Lightspeed-backed Exponent Energy, a maker of batteries and equipment that allow rapid charging of electric three-wheelers, is setting up a subsidiary that will offer an innovative pay-as-you-go financing model to help expand its business across the country, according to top company executives.
The finance subsidiary, Exponent One, will allow operators of autorickshaws to repay loans based on vehicle usage and their daily earnings instead of fixed equated monthly instalments. Exponent One will finance both the retrofitting of CNG or LPG three-wheelers into EVs and purchases of new electric three-wheelers.
"Fundamentally, we think with EVs, energy is the capital expenditure problem. Customers are paying that capex up front," Arun Vinayak, chief executive officer and founder of Exponent Energy, told Mint in an interview. “Customers need innovative financing options if we want to drive EV adoption.”
EV financing is a niche segment estimated at $3.59 billion this year and projected to grow to $28.7 billion by 2031, according to Mordor Intelligence. India is one of the world's largest EV three-wheeler markets, with sales growing 15% to 797,729 units in 2025, its best year so far.
Exponent Energy has roped in former Ola executive Sandeep Divakaran to serve as CEO and co-founder of the new venture, alongside Vinayak. Divakaran previously served as CEO of evfin, an EV financing company from Greaves Finance, a subsidiary of Greaves Cotton.
Exponent Energy raised a $2 million pre-seed cheque from mobility venture capital fund AdvantEdge Founders. It is betting that its battery tech tracking and real-time analysis will help its financing business to underwrite loans more precisely. The company argues that energy usage data and underwriting are inherently linked.
Warning signals
“The combination of battery intelligence from Exponent Energy and the ability to understand the earnings of a customer through financial data, like an account aggregator, helps us understand if a customer is defaulting,” said Divakaran. “Our focus is to build a product that gives us early warning signals, and that a customer's cash flows in such a manner that they don't fail.”
The model has been in pilot testing across a few thousand users over the past year ahead of a full-scale rollout.
Exponent One has been capitalized separately and structured as an independent entity to keep its balance sheet insulated from Exponent Energy’s deeptech investments, which are expected to remain loss-making in the near term.
“The company will be co-lending and raising debt from other investors who will want to see a healthy balance sheet,” said Kunal Khattar, founder of AdvantEdge Founders. “We wanted to start the finance business with a clean balance sheet with no accumulated losses.”
Exponent One is banking on Exponent Energy's 15-minute charging network, currently operational in Bengaluru, Chennai, Ahmedabad and the National Capital Region, to help riders earn more, reduce defaults, and expand the financing business. The plan for this year includes going into new markets and consolidating its presence in existing markets.
Exponent Energy has a network of over 100 chargers in Bengaluru and Delhi, and the company will increase the amount of charging stations in the other two cities. It plans to enter Pune, where three-wheeler use is heavy, and Hyderabad. There will also be a concentrated effort to put more EV three-wheelers on the road.
“We wanted to do this after we had the financing capabilities so that we're in control of our rate of deployment of vehicles from our partners, which is why we're doing this post-Exponent One,” said Vinayak.
Highly risky
Financial institutions have generally considered EV financing for commercial three-wheelers as risky, given that most of the borrowers are from low-income groups and their creditworthiness comes into question.
Other challenges include the unpredictable resale value of such vehicles, battery performance and fluctuating income for commercial EV users. The biggest risk is uncertain residual values on account of limited data and rapid technology shifts, not to mention battery degradation risk since the battery represents most of the asset’s value.
“Recovery is difficult because EVs can be stripped of batteries and telematics can be disabled,” said Srihari Mulgund, partner and new-age mobility leader at EY-Parthenon.
A joint report by the Boston Consulting Group and government think tank NITI Aayog from 2022 found that interest rates for three-wheeler commercial passenger vehicles were 1-7% higher than for diesel/petrol vehicles and 1-8% higher than for cargo three-wheeler EVs for loans taken from non-banking financial institutions. Additionally, the tenure for EV loans was shorter – 24-42 months compared to 24-60 for petrol/diesel vehicles.
There hasn't been a lot of venture capital interest in EV financing either because of the risk involved in underwriting. Over the past three years, the top 10 deals in the segment have stayed below $15 million, according to data from Venture Intelligence.
In 2025, only two EV financing startups raised money: EV leasing and green financing startup Stride Green raised $4 million from Incubate Fund Asia, Micelio Fund and others, and EV loan company Vidyut raised $3 million from Trifecta Capital, Alteria Capital and others.
Fundamentally unattractive
Incumbents including Tata Capital, Bajaj Finance and Mahindra Finance can readily underwrite EV assets because they have their own OEM ecosystem.
“In contrast, startups typically work with newer OEMs that lack captive finance capabilities,” said Mulgund. “Because EV financing continues to remain a high‑risk, low‑margin and capital‑intensive business, the segment is generally seen as fundamentally unattractive for venture-funded startups that rely on asset-light, scalable models.”
On the other hand, some carmakers in the personal vehicle segment have been slightly ahead of the curve. They launched assured buyback programmes owing to consumer concerns over rapid depreciation in EV prices.
MG Motors offers a 40-60% resale value for electric vehicles aged three to five years. India's largest carmaker Maruti Suzuki will also offer an assured buyback programme once it launches its EV in the domestic market.
EV financing companies include Mufin Green Finance, Revfin, and Greaves Finance's ev.fin.
(With inputs from Ayaan Kartik)