Concerns over the resale value of electric vehicles remain one of the key hurdles to faster adoption of EVs in India. While OEMs have introduced assured buyback programs, JSW MG Motor is now offering an extended buyback program that guarantees a fixed resale value for EVs for up to five years.
The automaker says this extended buyback program is an “industry-first initiative” for mass market EVs to boost consumer confidence, as most of the other OEMs offer a buyback program for only up to three years. The program, which guarantees 40-60% resale value, builds on the company’s existing buyback program, which is for up to three years.
“This new extended buyback program was designed after taking feedback from the market on resale value. We believe this program would ensure better confidence for customers to adopt EVs and at the same time expand the market, as resale value has been a key consideration for many customers who are considering buying an EV,” said Lakshmi Subbaraj, director sales at JSW MG Motor India.
The program named, MG Value Promise is part of JSW MG’s “EV Sahi Hai” awareness campaign to boost EV adoption in the market and is facilitated by Lockton India Insurance Broking and Advisory Ltd in partnership with Zuno General Insurance. Customers will have an option to choose the tenure ranging from three to five years. The program helps reduce the depreciation risk of EVs and makes upgrading to a newer MG model much easier. It is not tied to any particular financing scheme or loan program.
Battery EVs now account for around 4.6% of the total passenger vehicle sales in the country. Between January and November, India registered 160,740 electric passenger vehicles, registering 78% on-year growth. JSW MG is aggressively competing in this space with Windsor, ZS, Comet, M9 and Cyberster models, and marketing initiatives such as buyback and BaaS programs. The automaker is the second largest electric seller after Tata Motors, with a market share of around 30%. Its sales more than doubled in the January-November period to over 47,000 units.
Subbaraj noted that inadequate charging infrastructure and a lack of consumer confidence in resale value are stopping a larger section of consumers from entering the EV market.
“Charging infrastructure is evolving and improving at a very fast pace in India these days, which is why the adoption is also picking up year after year. And we believe an extended buyback programme will bring greater certainty for consumers about the resale value of their vehicles over the next three to five years, which should help strengthen and accelerate the momentum of EV adoption,” he said.
Paving Way for Organised Resale Market for EVs
Unlike the broadly predictable resale values of ICE vehicles, EV buyers face significant uncertainty about future valuation for their vehicle. This concern is largely due to uncertainty over battery degradation, a critical issue since the battery accounts for approximately 40% of an EV’s total cost.
With only a small number of EVs having so far returned to the market for resale, a well-established second-hand market for EVs has yet to take shape. Subbaraj said that assured buybacks of up to five years or more from OEMs are in the direction of establishing an organised second-hand market for EVs at a very early stage. “We will be sort of establishing or facilitating that process to sort of build that resale ecosystem.”
Recently, India’s largest passenger car maker Maruti Suzuki, which is preparing to enter the EV market, said it is also planning to launch assured buyback, Battery-as-a-Service and subscription programs for its battery electric models. Luxury carmakers such as Audi and Mercedes also offer assured buyback programs on their EVs.