Unlocking financing for 8 million electric two- and three-wheelers in India

• Feb 26, 2025
• 2 min

To accelerate EV adoption, MSC supported the World Bank and NITI Aayog in designing the EVOLVE Risk-Sharing Program (EVOLVE-RSP)—a USD 250-million initiative providing low-cost loans and credit guarantees. The program aims to unlock financing for 8 million EVs, driving India’s clean energy transition.

India intends to achieve 30% electric vehicle (EV) penetration by 2030. However, as of 2022, EV sales accounted for only 4.98% of total vehicle registrations in the country. The growth of electric two- and three-wheelers, which made up more than 95% of total EV sales in 2022, is crucial to reach this target. Yet, the high upfront cost of these vehicles compared to their internal combustion engine (ICE) counterparts and the lack of affordable financing instruments pose significant challenges.

The World Bank and the NITI Aayog launched the EVOLVE Risk-Sharing Program (EVOLVE-RSP) to address this financial gap in climate finance. The program intends to scale up the adoption of electric two- and three-wheelers to mitigate up to 9.5 million tons of CO₂ emissions over the vehicles’ lifetime and contribute to India’s clean energy transition. The USD 250-million initiative provides low-cost loans and credit guarantees to financial institutions to stimulate private-sector financing for EV adoption.

MSC designed the facility’s structure and onboarded stakeholders. We undertook the following tasks:

• We validated the risks associated with financing electric two- and three-wheelers, assessed de-risking measures, computed expected credit losses, and finalized the terms of the low-cost loan and credit guarantee facility;
• We developed selection criteria, credit models, and due diligence checklists for various borrower segments, which included individual drivers, fleet operators, and leasing companies;
• We designed the criteria to identify and onboard financial institutions and EV manufacturers that participated in the program.

The EVOLVE-RSP is projected to unlock financing for 8 million electric two- and three-wheelers over the next eight to 10 years. The USD 250-million fund is expected to catalyze up to USD 1.83 billion in loans from banks and nonbanking financial institutions. 

As part of this engagement, MSC also published a blog on the design of innovative financial structures to finance energy transition in the e-mobility sector. In it, we emphasized the need for a viable blended finance facility (BFF) business model and stronger government-multilateral collaboration.

The Small Industries Development Bank of India (SIDBI) commissioned this project.