Powering EV Adoption: Why We Invested in Vidyut’s Battery-as-a-Service Model

The electric vehicle (EV) market in India is accelerating. Sales are growing rapidly, government policies are encouraging adoption, and a strong ecosystem of manufacturers, charging infrastructure, and mobility services is emerging.

But financing remains a major roadblock.

For many individuals, small businesses, and fleet operators, the high upfront cost of an EV is a significant barrier. Traditional lenders are hesitant to finance EVs due to concerns over battery life, resale value, and lack of historical data. This financing gap is slowing down mass adoption. This is where Vidyut comes in.

At Flourish Ventures, we believe financial innovation is key to driving climate action. Vidyut’s Battery-as-a-Service (BaaS) model is a breakthrough in EV financing. By separating the cost of the battery from the vehicle, Vidyut makes EV ownership more affordable and reduces risk for both buyers and lenders.

We are excited to invest in Vidyut because they are not just solving a financial problem—they are unlocking the full potential of India’s EV market.

India’s EV Market is Growing, But Financing is Lagging

The Indian EV market has been on a steady upward trajectory, with annual sales growing at a CAGR of approximately 100% from FY15 to FY24. Despite a temporary dip during the COVID-19 pandemic, the market has rebounded strongly, with sales reaching 1.7 million units in FY24. Electric two-wheelers (e2Ws) and three-wheelers (e3Ws) dominate the market, accounting for nearly 90% of all EV sales. By 2030, EVs are expected to make up 35%-40% of total vehicle sales in India, up from 6.5% in 2023.

This growth is underpinned by several tailwinds:

• Government Incentives: Policies like FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) and PLI (Production-Linked Incentive) schemes are driving demand and local manufacturing.
• Cost Competitiveness: EVs are increasingly cost-competitive with internal combustion engine (ICE) vehicles, thanks to declining battery prices and lower operating costs.
• Ecosystem Development: Investments in localized manufacturing, charging infrastructure, and battery recycling are creating a robust ecosystem for EV adoption.
• Customer Readiness: Rising awareness of EVs’ benefits, coupled with technological advancements and expanding options, is driving consumer interest.

The Financing Gap: A Critical Barrier to EV Adoption

Despite these tailwinds, access to financing remains a significant barrier to EV adoption. Traditional financiers, such as banks and NBFCs, are hesitant to lend to EV buyers due to the lack of historical data, uncertainty around battery life, and challenges in assessing the residual value of EVs. This is particularly true for retail customers and small fleet owners, who form a large portion of the market.

According to a Niti Aayog report, the cumulative capital cost of India’s EV transition from 2020 to 2030 is projected to be $266B, with the organized EV financing market expected to reach $30 billion by 2030. However, the current financing landscape is not equipped to meet this demand, creating a significant opportunity for innovative players like Vidyut Tech.

Why Vidyut?

Vidyut has developed a unique financing model that addresses the key pain points of EV buyers and financiers alike. Their approach separates the financing of the vehicle chassis from the battery, offering a traditional term loan for the former and a “pay-as-you-go” financing for the latter through their Battery-as-a-Service (BaaS) model. This innovative structure has several advantages:

1. Converts CapEx to OpEx: By financing the battery on a pay-as-you-go model, Vidyut converts a significant capital expense into an operating expense, making EVs more affordable for customers. This is particularly appealing to commercial drivers and small fleet owners, who can now compare the per-kilometer cost of running an EV with that of an ICE vehicle.
2. Reduces Upfront Costs: Vidyut’s model significantly lowers the upfront cost of EV ownership by financing only the chassis. This reduces the down payment required, which is a critical factor for customers with limited savings (reducing downpayment by 55-65%).
3. Eliminates Battery Uncertainty: Customers no longer need to worry about battery life or replacement costs, as Vidyut handles maintenance and replacements under the BaaS model. This removes a major source of anxiety for EV buyers.
4. Battery Intelligence: Vidyut leverages proprietary algorithms to assess battery health and predict residual value, enabling more accurate underwriting. Their partnerships with OEMs and battery recyclers further enhance their ability to monitor and manage battery performance.
5. Enhanced Collections and Monitoring: Through live data from OEMs, Vidyut can monitor driving behavior and battery health, improving collections efficiency and reducing defaults. Their remote vehicle immobilization feature adds an additional layer of security, ensuring timely payments without physical intervention.

Why We Invested

Vidyut’s innovative approach to EV financing aligns perfectly with our investment thesis. We believe that access to affordable and tailored financing solutions is critical to accelerating EV adoption in India. Vidyut’s deep understanding of EV technology, combined with its focus on customer needs and robust underwriting capabilities, positions it as a leader in this space.

Moreover, Vidyut’s model has the potential to scale across multiple vehicle segments, from e3Ws and e4Ws to passenger vehicles. As the EV market continues to grow, we see Vidyut playing a pivotal role in bridging the financing gap and enabling India’s transition to sustainable mobility.

Looking Ahead: Making EVs More Accessible to Everyone

The EV revolution in India is just beginning, and Vidyut is at the forefront of this transformation. By addressing the financing challenges that have hindered widespread adoption, Vidyut is not only unlocking the potential of the EV market but also contributing to a cleaner, greener future by making EV ownership simpler, more affordable, and risk-free.

At Flourish Ventures, we are excited to support Vidyut in its mission. Their Battery-as-a-Service model is not just about financing—it is about enabling a future where electric mobility is accessible to everyone.