvals will determine how quickly drivers embrace this transition,” he said.
Echoing the need for a broader financing ecosystem, Khurana noted that the adoption of electric vehicles cannot be financed solely at the retail loan level. Scaling EV adoption will require a broader financing ecosystem that supports not just vehicle purchases but also batteries, charging infrastructure, fleet operations and after-sales services.
Rathi said that targeted subsidies or interest subvention schemes for first-time buyers and lower-income segments would go a long way. He added, “The focus now should be on expanding access, simplifying customer journeys and leveraging technology to deliver faster credit decisions.”
Back at Rajiv Chowk, the auto drivers are not thinking about any of this.
As the January 2027 deadline draws closer, the challenge for many drivers is no longer whether they are willing to switch to electric, but whether they can afford it. While Delhi’s EV policy sets a clear target, the real test is whether a stable financial ecosystem can emerge over the next 6 months to support it. |
