Navigating Legal Challenges in EV Rental & Leasing: Key Court Cases, Risks, and Solutions

EV rental and leasing disputes have risen notably with the rapid adoption of electric vehicles, especially as new business models and regulatory frameworks emerge in the mobility sector. Legal disagreements commonly revolve around payment defaults, proper vehicle usage, asset protection, and technical issues specific to EVs, such as charging infrastructure and battery upkeep. This article presents a comprehensive, original analysis reflecting the most recent cases, legal principles, and unique challenges in this space.

Overview of EV Rental & Leasing

Electric vehicle (EV) rental and leasing arrangements have become increasingly popular for individuals, fleets, and corporate clients. Unlike traditional automobile transactions, these contracts often involve clauses related to charging access, battery health, and telematics monitoring to preserve vehicle value. Rental agreements typically cover short terms, while leasing often spans several years with different obligations related to maintenance and risk-sharing.

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Common Causes of Disputes

Financial Defaults

The most typical legal battle arises when lessees or renters default on periodic payments. For example, when prominent fleet operators stop making agreed monthly lease payments, lessors fear rapid asset depreciation if vehicles are left idle without proper battery maintenance. These defaults can trigger court cases requesting asset seizure, receivership appointment, or injunctions to prevent unauthorized transfer or usage.

Asset Protection

Given the high cost and fast depreciation of EVs, lessors frequently seek urgent interim legal relief to safeguard their fleet from being sold, transferred, or neglected during disputes. Emergency court orders may restrain lessees from alienating vehicles, freeze movement, and appoint a receiver to maintain asset condition until the case resolves.

Battery & Charging Infrastructure

Unique to EV leasing are disputes involving charging access, with legal arguments about whether renters are entitled to install private chargers in communal premises or demand charging upgrades from lessors or landlords. Additionally, cases have arisen when lessors allege battery misuse or neglect, blaming lessees for premature battery failure due to improper charging or excessive idle periods.

Notable Legal Cases & Rulings

SMAS Auto Leasing vs. Gensol and Blu-Smart (2025)

In this high-profile Delhi High Court case, SMAS Auto Leasing sought protection for its fleet after Gensol and Blu-Smart defaulted on lease payments for over 200 EVs. The court granted strong interim measures, restricting the companies from transferring, encumbering, or using the vehicles, citing risks of rapid depreciation and potential loss of battery functionality.

• The Receiver was appointed to take possession and ensure charging and upkeep, highlighting judicial awareness of EV-specific asset risks, especially battery damage if cars are left idle.

SMAS Auto Leasing vs. Param Renewable Energy (2025)

A similar dispute involved Gensol’s subsidiary, Param Renewable Energy, defaulting on lease payments and asset visibility for 62 EVs and management services. The lessor requested urgent interim relief and disclosure of all assets, as inactivity could render EV batteries unusable and cause significant financial loss. The court’s intervention emphasized the need to protect lessor interests until the dispute is resolved.

Charging Rights Disputes

Other notable cases center on tenants or renters seeking permission from residential societies or landlords to install EV chargers in their allotted parking spaces, often resulting in prolonged litigation over property rights, electricity access, and compliance with government policies. Courts have generally ruled in favor of tenants, stating that essential amenities like electricity for charging cannot be unreasonably denied if policy compliance is met.

Taxation Classification

The Appellate Authority for Advance Rulings, Odisha, clarified that leasing EVs without an operator is deemed a financial lease, not simply an operating lease. This decision influences GST application, charging an 18% rate similar to ownership transfer—a distinction especially relevant for fleet lessors and mobility service startups.

Legal Principles Guiding EV Disputes

Interim Asset Protection

Courts increasingly recognize the unique technical and financial risks posed by idle or mismanaged EVs. They often grant interim protection to lessors and appoint receivers to ensure the operational status of leased vehicles.

Foreclosure and Liquidation Rights

Lease contracts frequently contain foreclosure clauses, enabling lessors to terminate agreements and repossess vehicles if lessees default or endanger assets.

Director and Promoter Liability

In cases involving corporate lessees, courts have started assigning personal liability to directors and promoters when defaults occur, especially amid regulatory investigations into governance and fund siphoning.

Essential Services Mandate

Rental arrangements may intersect with property and tenancy laws, particularly on the issue of electricity supply for charging. Courts have consistently protected tenants’ right to access electricity, rejecting landlord objections if legal prerequisites are met.

Unique Aspects of EV Rental/Leasing Disputes

• Battery health is a critical issue—EV batteries degrade rapidly if not charged regularly, raising asset management complications in disputes.
• Charging infrastructure access can be a contentious topic, especially in apartment complexes, leading to complex litigation involving multiple parties such as landlords, housing societies, and local electricity boards.
• Regulatory scrutiny on corporate lessees and fleet operators may trigger wider legal headaches for directors, who risk personal exposure if accused of failing to safeguard leased assets or violating financial regulations.
• EV contracts must include asset tracking, telematics, and robust maintenance schedules, or else lessors may become legally vulnerable.

Best Practices to Avoid Disputes

To minimize risk, lessors and renters should:

• Draft clear lease/rental agreements detailing asset monitoring, maintenance obligations, charging policies, and default procedures.
• Conduct frequent asset inspections and demand up-to-date location and condition disclosures for all EVs under contract.
• Ensure comprehensive insurance coverage including battery replacement and technical faults.
• Seek legal opinions before entering contracts with complex property arrangements or corporate parties.
• Build proactive communication channels with tenants and property managers to resolve infrastructure and amenity conflicts early.

Read Also: Canada’s Electric Vehicle Insurance Market: Trends, Challenges, and Opportunities

Conclusion

As the shift to electric mobility accelerates, rental and leasing disputes—ranging from payment defaults and asset neglect to property rights for charging—will continue to challenge legal practitioners and EV businesses. Recent high-stakes cases in Indian courts reveal robust judicial intervention focused on asset protection and the unique risks associated with EVs, especially battery maintenance and fleet tracking. Stakeholders must adapt contracts and operational protocols to reflect these realities, pursue active legal compliance, and embrace innovative dispute resolution approaches that keep pace with the evolving EV marketplace.