Forbes India 15th Anniversary Special

From an electric Thar to five other EVs, why Temasek is betting on Mahindra's electric ambitions

With the Singapore-based sovereign fund's $145 million (Rs 1,200 crore) investment, Mahindra Electric Automobile Limited is now valued at $9.8 billion, overtaking rival Tata Motors' electric vehicle division, valued at $9.1 billion

Manu Balachandran
Published: Aug 4, 2023 04:46:01 PM IST
Updated: Aug 4, 2023 04:55:44 PM IST

From an electric Thar to five other EVs, why Temasek is betting on Mahindra's electric ambitionsIn all Mahindra now corners 10 percent of the domestic market, after languishing for many years. Image: Courtesy Mahindra
Mahindra has quietly built up India’s most valuable electric vehicle company.  
On August 4, the country’s fourth largest carmaker announced that Singapore-based sovereign fund Temasek has invested $145 million (Rs 1,200 crore) in Mahindra Electric Automobile Limited, the four-wheeler passenger electric vehicles company of the automaker. The deal values the arm, set up in October 2022, at a staggering $9.8 billion.  
Rival Tata Motors’ electric vehicle division is valued at $9.1 billion, after it raised $1 billion from TPG Rise Climate in 2021, while Mahindra had last year raised $250 million from British International Investments (BII) at a valuation of as much as $9.1 billion.

Temasek will now invest Rs 1,200 crore in compulsorily convertible preference shares giving it between 1.49 percent to 2.97 percent stake in the company. TPG had picked up between 11 percent and 15 percent stake in Tata’s electric vehicle division in 2021. “Globally known for their strong governance, Temasek’s investment is a step forward, as we execute our strategy towards future leadership in electric SUVs,” Anish Shah, the CEO of Mahindra said in a statement.  
Interestingly, the announcement comes amidst rumours that Mahindra is set to announce an electric variant of its wildly popular SUV, the Thar, later this month. In the three years since its launch, the Thar has been instrumental in reviving the automaker’s fortunes and has sold over 100,000 units. The company’s recently-launched rear wheel drive version of the Thar has a waiting period of over 17 months, something similar for its flagship models including Scorpio and XUV 700.  
In all Mahindra now corners 10 percent of the domestic market, after languishing for many years. Its rediscovered portfolio, with a focus on offering what the company calls true blood SUVs, has been instrumental in the turnaround with models such as Scorpio, Thar, XUV 700 and Bolero. Later this month, apart from the Thar electric variant, Mahindra is also reportedly planning to launch a pickup truck based on the Scorpio and a next generation tractor platform. 

“By picking on our capability and competence, we want to attract consumers who are looking at multiple other segments,” Rajesh Jejurikar, the executive director and CEO, Auto & Farm Sectors, Mahindra & Mahindra had told Forbes India earlier. “You can be a specialised position brand and still get volumes. To win in the SUV battle, you don’t have to make a product that’s similar to what somebody else is making. Because that’s what works for them. We must focus on our strengths. And that’s exactly the tweaking that we’ve done.”

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Yet, in the electric vehicle segment, it hasn’t been an easy journey so far. Currently, Mahindra’s only electric vehicle is the XUV400, with a claimed maximum driving range of 456 km, and which sells less than 1,000 units a month. The vehicle was launched in January this year. Rival Tata Motors has had a head start and is currently selling more than 6,200 units a month with its portfolio comprising the Nexon, Tiago and Tigor.  
Over the next few years though, Mahindra has announced plans to launch as many as five electric vehicles, having showcased their concepts in 2022. The company will launch them under two sub-brands, XUV and BE, and the launches are expected between 2024 and 2026. The XUV.e will range will comprise two models, the XUV.e8 and XUV.e9, while the BE range will have three SUVs, the BE.05, BE.07 and the BE.09. The first of the vehicles from the XUV.e platform will likely be ready by December 2024.  
“We demonstrated Mahindra’s ambition to build a desirable global brand with the reveal of our born EV portfolio based on the INGLO platform in August 2022 in UK, which is on track for execution,” Jejurikar said on August 03. “By having Temasek as an investor, we have strengthened our global strategic partnerships and are targeting 20 percent to 30 percent of Mahindra SUVs sales from electric vehicles by 2027.”
Mahindra has outlined a total capital infusion of around Rs 8,000 crore between FY24 and FY27 for the planned product portfolio in the new electric arm. In May 2021, Mahindra approved the merger of the EV subsidiary Mahindra Electric Mobility Ltd (MEML) with the company to consolidate operations, development, sourcing, and manufacturing.  
The company was among the earliest entrants in the EV category, buying a stake in Bengaluru-based Reva Electric in 2010. In 2017, it was one of the companies chosen by government agency Energy Efficiency Services Ltd to provide 10,000 electric cars for government use. But concerns over poor range and performance led to the government shelving the plan.  
Temasek’s investment also comes at a time when Tesla is firming up plans to set up a base in India and is even planning a sub $20,000 car for the domestic market. India’s electric vehicle (EV) market is expected to have a compound annual growth rate (CAGR) of 90 percent in this decade to touch $150 billion by 2030, according to a report by consulting firm RBSA Advisors. 

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Globally, automakers ranging from GM to BMW and Ford are expected to spend over $500 billion in developing all-electric vehicles from gasoline models over the next several years. GM had in 2021 said that the company would switch to an all-electric fleet by 2035 while Ford had announced plans to go all-electric in Europe by 2030.  
By 2030, about 40 to 45 percent of all two-wheelers and 15 to 20 percent of all four-wheelers (passenger vehicles) sold in India will likely be electric, according to a report by Bain & Co, while the government wants EV penetration to hit 40 percent for buses, 30 percent for private cars, 70 percent for commercial vehicles, and 80 percent for two-wheelers.
Still, affordability remains a key constraint when it comes to mass adoption in a market that’s well-known for being price sensitive. Currently, electric vehicles from Kia, Mercedes, BMW and Hyundai, among others, position themselves at a higher price point, making them less accessible to a broader consumer base.