The document discusses key barriers to electric vehicle deployment in India and programs that Climate Policy Initiative (CPI) is undertaking to address these barriers. The major barriers include high upfront costs of electric vehicles compared to diesel, pricing risks due to evolving battery technologies, lack of long term financing for batteries, lack of credit for smaller electric vehicles, need for charging infrastructure development, and lack of institutional capacity. CPI's programs seek to address these through initiatives like battery service agreements, long term debt facilities for batteries, financing for auto rickshaws, pay-as-you-save models, and project preparation facilities to connect cities and investors.

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Electric Vehicle Financing
Saurabh Trivedi
Senior Analyst, Climate Policy Initiative India

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Climate Policy Initiative
With deep expertise in policy and finance, CPI works
to improve the most important energy and land use
practices around the world.
Our mission is to help governments, businesses, and
financial institutions drive growth while addressing
climate risk.
TRACKING
FINANCE
EFFECTIVE FINANCE TRANSFORMATIVE
FINANCE

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The India Innovation Lab for Green Finance
www.climatefinancelab.org

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Key Barriers to Electric Vehicle Deployment
Reduces dissemination of EV
EffectRisks
Inertia in adoption of EV on
large scale
High upfront costs of electric buses vs
diesel buses
• No long term view of
pricing and operational
costs
• Higher cost of financing
Perceived technology risks of batteries
Unknown future costs of replacement
batteries
Elongate the process for
transition to low carbon
transportation
Lack of institutional capacity of cities/EV
operators to structure commercially viable
green infrastructure projects, and investors
are often unaware of these opportunities.
Absence of credit for smaller EVs such as
low-carbon auto-rickshaws

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What CPI is doing to address these risks
Risk Description Program 1 Program 2 Program 3 Program 4 Program 5
High upfront costs of electric buses
vs diesel buses
Proterra
Electric Bus
Battery
Service
Agreements
Long-Term
Debt Facility
for Traction
Batteries
Pay As You
Save (PAYS)
for Clean
Transport
Pricing risks arising out of
technology evolution
Proterra
Electric Bus
Battery
Service
Agreements
Lack of credit facility for smaller EVs
Financing
for Low-
Carbon
Auto
Rickshaws
Need of developing associated
infrastructure
Matchmaker
– E-mobility
Project
Preparation
Facility
Lack of institutional capacity of
cities/EV operators to structure
commercially viable green
infrastructure projects, and
investors are often unaware of
these opportunities
Matchmaker
– E-mobility
Project
Preparation
Facility

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1. Proterra Electric Bus Battery Service
Agreements
Instrument Description
• Proterra’s electric bus battery service agreements are
an initiative led by Proterra to transfer up-front costs
and technology risk from the customer.
Barriers Addressed
• High upfront costs of electric buses vs diesel buses
• Perceived technology risks of batteries
• Unknown future costs of replacement batteries
Development Stage
• Already in action in the USA/Europe
Previous Slide

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2. Long-Term Debt Facility for Traction Batteries
Instrument Description
• Proposed by NN4Energy (a Mytrah group company)
• Stage 1 is to reduce the total ownership cost of electric
buses in India, by creating a separate
mechanism/market for ‘Battery Financing’
• Stage 2 is to generate additional revenue from
repurposing traction batteries as energy storage
batteries after the end of the traction period (EV usage),
which would enable the use of the battery for another
5-10 years.
Barriers Addressed
• High upfront costs of electric buses vs diesel buses
• Absence of long term financing for batteries
Development Stage
• In design phase for India
Previous Slide

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3. Financing for Low-Carbon Auto Rickshaws
Instrument Description
• Proposed by Three Wheels Capital, a non-banking
financial company proposes to fill the credit gap by
financing asset loans for low carbon and electric auto-
rickshaw drivers by leveraging financial and digital
technologies such as real time information and
payment systems.
Barriers Addressed
• Addresses credit risk and transaction costs
Development Stage
• In design phase for India
Previous Slide

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4. Pay As You Save (PAYS) for Clean Transport
Instrument Description
• Proposed by Clean Energy Works, PAYS for clean
transport idea aims to accelerate clean transit in cities,
by lowering the upfront costs of electric buses via a Pay-
As-You-Save mechanism where a utility invests in the
upfront upgrades – on-board batteries and charging
stations – and recovers those costs with a charge on the
customer’s bill that is less than the estimated savings.
Barriers Addressed
• High upfront costs of electric buses
Development Stage
• In design phase for Africa and India
Previous Slide

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5. Matchmaker – E-mobility Project Preparation
Facility
Instrument Description
• Proposed by Carbon Disclosure Project (CDP) aims to
help green infrastructure projects especially across cities
get access to capital by connecting urban entities with
various investor classes, while providing project
preparation support to make them commercially viable.
Barriers Addressed
• Lack of institutional capacity of cities/EV operators to
structure commercially viable green infrastructure
projects
• Unawareness of investors about such projects
Development Stage
• In design phase for Indian cities
• Already working closely with J&K government
Previous Slide

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Thanks…

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Backup Slides

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Instrument Mechanics
Matchmaker
Service
Energy / Energy
efficiency
Urban mobility
Waste
management
Water
management
Housing
Commercial
viability
Development
impact
Operational
stability Financial Technical
Market
assessment
Legal
Investor
subscriptions
Project
Preparation
Services required to
make project bankable
Grants
• Project overview
• Projected impact
• Finance
• Barriers and risk
• Strategic policy
framework
• Investor data
reporting
• Foundations
• Government institutions
• Others
City Project
What projects are
needed & feasible?

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E-mobility Project Preparation Facility Implementation
Process
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0. Creation/ structuring and
marketing of the facility
1. City and Project
Identification
2. Viability Test of the
project - Financial,
Technical and Legal
3. Feasibility, Strategy and
Options Analysis,
Structuring of projects
4. Transaction Advisory and
Supporting Service
5. Investment
Banking
6. Connecting
investors through
the Platform
Led by the
consortium
Led by the
founding
member/s
The facility can become operational within a year, and can
potentially implement its first project in the next 1-2 years.

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PAYS for Clean Transport

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Catalytic Finance Interventions
The US-India Clean Energy Finance Facility
(USICEF) works to meet the growing demand for
electricity within India’s rapidly expanding
economy as India’s first facility to help promising
distributed solar projects develop into viable
investment opportunities, via essential early-stage
project preparation support.
The US-India Catalytic Finance Program (USCISF)
aims to fillip the distributed renewable energy
sector through development of financial
interventions that can mobilize private capital, thus
assisting in India’s policy targets of achieving 40
GW installed capacity in the DRE sector by 2022.
During Prime Minister Modi’s 2016 visit to the US a commitment of USD 60
million was made between the Indian government and a consortium of US
foundations with an objective of providing impetus to the distributed
renewable energy (DRE) sector in India. This was done through two
programs:

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US-India Clean Energy Finance (USICEF)
India’s first project preparation facility to scale up distributed
solar power projects and drive long-term financing

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How are the CPI projects are countering the risks is
doing to address these risks
Risk Description Program 1 Program 2 Program 3 Program 4 Program 5
High upfront costs of electric
buses vs diesel buses
To be filled in by ST
We are trying to create a
lease financing model to
allow long term debt
financing for battery
storage business
To be filled in by ST
Pricing risks arising out of
technology evolution
To be filled in by ST
Lack of credit facility for smaller
EVs
By creating a credit
guarantee facility to
reduce the cost of
lending from financial
institutions (NBFC)
Need of developing associated
infrastructure
By bringing together
all important
stakeholders to
prepare the projects
and direct them to
potential financing
agencies. This will
reduce the time taken
for actual
implementation.
Lack of institutional capacity of
cities/EV operators to structure
commercially viable green
infrastructure projects, and
investors are often unaware of
these opportunities