India’s electric vehicle (EV) market is moving at an upward growth trajectory. In 2024 alone, the country crossed a record-breaking 1.94 million EV sales, showcasing a growing appetite for cleaner mobility. Owing to several factors such as the boom in fleet leasing, shared mobility services and progressive policies are gaining huge momentum.
On the surface, the sales numbers are bringing EVs into the mobility mainstream. However, under the hood, a different story is unfolding with the brewing of a legal storm which could stall the EV boom just as it takes off.
Commenting on the scenario, Himanshu Gupta, Founder & CEO of Lawyered said, “EV leasing has quietly become one of the biggest enablers of India’s electric mobility shift — helping people get into EVs by removing the high upfront cost barrier. But for all the promise this model holds, leasing companies are operating on razor-thin margins and dealing with a mix of financial and legal challenges that are tough to ignore. Beyond things like battery depreciation and rising operational costs, it’s the day-to-day legal issues — especially traffic challans and vehicle impounding — that end up hitting the hardest.”
The Legal Roadblocks
As the demand for EVs is continuing to surge, a parallel crisis of legal risks is scaling at the same speed. Leasing and financing companies are increasingly finding themselves entangled in regulatory quicksand. For instance, unresolved traffic challans can block vehicle repossession and leave lessors unable to reclaim their assets. Additionally, the ambiguities around battery ownership and subsidy claims lead to serious disputes which can disrupt financing models. On the other hand, ever-evolving state-level regulations require leasing companies operating in multiple states to navigate a labyrinth of compliance rules.
“When users don’t pay fines or comply with rules, the responsibility often falls back on the lessor, which just eats into already tight margins. Add to that the legal complexity from the gap between who owns the vehicle and who actually uses it, and it becomes a serious compliance headache,” he added.
Two-pronged challenges for EV leasing players
The traditional EV leasing companies focus on credit evaluation and asset management. However, as the ecosystem’s legal dynamics are shifting, it becomes pivotal to proactively anticipate and manage compliance risks. In highly fragmented yet automated enforcement systems, a single outstanding traffic challan can cause repossession hurdles, blocking asset recovery for the owner.
In the present environment, especially in the EV segment, fleet players grapple with battery and subsidy battles. EVs come with complex subsidy structures and battery ownership models, hence, this creates gray areas that are fertile ground for disputes.
Besides, every state enforces its own set of rules and regulations for registration, taxation and operational compliances. This creates an administrative nightmare for EV operators as they have spent extra hours in compliance management, slowing down the EV revolution.
He further adds that “The need of the hour is a solid support system to help leasing companies navigate these legal hurdles — because if we want India’s EV movement to truly scale, we need to make sure the backbone of it isn’t left exposed.”
The road ahead with strong legal infrastructure
The future of India’s EV leasing revolution is based on multi-faceted factors. It hinges on manufacturing prowess, consumer adoption as well as invisible implementation of legal infrastructure. This requires a strategic approach to build a dynamic and tech-enabled mobility support infrastructure in which leasing companies or operators can have access to instant, transparent information on pending fines to avoid surprise roadblocks Additionally, widespread implementation of instant dispute resolution mechanisms and proactive compliance can build a high-value economic and environmental ecosystem for the alternate mobility sector.
Great insights. And it looks very important for leasing companies and the operators to fix these issues related to Challans on time. Great job