Financial roadmap for sustainable switch from ICE to EVs
With governments, financial institutions, and automakers taking significant steps to make EVs more affordable and accessible to the general populace, the road to widespread EV adoption is not without its potholes.
Electric vehicles (EVs) have established themselves as the future of transportation. As the world grapples with concerns over climate change and air pollution, EVs offer a sustainable and efficient solution. However, while the benefits of EVs are widely acknowledged, the financial transition from traditional internal combustion engine (ICE) vehicles to electric mobility is not without its challenges.
With governments, financial institutions, and automakers taking significant steps to make EVs more affordable and accessible to the general populace, the road to widespread EV adoption is not without its potholes, and improvements are still needed to ensure a smooth transition.
EV policies introduced in 2023
Governments globally recognise the transformative potential of electric vehicles in addressing climate change and fostering sustainable transportation.
In 2023, India announced a list of EV-favouring policies in hopes of meeting the nation’s decarbonization goals.
The Union Budget 2023-24 extended the customs duty exemption to the import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles.
GST on electric vehicles has been reduced from 12% to 5%; GST on chargers/ charging stations for electric vehicles has been reduced from 18% to 5%.
Both commercial as well as private battery-operated vehicles are given green license plates and are exempted from permit requirements.
Waiver on road tax on EVs, which in turn will help reduce the initial cost of EVs.
Even oil marketing companies have announced the setting up of 22,000 EV charging stations in prominent cities and on national highways across the country.
However, it's important to note that while these incentives are helping to level the playing field, conventional gasoline vehicles often come with a lower initial purchase price.
The transition to EVs, despite the incentives, may still involve a slightly higher upfront cost, but the long-term benefits in terms of operating savings and environmental impact are substantial. As technology advances, the cost difference is likely to continue decreasing, making EVs an even more cost-effective choice in the future.
Financing options and planning
Traditional auto loans, lease programs, and innovative subscription models are still unavailable for EV buyers. There is a huge requirement for tailormade EV financing options. While, it has moved much ahead from where it started, the pace has been low till now, hence the mass adoption is taking time. Having said that, the need for same has been achievable and actions on ground are scaling.
Consider your monthly budget, potential savings on fuel and maintenance, and the available financing options.
By making informed financial decisions, you can fully embrace the world of electric mobility and take advantage of the long-term cost savings and environmental benefits that come with it.
Total cost of ownership
EVs are celebrated for their cost-efficiency, with substantial savings on fuel, maintenance, and reduced repair requirements due to fewer moving parts. However, it's worth noting that this one-time cost can be a concern for EV owners, exerting financial pressure on them.
Despite this initial hurdle, the long-term financial advantages of owning an EV frequently outweigh the slightly higher upfront purchase price, making electric mobility an economically viable choice in the long run.
As technology advances and EV adoption gains traction, the resale value of electric vehicles is expected to become more competitive with traditional vehicles. Factors such as battery health, mileage, and the model's popularity will play a pivotal role in determining the resale value.
While the Indian market may currently lag in terms of second-hand EV market, the evolving landscape of electric mobility promises improvements in this area in the coming years. As EV adoption grows, so will the options for both buyers and sellers in the second-hand EV market.
In conclusion, challenges in EV ownership like initial purchase costs and the absence of a robust second-hand market persist, but the undeniable long-term advantages of EV ownership continue to shine. In this world of environmental consciousness, embracing this electrifying transformation is our path to a cleaner, more sustainable future.
Nimish Trivedi, CEO and CO-Founder of Evera.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)