Indian SUV maker Mahindra to invest $1.4 billion in EV unit
Company is in 'advanced stage' of starting production of its Born Electric portfolio
Mahindra & Mahindra Ltd., known for its diesel guzzling SUVs, will plow 120 billion rupees ($1.4 billion) into its electric vehicle business over the next three years as the automaker doubles down on cleaner transport.
Mahindra is in 'advanced stage' of starting production of its Born Electric portfolio, which includes six battery-powered sport utility vehicles, Rajesh Jejurikar, chief executive officer of the company's auto and farm businesses, said in a post-earnings call Thursday. The company will launch the electric SUVs between January and March, and expects battery-powered models to account for 20-30 per cent of its SUV lineup by 2027, he said.
Mahindra is also in 'active' discussions with a company to manufacture electric vehicle batteries in India, according to Jejurikar.
The funds will allow Mahindra to expedite its slow transition to electric vehicles and catch up with rival Tata Motors Ltd. that dominates the country's fledgling clean car market. Decarbonizing transport is crucial for India to reach its goal of net carbon zero by 2070. Electric cars made up just 2.3 per cent of the total passenger vehicles sold last year, according to BloombergNEF, as high prices and a lack of charging stations deters consumers from adopting battery-powered models.
British International Investment Plc has invested 12 billion rupees in the Mumbai-based company's EV unit, Mahindra Electric Automobile Ltd. Temasek also provided 3 billion rupees, Anish Shah, Mahindra's chief executive officer, said in the same call.
The UK agency will hold off a portion of its planned investment of another 7.25 billion rupees as Mahindra's EV unit has sufficient funds for now, Shah said. Both firms will jointly assess whether further investment is needed after six months, he said. Temasek will infuse 9 billion rupees more, he said.
The company and its auto division will generate enough cash to cover the planned investment, Mahindra said in a stock exchange filing Thursday.
While the company is shifting to cleaner transport, it will continue to have 'aggressive' internal combustion portfolio going forward, said Jejurikar. Mahindra plans to invest 140 billion rupees in gasoline- and diesel-powered vehicles over the next three years, which is more than the investment it has planned for EVs.
Mahindra is also looking at hybrid technology, although it considers that as an extension of gasoline vehicles and will prioritize electrification of models to reduce emissions, Shah said.