The news: The government of India and the World Bank are the latest organizations resorting to subsidies and incentives to accelerate electric vehicle adoption, per Bloomberg.
Why it’s worth watching: Aimed at cutting costs for financing EVs, the fund will help banks hedge against loan defaults. The $1 billion fund is a risk-sharing mechanism to compensate banks giving loans for EV purchases.
In India’s case, the environment is the impetus to accelerate EV adoption. Air pollution in India is at an all-time high, posing a serious health risk.
Analyst Take: “Clean transport is laudable, but this dangerously incentivizes subprime auto lending. The market’s saying something: EVs might be good for the environment, but carelessly subsidized, they’re a financial sinkhole for Indian consumers,” said Tyler Brown, senior analyst for banking at Insider Intelligence.
EV incentives are on the rise: EVs are between 10% to 40% more expensive than gas- or diesel-powered vehicles, per Consumer Reports, and incentives can help offset the difference.
The key takeaway: Incentives and affordable payment options can help consumers with the initial expense of adopting EVs. However, not all subsidies or incentives are equitable. A study from the National Bureau of Economic Research found that most of the benefits of EV subsidies go to high-income households.
This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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