HDFC Bank to Make Significant Investments in EV Loans

Despite certain setbacks on the level of the auto industry, HDFC Bank is seeking to triple its financing for electric vehicle (EV) purchases in the next three years. This is due to an early assessment that lending is proving to be profitable.

The banking institution aims to triple the ebook dimension by 2025 after initially testing the waters with lending for 589 EV purchases and an ebook dimension of 5,100 crores.

According to Vikas Pandey, enterprise Head for Auto Loans at HDFC Bank, “We are aggressively pushing EV financing in line with our target to become carbon neutral by 2031-32. We are industry leaders in financing passenger vehicles. We are funding 15–17 EVs out of every 100 sold. We, therefore, hold a market share of almost 15%.

According to data, 3,800 passenger EVs were purchased in October, and HDFC Bank provided financing for 589 of those vehicles. In October, the financial institution disbursed similar loans of 170 crores.

According to Pandey, “We are witnessing at least a 2.5x growth this year in terms of quantities of vehicles financed. Numbers should increase from this point forward, and we anticipate a 3x surge in the following three years. We want to have a market share of more than 20% by 2025.”

The financial company offers eight-year mortgage terms with interest rates starting at 8.05%. The typical mortgage ticket size is 17 lakh rupees. As the access to charging infrastructure continues to be a barrier to widespread EV adoption across the country, 80% of the demand is concentrated in metro areas and other concrete locations.

In India, there are 2,500 EV chargers spread throughout 270 cities. In Maharashtra, there are around 500 of them.

According to Pandey, Tata Motors produces about 80% of the autos that HDFC Bank finances, with the remaining 20% going to MG Motors and Hyundai. The market is prepared to expand with Chinese competitor BYD entering India and M&M scheduled to introduce its EV.

19,500 electrical passenger autos were purchased in the country last year. Up to October of this year, 20,500 cars had been purchased.

Under 1% of passenger autos on the road, today are electric vehicles.

By 2030, India’s EV financing market is projected to be worth $50 billion (INR 4.1 lakh crore), with 30% of personal vehicles, 70% of commercial vehicles, and 80% of two- and three-wheelers in the country having an electrical powertrain.

Several Indian banks offer green auto loans- a lucrative financing option for consumers looking to buy zero- or low-emission vehicles. These green auto loans lower interest rates on offer among other perks. Banks such as SBI (Green Car Loan), Union Bank (Union Bank Green Miles), Axis Bank currently offer these loans.