In E3W segment, customer base may be new to credit or lack strong credit score: Sameer Aggarwal, Revfin

Sameer Aggarwal, CEO & Founder, Revfin

EV finance firm Revfin claims that it has financed over 17,118 electric vehicles in the last 51 months (as of March 2023). This translates to financing 11 electric vehicles everydayin the last 1530 days. The vehicles are plying in over 200 cities across 16 states of India. Revfin also underwrites financially excluded and underserved segments in tier 2 and tier 3 cities also. Aiming to finance 2 million electric vehicles in the next five years, the firm has established a nationwide presence with strong market share in Bihar, Uttar Pradesh, Uttarakhand, Jharkhand and strengthening market presence in Madhya Pradesh, Rajasthan, Gujarat, Punjab and Assam in partnership with more than 650 dealerships. Having increased the financial inclusion ratio by 85% Revfin claims that it has managed to cover over 305 million green kilometres with the EVs. Sameer Aggarwal CEO & Founder, Revfin, sheds light on the obstacles and untapped opportunities in EV financing.

Sameer Aggarwal, CEO & Founder, Revfin

Tell us about Revfin and its AI-enabled digital platform formed in partnership with IIT. 

Revfin is India’s number one EV lending platform, which focuses on financial inclusion by providing the smartest, fastest electric vehicle loans to low-income earners in small cities and towns of India.

Revfin leverages an AI-enabled digital platform for giving loans. The entire process is digital from loan application to loan disbursement. In collaboration with IIT Kharagpur, Revfin has created a unique and strong underwriting model to check the intent to pay, which includes psychometrics, biometrics, and gamification techniques. This underwriting model helps in serving new to credit ( NTC) and unserved segments and makes them financially and socially empowered owners of the vehicle-micro-entrepreneurs. Revfin’s establishment was motivated by a desire to promote financial inclusion and sustainability in India.

How many EVs has Revfin financed? Which regions claim the largest market share and why?

So far, Revfin has financed more than 19,033 EVs across 224 small cities in India. Revfin’s market share is largest in Bihar, which is more than 28%. This is due to Bihar having the largest e-rickshaw sales market in the country, and higher earning capacity compared to other states. We have a strong network presence in Bihar.

Why do financers continue to be so apprehensive despite India reporting good EV sales? 

In India, the low trust in EVs, the lack of a strong EV ecosystem, innovation and changes happening in technology- mainly with regards to battery, make people wonder if the current technology becomes redundant very soon, what would be the value of their purchase. All these factors lead to financiers getting cautious about financing EVs  and that leads to challenges in financing. The funds come to financiers at high price. However, opportunities exist for designing new finance products, creating financing options for the complete EV ecosystem, promoting a strong second-hand market, and providing financing for it.

Do banks hesitate too to provide loans for EVs along with second thoughts about credit risk?

The entry of NBFCs/startups in the EV loan segment suggests that banks do have some hesitation in providing loans for EVs due to the product risk associated with it, which is then linked to credit risk. This is particularly true for the E3W segment where the customer base may be new to credit or lack a strong credit score, making it challenging for banks to evaluate their creditworthiness. Revfin’s unique underwriting system provides them with an advantage in such situations.

How do you view the the bottleneck of lack of second-hand market for EVs?

Yes, lack of secondary market for EVs is a challenge. In fact, it is the main reason why most lending institutions stay away from EVs. Lack of secondary markets create a big opportunity as with adoption of EVs increasing, secondary market will need to be developed soon.

Various different approaches for this can be taken. The approach Revfin has taken is to co-create secondary market with OEMs and dealers by using dealerships as a hub for refurbishment and resale of vehicles. Along similar lines, partnerships with existing secondary markets and fleet operators can be made to resolve this.

What role can startups and investors play in giving a push to the EV ecosystem?

EV adoption is growing at a very rapid pace, thereby creating significant opportunities for investments and for new startups. Investments in the sectors still remain weak as the total addressable market is not yet clear.

Electric vehicle ecosystem is developing very differently from ICE vehicles. And given the market is not yet at scale new business models can be created. There are several areas of opportunities like telematics, battery management systems, manufacturing, vehicle design, charging, swapping, financing, delivery, and logistics. Both investors and startups can pick any one the above areas and with focus, and can create very large businesses.