Impact of EVs in the FinTech industry

 Boomer- EVs are too expensive! Reality- Your “savings” on buying a combustion engine vehicle get’s easily exhausted buying fuel for its lifetime.

Fuel isn’t cheap like it was “back in your day”!

Fintechs play a critical role in the EV industry, particularly in the small commercial two and three-wheeler segments. Fintechs provide convenience, speed, and reach. The deeper involvement of the fintech sector with that of the EV might enable the industry to grow at a rate of 10-20 times its current rate.

Data-driven tools are used by digital lending platforms to make underwriting judgments. Quick and precise decisions about the borrower's purpose and capacity can be made using non-traditional data such as psychometrics, SMS, and biometrics, which are overlaid with machine learning algorithms.

Why is Fintech required?

The use of digital platforms also eliminates the need for a lot of human intervention, making it possible to give loans even in tiny communities with low sales. This aids in obtaining a cost advantage.

In this market, digital payments have a relatively low penetration rate. In most cases, first and final mile delivery is handled by an electric commercial two or three-wheeler driver. They can get their fare/payment in e-wallets, hand back any change to their customers through the wallet, and, most importantly, repay their loan instalments digitally with digital payments. All of this will make them a member of the 'formal' economy and provide them with a wealth of data, opening them up to a slew of new prospects in the future.

By minimizing expenses and human intervention, the use of digital technologies in insurance claims settlement to estimate damage through video and pattern recognition will also make insurance models sustainable.

Embedded IoT devices assist lenders and insurers in tracking automobiles, limiting the range of vehicle movement through geofencing, immobilizing vehicles, and determining driver productivity. Higher productivity translates to more money and better debt management.

Supporting the electric vehicle (EV) ecosystem

Fintechs have a vital role in the development of the electric vehicle ecosystem. Partnerships with insurance providers to provide borrowers with the vehicle, life, and EMI protection insurance; partnerships with battery manufacturers to finance replacement batteries; partnerships with battery charging and swapping providers to create an instalment-cum-subscription model to reduce the initial capital required to buy vehicles; and partnerships with aggregators to provide revenue/earning opportunities to drivers making loan instalment payments easily are just a few examples.

The EV industry's future is being driven forward.

Electric vehicles will be around for a long time. The notion of electric vehicles was born out of environmental concerns, and India's national and state governments have made various legislative measures to encourage EV adoption. Electric two and three-wheelers have excellent economics, with the cheap purchase and operating costs. The demand for work in small towns is expected to rise as a result of the recent reverse migration caused by COVID-19. The demand for EVs is on a strong growth trajectory due to a combination of the foregoing, as well as an increase in e-commerce, hyperlocal deliveries, and first/last mile connection.

Fintechs' digital technology, when paired with technology from other ecosystem players like insurers, e-commerce, payments, and aggregators, would result in a solid and scalable electric car model in India.

What does the future hold for EVs?

The electric car industry's current state is still improving. The global stock of electric automobiles is expected to expand at a compound annual growth rate of 33%, from 3.1 million units in 2017 to 125 million by 2030, according to estimates. According to the International Energy Agency, by 2040, electric vehicles will account for 55 per cent of all sales of new cars and 33 per cent of the worldwide fleet.

This simply means that demand for manufacturing and production will continue to climb, and electric vehicle companies will want all of the financial assistance they can obtain. FinTech solutions, thankfully, can give the resources they need to keep going forward and attain their full potential for general acceptance.

Tax deductions on loans for EVs

Section 80EEB allows for a total tax exemption of up to Rs 1,50,000 when paying off an EV loan. This tax credit is valid for both four-wheeled and two-wheeled electric vehicles.

Criteria for Eligibility

Individuals are the only ones who can benefit from this tax deduction. This deduction is not available to any other taxpayer. As a result, if you are a HUF, AOP, Partnership firm, company, or any other type of taxpayer, you cannot claim any benefit under this provision.

The conditions that apply to Section 80EEB are listed below.

• Each person is only eligible for this exemption once. This means that Section 80EEB loan tax reduction is only available to people who have never owned an electric vehicle previously.

• Only those who are financing an electric vehicle are eligible for this exemption. A loan from a financial organization or a non-banking financial company should be used to fund the EV (NBFC).

• The clause allows for tax savings on EV loan repayments made between April 1, 2019, and March 31, 2023.

• Tax incentives under Section 80EEB will be available beginning in FY 2020-2021.

Is it true that electric vehicles are better for the environment?

The most significant advantage of electric automobiles is the contribution they can make to improving air quality in cities. Pure electric automobiles produce no carbon dioxide emissions when driving because they do not have a tailpipe. This significantly minimizes air pollution.

Simply put, electric automobiles provide cleaner streets, making our cities and towns safer for walkers and bikers. Just one electric car on the road for a year can save an average of 1.5 million grams of CO2. 

Electric vs Petrol car

In this comparison, an electric vehicle is compared to a gasoline vehicle. The major goal is to help users understand why, how, and in which situations electro-mobility lives up to its green image by reducing per-km emissions when compared to its fossil-fuel-based alternative. A second goal is to demonstrate how electric vehicles can "counter-perform" in various situations, such as when the battery size varies, the background electricity mix changes, the battery lifetime changes, or how winter circumstances affect battery performance.

Our Course

If you think you're late to the party because there's so much noise about electric vehicle stocks, you're not. In India, electric vehicles account for only 1% of total vehicle sales, although most research organizations project the industry to increase rapidly by 2030. To put it another way, the electric vehicle revolution is only getting begun.

What will the future of the electric vehicle revolution look like? Will electric vehicles be able to entirely replace conventional vehicles? What types of businesses would profit from them? Our course on EVs on Quest will teach you everything you need to know about the sector.

So, what will you do? Ride an EV into the future? Or stick to fossil fuels and become a relic with them?