Mahindra & Mahindra has been on a roll thanks to a blockbuster product launch starting with the XUV300 to the new Scorpio-N, which has helped it revive lost grounds in the SUV space. And now, it aims to replicate its success in the EV space, which has got a new charge with the British International Investment (BII), the U.K.’s Development Finance Institution and impact investor entering into a binding agreement to invest up to Rs 1,925 crore into a new yet-to-be-named subsidiary (EV Co).
The external investment will help Mahindra reduce its planned CAPEX of Rs 10,000 crore by Rs 1,925 crore.
Mahindra & Mahindra’s Automotive Head will dual-hat by leading the EV Co and will report to the Board. He will operate through a Management Council and CEO – which will be appointed soon. The Management Council will initially compromise of – President – Automotive; President -Automotive, Tech & Product Development; President – Purchase and CFO – Mahindra Automotive. The new company will create 8,000 jobs, which will see one quarter of the employees being women.
The new organisation will have key functions of sales, customer care, marketing, supply chain coordination, product strategy/ planning, HR and finance.
In a press conference that followed the late-night announcement, the company management said that the new EV division will be an asset-light company.
Rajesh Jejurikar “The new EV Co will fully leverage the synergies Mahindra has, wherein manufacturing will be done by us and will be related party transaction. Non-EV part sourcing will also be done by Mahindra. It will also utilise product development set-up in – Detroit, Bangalore and Chennai, which will act as a service provider to the EV Co.”
What’s interesting is to note that the new EV Co in addition to certain brand – Thar, XUV – will also be able to utilise the existing Mahindra dealer network and can also set-up its own network. The EV Co will launch four new battery-electric vehicles by FY2026. This will be in addition to the XUV400 reveal in September 2022 with deliveries set to start in January-March 2023.
In terms of sales expectations, on the upper side, Mahindra expects to sell upto 2 lakh e-SUVs per annum by FY2027, which will be around 30 per cent of its overall SUV sales portfolio.
While Mahindra has been quite aggressive in terms of partnerships and alliances, it will steer away from investing in cell manufacturing and getting in the charging infrastructure business. “Rest of the decision such as make vs buy, the methodology does not change just because its electric,” said Jejurikar.
BII on its part too is looking this as a long-term commitment with Mahindra. The Rs 1,925 crore in two tranches – Rs 1,200 crore by June 2023 and Rs 725 crore on certain pre-decided company milestones – marks one of its biggest investments in the mobility space. The firm is not looking to make any investment in a rival company as of now.
