Why Battery Financing Is Far Superior to E-Rickshaw Financing

A Deep Dive Into Risk, Credit Behaviour, Collateral, Collections, and Scalability

India’s EV revolution is happening in layers. The first major wave was the rise of e-rickshaws, which now move over 1 crore people daily. The second, even more transformative wave is the upgrade to lithium batteries, which are more efficient, more reliable, and economically essential for every EV operator.

With this transition, a powerful financial model has emerged: Battery Financing.

While e-rickshaw financing was the dominant model for the past decade, battery financing is proving to be a dramatically superior lending product — safer, more predictable, more scalable, and more profitable.

This article breaks down why battery financing outperforms e-rickshaw financing across every dimension: customer behaviour, collateral quality, credit risk, unit economics, collections, and scalability.

🔵 1. Customer Type: Battery = ETC, E-Rickshaw = NTC

The silent but biggest differentiator in risk

Battery customers are primarily ETC (Existing To Credit)These users already:

• Own an EV or work with delivery platforms

• Have taken loans before (MFI, consumer durable, gold loan, personal loan)

• Show EMI discipline

• Have a credit score and a borrowing track record

E-rickshaw customers are primarily NTC (New To Credit)Typical profile:

• First-time borrowers

• Migrant workers or new drivers

• No credit history

• No EMI discipline

• Low understanding of how formal credit works

Why this matters

NTC borrowers statistically have:

• Higher first-month default

• Higher bounce rates

• Higher delinquency

• Higher NPA risk

ETC borrowers already understand:

• How EMIs work

• The consequences of non-payment

• The importance of maintaining a CIBIL score

This single difference makes battery financing inherently safer.

🔵 2. Collateral Strength: Batteries Hold Value, Vehicles Don’t

Collateral is the backbone of secured lending, and battery beats the vehicle by a huge margin.

🔋 Lithium Battery Collateral

• Strong residual value: 65–75% even after 18 months

• Standardised — every unit is consistent

• IoT-enabled (GPS, lock, live health, cycles, temperature)

• Easy to verify

• Easy to store

• Easily re-leased or resold

A battery is a digital, trackable, high-value asset.

🚙 E-Rickshaw Collateral

• Rapid depreciation

• Resale value after 2–3 years: ₹25,000–₹40,000

• Dependent on dealer honesty and parts condition

• No tracking

• Can be hidden, dismantled, or tampered

• Huge variation in value

A vehicle is a low-resale, non-standard, hard-to-control asset.

Practical effect

Battery financing has a very low LGD (Loss Given Default).Vehicle financing has a high LGD, because recovered value is extremely low.

🔵 3. Recoverability: Battery Repo Is Instant, Vehicle Repo Is Painful

🔋 Battery Recovery (Best in Industry)

• IoT pinpoints exact location

• Removing a battery takes less than 30 seconds

• No police involvement

• No RTO paperwork

• Low-cost recovery

• Fits in a backpack

• Repo success rate: 95%+

🚙 E-Rickshaw Recovery (Worst in Industry)

• Vehicle can move across city routes

• Customers hide it intentionally

• Repo team + police required

• High cost

• Sometimes risky or violent

• Repo success rate: 50–60%

Repossession difficulty directly raises NPA risk. That’s why lenders avoid vehicle loans but love battery loans.

🔵 4. Dependency on the Asset: Battery = Daily Survival

A battery is literally the heart of income.

Without a battery:

• The EV cannot run

• The driver cannot earn

• They face immediate livelihood loss

So if a battery customer misses an EMI:

• They return the call

• They negotiate

• They restart payment quickly

This is a self-enforcing repayment loop that keeps NPAs low.

In contrast, e-rickshaw owners:

• Can park the vehicle and stop working

• Can borrow a battery from a friend

• Can shift to daily labour

• Can hide the vehicle

Their dependency on the financed asset is weak → repayment behaviour is inconsistent.

🔵 5. EMI Affordability: Small Tickets = Low Risk

🔋 Battery Loan

Ticket size: ₹40,000–₹60,000EMI: ₹1,200–₹1,800

🚙 E-Rickshaw Loan

Ticket size: ₹1.4–1.8 lakhEMI: ₹5,000–₹8,000

Small EMI =

• Lower stress

• Better affordability

• Fewer missed payments

• Higher approval rates

• Lower defaults

For a low-income customer, an extra ₹5,000 EMI is a huge burden. But ₹1,200–₹1,800 is manageable even in a slow month.

🔵 6. Operational Simplicity: Battery Financing Is Plug-and-Play

🔋 Battery Financing (Ultra Simple)

• No RTO

• No hypothecation

• No dealer involvement

• No vehicle-level paperwork

• No fraud in chassis/engine numbers

• No GST disputes

• No complicated insurance needs

🚙 E-Rickshaw Financing (Ultra Complex)

• Heavy dependency on OEM

• Dealer fraud and over-invoicing

• RTO registration

• Hypothecation

• Insurance paperwork

• Physical verification

• Margin money fraud

Every additional layer adds cost and introduces risk.

🔵 7. Multi-Cycle Monetisation: Batteries Earn 2–3 Times Over

A battery has repeat income cycles:

• First financing

• Repo or return

• Second lease cycle

• Even a third cycle possible

• Resale in secondary markets

• Then energy-as-a-service monetisation

An e-rickshaw has only one cycle.After repo, value is almost negligible.

This makes battery financing far more profitable per asset.

🔵 8. Scalability: Battery Financing Can Grow 10× Faster

Scaling e-rickshaw financing requires:

• Large sales teams

• Dealer networks

• OEM onboarding

• Field verification

• Physical inspections

Scaling battery financing requires:

• Just a credit check

• Asset verification

• Digital disbursal

• IoT control

This enables:

• Pan-India expansion

• Centralized underwriting

• Automated collections

• Rapid loan growth

• Asset-light operations

A battery financing business can scale from 100 to 10,000 loans with minimal increase in manpower — something e-rickshaw lenders cannot achieve.

🔵 9. Better Portfolio Quality and Lower NPAs

Because battery financing has:

• ETC customers

• Small EMIs

• IoT tracking

• Instant repo

• Strong collateral value

It naturally delivers:

• Lower bounce rate

• Lower 30+ DPD

• Lower NPAs

• Higher lifetime yields

E-rickshaw financing struggles with:

• High first EMI default

• Seasonal income fluctuations

• High repo cost

• High losses after default

🟩 Final Conclusion: Battery Financing Is Not Just Better — It Is Structurally Superior

Battery financing solves every structural weakness of e-rickshaw financing:

• Customer quality

• Collateral strength

• Recovery speed

• Operational simplicity

• Multi-cycle monetisation

• Scalability

• NPA control

• Yield

It aligns perfectly with the core fundamentals of sound lending:✔ Strong collateral✔ Predictable customer behaviour✔ High recoverability✔ Scalable operations✔ Low credit risk✔ Stable yield

This is why battery financing is the future of EV lending in India — and why lenders, NBFCs, and investors are shifting their focus rapidly from e-rickshaws to batteries.