Mahindra is going big on electric vehicles. How long before it catches up?

Though rival Tata Motors has a clear advantage in the ecosystem space, Mahindra may well succeed with its product-centric strategy that focusses on the modern, lifestyle-oriented eco-conscious customer

By Manu Balachandran Forbes India Staff

Published: Sep 15, 2023 12:17:53 PM IST

Updated: Sep 18, 2023 11:16:07 AM IST

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At a packed auditorium at the Lourensford Wine Estate on the outskirts of Cape Town, the picturesque legislative capital of South Africa, on India’s 77th Independence Day, homegrown automaker Mahindra went all guns blazing.

First, the 78-year-old automaker unveiled its Oja range of tractors, a lightweight tractor for the global market, boasting features such as four-wheel drive and some incredible power options. That was soon followed by the launch of a global pick-up that will rival the likes of Toyota Hilux and the Isuzu D-Max, based on the company’s popular model, the Scorpio N. Although the vehicle isn’t likely to hit the roads before 2025, it is specifically designed for global markets including Australia, South Africa, India, and South Asian countries where such vehicles are quite popular.

But the excitement in the room, set up amidst one of the world’s oldest mountain ranges, wasn’t for the global pick-up or even the glitzy presence of the Oscar-winning musician, AR Rahman, who had composed an anthem for Mahindra’s electric vehicle arm. The head turner, most certainly, was the electric variant of the Mahindra Thar featuring five doors, unlike the three-door combustion one currently on sale in India.

Boasting a rugged exterior, futuristic exterior, and an all-electric powertrain, the electric Thar is expected to be one of the first electric SUVs in India to offer off-road capabilities. But, more importantly, the electric Thar showcases a clear intent from the Mumbai headquartered automaker, especially as it looks to take to the fight in the domestic electric vehicle market and play catch-up to Tata Motors.

Despite a head start in electric mobility—Mahindra had acquired electric carmaker Reva even before electric vehicles became the norm—the automaker doesn’t have a stronghold in the electric ecosystem in the country. In August this year, Mahindra’s lone electric offering in the country, the XUV 400, sold a little over 700 units, while market leader Tata Group sold more than 6,000 units a month. Last year, the company showcased five new electric vehicles to be launched under its Born Electric brand, of which the first is expected sometime late next year. The rest could only come by 2025, by which time Tata Motors could further cement its dominance.

Surprisingly, the Thar Electric’s concept wasn’t one that Mahindra had showcased while showcasing its electric portfolio in 2022. The company is yet to provide timelines on the launch of the electric Thar which will come equipped with AWD electric powertrain and INGLO, its all-new electric architecture.

“Over a period of time, we will electrify all our ICE (Internal combustion engine) brands,” Rajesh Jejurikar, executive director and CEO of auto & farm sectors at the Mahindra Group says. The company has now announced a new identity for its electric vehicle arm, an infinity symbol, that it plans to use on all its electric vehicles as it looks to attract what the company reckons will be modern, eco-conscious customers.

Rajesh Jejurikar, Executive Director, and CEO of Auto & Farm Sectors, Mahindra & Mahindra Ltd. Image: Neha Mithbawkar

“We are targeting those customers for whom lifestyle is more important than the economy,” Jejurikar added. “Our customers are not those who worry about fuel cost per month. These are customers for whom expressing themselves is crucial. A lot of what is going into our products is being driven around these insights.”

Interestingly, behind closed doors, Mahindra also showcased its production-ready version of the BE 05, which derives almost 90 percent from its concept version, which when launched could shake up the domestic electric market if Mahindra prices it well. The stunning model featuring a fixed glass panoramic sunroof and a sporty design is set to be launched by October 2025 with the motors being sourced from Volkswagen.

“What we show is what we get,” Veejay Nakra, the president of the automotive division at Mahindra said. “Our definition of what is a concept is different to what people usually call a concept. What we think is what we talk and what we talk is what we make.”

To do all that, Mahindra is banking on its electric SUV factory in Chakan, Pune, which will become operational by the end of 2024, with the launch of its XUV.e8. The factory will be able to produce 200,000 units of electric SUVs by 2027, with the company now expecting electric vehicles (EVs) to account for 30 percent of its overall volumes by 2030.

“Mahindra’s aggressive posturing on the electric front is a positive development for the Indian EV market,” says Harshvardhan Sharma, the head of auto retail practice at Nomura Research Institute. “The company has a strong brand reputation and is known for its reliable and affordable vehicles. However, Mahindra will face stiff competition from Tata Motors, which is currently the leader in the Indian EV market. Tata has a wider range of electric vehicles on offer, including cars, SUVs, and commercial vehicles.”

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

Taking the fight head-on

India’s domestic electric vehicle market is currently dominated by Tata Motors followed by MG Motors and Mahindra.

Of the 48,000 electric vehicles sold in the first half of 2022, Tata Motors sold as many as 34,000 units, contributing to as much as 72 percent of the market according to Singapore headquartered market research firm Canalys. Tata Motors is followed by MG Motors and Mahindra, which sold around 5,000 vehicles and 4,300 units during that period. The Tata Tiago was the country’s highest-selling electric vehicle, followed by Tata Nexon and Tata Tigor. Mahindra’s XUV 400 was the fourth largest-selling electric vehicle in the country, where affordable, feature-loaded EVs are now attracting budget-conscious buyers.

“Tata Motors has a clear advantage in the ecosystem space, and this is likely to be a key differentiator between the two companies in the coming years,” says Sharma of Nomura. “However, Mahindra may be able to succeed with its product-centric strategy if it can develop electric vehicles that are significantly better in terms of performance, range, and features. Additionally, Mahindra could partner with other companies to provide ecosystem services to its customers. Tata’s conglomerate synergy is a strong moat.”

It also helps that the country’s electric vehicle transition is still in its infancy, and could take some more years before fossil fuels are deserted. 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.

“Whether or not Mahindra is late to the party is a matter of perspective,” adds Sharma. “The Indian EV market is still in its early stages of development, so there is still plenty of room for new entrants. However, Tata Motors has a significant advantage in terms of experience and brand recognition. Mahindra will need to work hard to catch up to Tata, but it is not too late to do so. The company has a strong track record of innovation and is well-positioned to develop successful electric vehicles.”

Also read: From Delay In Bharatmala-1 To EVs, Nitin Gadkari On Overcoming Hurdles To Fast-track Growth

For now, 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, Mahindra Electric Automobile Limited. Alongside, it is also aggressively ramping up on product features including audio composed by AR Rahman for drive modes in its electric fleet, in addition to partnerships with Dolby Atmos and Harman Kardon.

All that has meant that Mahindra, with as many as ten new electric vehicles in the pipeline, has already attracted the likes of Singapore-based sovereign wealth fund, Temasek and British International Investments, which now values Mahindra’s electric vehicle arm at $9.8 billion, making it the country’s most valuable electric vehicle company.

On August 4, Mahindra announced that Temasek had invested $145 million (Rs 1,200 crore) in Mahindra Electric Automobile Limited. 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.

“Overall, I think Mahindra’s aggressive posturing on the electric front is a positive development for the Indian EV market,” adds Sharma. “The company has the potential to take on Tata Motors, but it will need to execute its strategy well and focus on developing high-quality electric vehicles that meet the needs of Indian consumers.”

The recent attention from investors towards Mahindra’s electric portfolio also follows a phenomenal turnaround story at the automaker in the past three years. 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.

“We’ve demonstrated that the speed at which we are transforming is radical compared to many other players in the industry,” Nakra told Forbes India in August. “And we believe that’s the momentum we will need to continue going forward.”

“By picking on our capability and competence, we want to attract consumers who are looking at multiple other segments,” Jejurikar 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.”

Also read: Car, Samosa, Tractor: Carnot & its ride with Mahindra

Not dipping its feet in everything

Meanwhile, unlike its homegrown rival Tata Motors, Mahindra has no intention of foraying into building charging infrastructure to further its electrification play. “We are not going to invest behind charging, but we will get into partnerships for charging,” Nakra says. “Oil companies are working on getting electric charging stations at their fuel pumps. Our understanding again is that come 2026-27, there will be a huge pivot that will happen in terms of charging infrastructure available in the country.”

Rival Tata Motors has taken giant strides in building an ecosystem that will help them in controlling their product offerings. That project, known as Tata UniEVerse, is an ecosystem that will leverage group synergies, from companies such as Tata Power, Tata Chemicals, Tata Autocomp, Tata Consultancy Services (TCS), Tata Digital, Tata Elxsi and Tata Motors Finance. The automaker is also readying newer models including an electric variant of the Tata Harrier in addition to launching vehicles such as Curvv, Avinya, and the Sierra. On September 14, Tata also intensified its electric offering with a new Nexon with a range of 465 kilometres, the highest from the Tata group so far.

All that means Mahindra has some tough fight ahead of it. Its electric vehicle portfolio currently includes the XUV.e8 and XUV.e9, and the BE.05, BE.07, and the BE.09 apart from electrifying its popular models such as Bolero and Scorpio over time. “Overall, it’s going to be a steep learning curve given the early mover advantage from Tata Motors,” adds Sharma.

In the meantime though, Mahindra will also have to tussle it out with the likes of Tesla which is firming up plans to set up a base in India and is even readying a sub $20,000 car for the domestic market. Then, there are newcomers such as Ola Electric, which began manufacturing two-wheelers only last year and has already announced plans to build an electric four-wheeler. 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.

Over the past three years, Mahindra has scripted a remarkable turnaround story, one for the history books. If that’s anything to go by, the company’s electric journey is certainly something to watch out for.