Key Takeaways
EV freight drivers can see around 25% higher income after switching from ICE vehicles, mainly because of lower operating and maintenance costs.
Lease-based drivers saw monthly income rise from ₹19,745 to ₹24,813, while salary-based drivers saw income rise from ₹16,851 to ₹20,809.
Owner-cum-drivers saw a 41% decline in net monthly income, from ₹32,727 to ₹19,181, under the study’s base EV scenario.
High financing costs, EMIs, vehicle utilisation and access to freight demand can determine whether an EV actually improves a driver's income.
Longer loan tenures, alternative credit assessment, platform-backed leasing and lease-to-own models could make EV financing more inclusive.
When an EV Saves Fuel but Costs the Driver More
Before sunrise, a freight driver begins another day on India's busy roads. His vehicle is not simply a means of transportation. It is his workplace, his business and, for an owner-cum-driver, often his most important income-generating asset.
Every trip adds to his earnings. Every kilometre affects his operating costs. Every hour the vehicle remains idle can reduce his income. And every month, the vehicle loan has to be repaid.
Now imagine that driver replacing his conventional internal-combustion-engine vehicle with an electric vehicle.
On paper, the decision looks simple.
Fuel costs fall. Maintenance costs can come down. Electric vehicles can offer lower running costs compared with petrol or diesel vehicles. The driver should therefore have more money left at the end of the month.
But what happens when the vehicle itself is expensive to finance?
That is where India's electric freight story becomes much more complicated.
A new study by Smart Freight Centre and Shell Foundation, titled “Driving Income Uplift: Designing Inclusive EV Financing for India’s Freight Drivers,” finds that switching to an electric vehicle can increase freight driver income by close to 25% on average.
But the same study reveals a striking contradiction.
For some drivers, the transition can improve their livelihood significantly. For others, particularly independent owner-cum-drivers, the economics can move in the opposite direction.
Under the study's base EV scenario, owner-cum-drivers saw their net monthly income fall by approximately 41%, from ₹32,727 under ICE operations to ₹19,181 after switching to an EV.
So, if EVs are cheaper to operate, why can income fall?
The answer is not necessarily the vehicle.
It is the financing model behind the vehicle.
A Study That Looks Beyond EV Adoption
The report is based on a mixed-methods study involving more than 1,500 freight drivers across 11 Indian states, covering both three-wheeler and four-wheeler freight segments.
The states covered include Punjab, Haryana, Delhi, Bihar, Karnataka, Maharashtra, Telangana, West Bengal, Madhya Pradesh and Uttar Pradesh.
Rather than looking only at whether drivers are adopting EVs, the study examines what happens to their income after the transition.
This distinction is important.
Electric mobility is often discussed through metrics such as vehicle sales, battery costs, charging infrastructure and total cost of ownership.
But for a commercial driver, the most important question is much simpler:
After paying all the costs, how much money is left in my pocket?
That is the question this research attempts to answer.
And the answer depends heavily on how the driver operates the vehicle.
Three Drivers, Three Different EV Outcomes
The study looks at three broad operating models: salary-based drivers, lease-based drivers and owner-cum-drivers.
A salary-based driver typically works for a fleet or logistics company and receives a fixed monthly income. This model provides relatively greater income stability because the driver does not have to carry the entire burden of vehicle ownership and financing.
A lease-based driver operates a vehicle through a structured leasing arrangement, often connected to a logistics or mobility platform. The driver makes repayments while generating income through vehicle utilisation.
Then there is the owner-cum-driver.
This driver owns the vehicle and operates it independently. The model provides greater control and potentially higher earning capacity, but it also means that the driver carries almost all of the financial and operational risk.
The difference becomes clear when the study's income figures are compared.
Lease-based drivers saw their net monthly income rise from approximately ₹19,745 under ICE operations to ₹24,813 under the base EV scenario, representing an increase of around 25%.
Salary-based drivers saw their income rise from approximately ₹16,851 to ₹20,809, an increase of around 23%.
But owner-cum-drivers experienced a very different outcome.
Their net monthly income fell from approximately ₹32,727 to ₹19,181, representing a decline of around 41%.
This is one of the most important findings of the study because it challenges the assumption that every driver automatically benefits from switching to an EV.
Why Can an EV Increase Costs Even When It Reduces Fuel Expenses?
The economics of an ICE vehicle and an EV are fundamentally different.
For a conventional freight vehicle, fuel is usually one of the largest recurring expenses. The driver is exposed to petrol or diesel prices and has to continuously spend money to keep the vehicle running.
With an EV, the fuel expense is replaced by electricity costs, which can be considerably lower on a per-kilometre basis.
Maintenance requirements can also be lower because electric drivetrains generally have fewer moving mechanical components.
So far, the economics appear attractive.
But an EV can also have a higher upfront acquisition cost, and that cost has to be financed.
This changes the monthly expense structure.
Under ICE operations, fuel may be the biggest cost.
Under EV operations, EMI can become the biggest cost.
For an independent owner-cum-driver, that difference can completely change the financial outcome.
The report highlights that independent drivers can face interest rates in the range of 16% to 19%, reflecting lenders' perception of both technology risk and borrower credit risk.
If the driver is also dealing with a short repayment period, the monthly EMI can become substantial.
The driver may save money on fuel every month, but if the EMI is significantly higher, those operating savings may not translate into higher take-home income.
This is how a vehicle that is cheaper to operate can still result in lower monthly income.
Is the Problem the EV or the Way It Is Financed?
The study's findings suggest that the problem is largely connected to market design and financing rather than electric technology itself.
Amresh Sharma, Business Development Advisor for the Transporter Portfolio at Shell Foundation, points to the combination of high financing costs, uncertain utilisation and independent freight sourcing as a major challenge for owner-cum-drivers.
An independent driver has to find freight, manage periods of weak demand, maintain the vehicle and repay the loan at the same time.
That means the driver carries multiple risks simultaneously.
As Sharma explains, the challenge is not simply whether an electric vehicle can generate operating savings. The bigger question is whether the financing structure allows the driver to retain those savings.
Prof. Dr. Ing. Christoph Wolff, CEO of Smart Freight Centre, similarly highlights the combination of financing costs, utilisation challenges and market uncertainty faced by independent drivers.
This leads to an important conclusion.
The economics of an EV cannot be separated from the economics of the loan used to purchase it.
Why Do Lease-Based Drivers Appear to Be Doing Better?
The difference between owner-cum-drivers and lease-based drivers can be understood by looking at risk distribution.
An independent owner-cum-driver has to manage demand and financing independently.
A lease-based driver may operate within a more structured ecosystem where the vehicle, financing and freight demand are connected.
This can create better utilisation.
For a commercial vehicle, utilisation is critical.
An EV that is running regularly and generating freight revenue has a better chance of covering its monthly financing obligations.
An EV that spends long periods parked still generates EMI obligations even though it is not generating revenue.
Platform-linked models can therefore provide an important advantage by connecting drivers with freight demand.
The report highlights platform-backed lease models as one of the structures that can improve income outcomes.
The concept is relatively straightforward.
Instead of asking a driver to independently purchase an EV, arrange financing and find freight, a platform-backed model can combine vehicle access, financing and demand.
That can reduce some of the uncertainty that independent drivers face.
Does EV Adoption Eliminate Risk?
No. It changes where the risk comes from.
This is one of the clearest lessons from the report.
With an ICE vehicle, the driver is highly exposed to fuel-price volatility.
When fuel prices increase, operating costs increase.
With an EV, that exposure is reduced.
But the driver becomes more dependent on financing conditions, vehicle utilisation, charging infrastructure and predictable freight demand.
In other words, EVs do not eliminate risk; they redistribute it.
A driver with affordable finance, strong trip volumes and reliable charging access can potentially achieve strong economic returns from an EV.
Another driver with expensive financing, inconsistent freight demand and limited charging access may experience repayment pressure despite having a vehicle with lower running costs.
This means that the transition to electric freight cannot be evaluated purely on the basis of vehicle-level economics.
The entire operating ecosystem matters.
Why Are Banks and NBFCs Still Cautious About EV Freight?
For lenders, electric freight is still a relatively emerging asset class.
Traditional vehicle financing depends on historical data about asset performance, resale values, borrower behaviour and repayment patterns.
EV freight does not yet have the same depth of historical data as conventional commercial vehicles.
There is also another challenge.
Many independent freight drivers do not have conventional salaried income.
Their earnings can fluctuate depending on the number of trips they complete, the distance they travel and the demand available to them.
This can make traditional credit assessment difficult.
The report therefore argues that lenders should consider alternative data when evaluating EV freight borrowers.
Verified earnings, trip volumes and vehicle utilisation records from logistics platforms could provide a much clearer picture of a driver's actual repayment capacity.
Instead of evaluating the borrower only through conventional credit metrics, lenders could also examine the income-generating capacity of the vehicle.
This could potentially allow financial institutions to differentiate between a high-risk borrower and a driver who has consistent earnings but lacks a traditional income profile.
Can Better Financing Make EV Freight More Profitable?
Yes, and this is where the report's recommendations become important.
One of the proposed solutions is longer loan tenure.
A longer repayment period can reduce the monthly EMI and make the financing burden more closely aligned with the driver's monthly cash flow.
The report points toward loan tenures of around six years as one potential approach.
The idea is simple.
If the vehicle is expected to generate income over several years, the financing obligation should not necessarily be concentrated into a short repayment period.
The report also highlights alternative credit assessment, where lenders use earnings and utilisation data to understand repayment capacity.
Another approach is platform-backed leasing, which can combine vehicle financing with access to freight demand.
The study also points toward lease-to-own models, which can reduce the initial barrier to EV adoption while creating a pathway toward eventual ownership.
Finally, catalytic capital and blended-finance structures, including first-loss guarantees, could help reduce the risk for commercial lenders entering the segment.
Together, these approaches could shift EV financing away from a standard vehicle-loan model and toward a model designed around the actual economics of freight drivers.
What Happens If Independent Drivers Are Left Behind?
This question goes beyond individual driver income.
India's freight ecosystem includes a large number of independent operators.
If EV adoption becomes financially attractive primarily for organised fleets and platform-linked drivers, independent operators may find themselves unable to participate.
That could create a two-speed transition.
Large fleet operators and organised platforms could electrify rapidly, while smaller independent operators continue using ICE vehicles because the financing economics of EV ownership do not work for them.
Such an outcome would create a challenge for India's broader electrification goals.
The objective of the transition is not simply to replace internal-combustion vehicles with electric vehicles.
It is also to make the transition economically sustainable for the people who depend on those vehicles.
As Amresh Sharma points out, if independent drivers continue to experience weak economic returns, the benefits of electrification could become concentrated among a smaller group of fleet operators and platform-linked drivers.
Christoph Wolff similarly argues that independent owner-drivers are an important part of India's freight economy and that excluding them could make the transition slower and less inclusive.
What Would an Inclusive EV Financing Model Look Like?
An inclusive model would begin with a different question.
Instead of asking how a standard vehicle loan can be adapted for an EV, lenders would need to ask how financing can be designed around the driver's actual cash flow.
The driver's earnings, vehicle utilisation, freight demand and repayment capacity would become central to the financing decision.
Longer loan tenures could reduce monthly repayment pressure.
Alternative credit assessment could help lenders identify drivers with strong earning potential.
Platform partnerships could provide more predictable freight demand.
Lease-to-own structures could create a pathway toward ownership.
Blended finance could help reduce the perceived risk for commercial lenders.
The result would be a financing ecosystem in which the driver is not forced to absorb every risk alone.
That is ultimately the market-design challenge highlighted by the report.
Final Thought
India's electric freight transition is often described as a technology revolution.
But behind every electric freight vehicle is a driver trying to make a living.
That driver does not measure the success of electrification through battery capacity, charging speed or vehicle sales.
The driver measures it through one number:
How much money do I take home at the end of the month?
The Smart Freight Centre and Shell Foundation study shows that EVs can deliver meaningful income gains, with the research indicating around a 25% improvement for freight drivers under the right conditions.
But the 41% decline recorded for owner-cum-drivers under the report's base EV scenario shows why the transition cannot stop at vehicle adoption.
The technology may reduce fuel and maintenance expenses, but expensive financing can absorb those savings.
That makes financing one of the most important pieces of India's electric freight transition.
The future will therefore not be decided only by how quickly India replaces ICE freight vehicles with EVs.
It will also be decided by whether lenders, platforms, fleet operators, manufacturers and policymakers can create a financial system in which drivers can afford the transition and actually benefit from it.
Because an electric vehicle is only truly successful when the person behind the wheel can build a better livelihood from it.
Frequently Asked Questions
1.What is the main finding of the Smart Freight Centre and Shell Foundation study?
The study finds that switching to an EV can increase freight driver income by close to 25% on average, but the benefit varies significantly according to the driver's operating and financing model.
2.Why did owner-cum-drivers experience a 41% decline in income?
Owner-cum-drivers face the combined burden of vehicle financing, freight-demand uncertainty and operational costs, and under the report's base EV scenario, higher EMI obligations outweighed the savings generated from lower fuel and maintenance costs.
3.Which drivers benefited most from switching to EVs?
Lease-based drivers recorded the strongest improvement in the study's base scenario, with net monthly income increasing from approximately ₹19,745 to ₹24,813, while salary-based drivers saw income rise from approximately ₹16,851 to ₹20,809.
4.Why do EV loans create such a significant burden?
EV loans can create a significant burden because independent freight drivers may face relatively high interest rates and shorter repayment periods, causing monthly EMIs to become the largest cost component even when electricity and maintenance expenses are lower.
5.Can longer loan tenure improve EV driver economics?
Longer loan tenures can improve affordability by spreading repayments over a longer period and reducing the monthly EMI, which can help align debt servicing more closely with the driver's monthly earnings.
6.How can lenders improve EV financing for freight drivers?
Lenders can improve EV financing by using alternative credit data such as verified earnings, trip volumes and utilisation records, while also developing financing products that reflect the actual cash flows of commercial drivers.
7.What role can logistics platforms play in EV adoption?
Logistics platforms can support EV adoption by providing drivers with more predictable freight demand, improving vehicle utilisation and supporting structured leasing or lease-to-own arrangements that reduce the upfront financial burden.
8.What is the biggest lesson from the report?
The biggest lesson is that the success of electric freight depends not only on the economics of the vehicle but also on the economics of financing, because an EV can reduce operating costs while still leaving a driver financially worse off if the monthly repayment burden is too high.
Source: Smart Freight Centre and Shell Foundation, Driving Income Uplift: Designing Inclusive EV Financing for India’s Freight Drivers, July 2026.
