Mission 50K-EV4ECO: SIDBI launches new financing solution for electric vehicle space

Source: The post is based on the article “SIDBI launches new financing solution for electric vehicle space” published in Economic Times on 21st April 2023

What is the News?

Small Industries Development Bank of India (SIDBI) has announced a new scheme named “Mission 50K-EV4ECO” to boost the electric vehicle (EV) ecosystem in the country.

What is Mission 50K-EV4ECO?

Launched by: Small Industries Development Bank of India (SIDBI)

Aim: To increase the uptake of electric two-wheelers, three-wheelers and four-wheelers through direct and indirect lending support to vehicle aggregators, fleet operators and leasing companies.

Under the scheme, SIDBI will directly provide loans to eligible small and medium enterprises (SME) for the purchase of EVs and developing charging infrastructure, including battery swapping.

Significance of the scheme: This scheme is a positive step to support the demand side of EV adoption in India, especially in light of the Government of India’s FAME 2 scheme coming to an end by March 2024.

What is the drawback of Mission 50K-EV4ECO?

The thing that is missing in this scheme is the crucial supply-side incentives to stimulate the ‘entire EV value chain’. The critical component of this value chain is the battery, which accounts for 25-35% of the EV cost.

– Manufacturing of lithium-ion batteries comprises multiple steps, including electrode preparation, cell assembly, battery pack assembly and battery testing, which involve advanced machinery.

– Currently, a substantial part of the battery manufacturing ecosystem is heavily skewed towards battery pack assembly that relies on imported lithium cells. 

– This raises concerns about the suitability of battery chemistry and design to the local environment, operational safety and vulnerability to external supply shocks.