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Affordable electric car loans, India in discussions with World Bank

The shift to clean transport in India has been slower than in the US and China in part due to the slow adoption of battery-powered vehicles.

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Update on:
September 20, 2022, 5:57 PM ONLY

Affordable pricing is a key issue for India's electric vehicle growth story.
Affordable pricing is a key issue for India’s electric vehicle growth story.

An official said the Indian government and the World Bank are in talks to devise a risk-sharing mechanism to compensate banks for lending to EVs as the country seeks to decarbonize the transport sector. .

(Also read: Japan tests avenues for wireless EV charging, aims to deploy the technology by 2025)

The risk tool will help banks hedge against defaults and cut electric vehicle financing costs, G20 India’s Amitabh Kant said on the sidelines of an industry event in New Delhi. Kant was CEO of the government thinktank NITI Aayog until June this year, leading the state’s policy decisions throughout the economy.

The transition to clean transport in the South Asian country has been slower than the US and China in part due to the slow adoption of battery-powered vehicles. The high cost of these vehicles and insufficient charging stations are major barriers as BloombergNEF says that by 2040, 53% of new car sales in India will be electric, behind China at 77%.

Kant, who was recently appointed as India’s chief negotiator, said the cost of insurance for these vehicles is high and the resale market is still small. of 20 countries in December.

According to a senior NITI official Aayog working on the project, the World Bank will set up a $1 billion fund with an Indian bank. The official, who declined to be named, said the fund would provide the first loss guarantee to lenders in the event of default.

A spokesman for the World Bank in India did not return calls and an email seeking comment.

India has been promoting the decarbonization of the transport sector, which accounts for 13.5% of the country’s total emissions, as it looks set to meet its goal of becoming net carbon-free by 2020. 2070. The government expects investment in India’s electric vehicle industry to more than triple. $20 billion in 2030 from $6 billion in 2021.

The government is also implementing a battery swap program to accelerate the adoption of electric motorcycles and trailers, which are growing faster than the four-wheeler segment.

First published date: September 20, 2022, 5:57 PM IST

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