Forbes India Rich List 2022

Not just Tata Motors, Mahindra too has now built India's most valuable electric vehicle company

With an investment of Rs 1,925 crore from British International Investment, M&M's EV business valued at $9.1 billion—on par with Tata Motors' EV business

Manu Balachandran
Published: Jul 8, 2022 04:55:31 PM IST
Updated: Jul 8, 2022 05:41:03 PM IST

Not just Tata Motors, Mahindra too has now built India's most valuable electric vehicle companyRobotic arms on the production line at the Mahindra & Mahindra Ltd's facility in Chakan, Maharashtra Image: Udit Kulshrestha/Bloomberg via Getty Images

It’s been a phenomenal two years for Mahindra. And there seems to be no stopping the Mumbai-based carmaker.

It all started with the launch of the second generation Mahindra Thar—the first was introduced in 2010—in October 2020. The Thar, an iconic off-road SUV, was launched with a revamped and rugged design, the latest infotainment options, an automatic gearbox to target the urban clientele, and a refreshed engine, among a slew of changes in Mahindra’s attempt to reclaim its losing turf in the domestic automobile market. Even today, the vehicle has a waiting period of up to 12 months despite selling 3,000 units a month.

Then, a year later, Mahindra brought in its flagship model, the XUV 700, among the best-selling cars in India today, clocking bookings of over 10,000 units a month. The waiting period for the car now extends to over a year and a half, and despite that, the company continues to receive fresh bookings.

Then, even as it faces serious production constraints, as part of its renewed focus on building what the company calls authentic SUVs, the company launched the third generation of the Mahindra Scorpio in June this year. The new Scorpio is a deviation from its previous self, mostly retaining just the name, with the vehicle undergoing a significant transition.

Today, Mahindra has over 143,000 open bookings across its models, the Mahindra Thar, XUV 700, Bolero, and the XUV 300. “By picking on our capability and competence, we want to attract consumers who are looking at multiple other segments,” Rajesh Jejurikar, the executive director for the auto and farm sectors told Forbes India in a detailed interaction last year. “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.”

All that has meant that Mahindra has come back into the fight and reclaimed lost turf. Today, the company has zoomed past Kia Motors to become India’s fourth-largest carmaker, cornering a market share of 7.44 percent. If not for its production constraints, largely due to the global semiconductor shortage, Mahindra would have sold more cars, and improved its market share in the domestic automobile market, currently pegged at some $105 billion.

“We have been having one blockbuster launch after another,” Aneesh Shah, managing director and CEO of the Mahindra Group said on July 8 in Mumbai.

Now, as the company finds itself on firm footing, Mahindra is busy turning its attention to India’s electric vehicle segment, and has announced plans to set up a subsidiary to focus entirely on building electric vehicles. The company has already managed to rope in British International Investment (BII), the UK’s development finance institution, to invest in the new subsidiary.

Also read: Tata Motors is on a roll. Can anything stop it?

“British International Investment (BII), the UK’s development finance institution and impact investor, and Mahindra & Mahindra (M&M) have executed a binding agreement to invest up to Rs 1,925 crore each into a wholly-owned subsidiary of M&M that will be newly incorporated (“EV Co.”),” Mahindra said in a statement on July 8. “BII will invest up to Rs 1,925 crore in the form of compulsory convertible instruments at a valuation of up to Rs 70,070 crore ($9.1 billion), resulting in 2.75 percent to 4.76 percent ownership for BII in the EV Co.”

The new electric vehicle company will focus on four-wheel passenger electric vehicles. “The total capital infusion for the EV Co. is envisaged to be approximately Rs 8,000 crore / $1 billion between FY 24 and FY 27 for the planned product portfolio,” Mahindra says. “M&M and BII will work jointly to bring other like-minded investors in the EV Co. to match the funding requirement in a phased manner.”

BII will initially invest Rs 1,200 crore and the balance Rs 725 crore on the EV company achieving certain milestones. Mahindra reckons that by FY27, it will be able to see electric vehicle penetration of between 20 percent and 30 percent in its portfolio. “At the higher end, that means assuming 30 percent penetration, we would expect to be selling 200,000 electric SUVs in the year 2027,” Jejurikar says. “Two hundred thousand may sound like a lot, but that's only 17,000 a month and 17,000 a month coming out of a large portfolio which we will have by then, we believe is a very doable number.”

Already, Mahindra’s homegrown rival, Tata Motors, India’s largest electric vehicle manufacturer, has set up an electric vehicle subsidiary, raising $1 billion from private equity major TPG Rise Climate. The deal had valued the subsidiary at over $9 billion. Tata Motors is India’s largest electric vehicle carmaker cornering some 75 percent of the market, led by its hugely popular Nexon EV which currently receives some 3,500 orders a month. Interestingly, Mahindra’s EV stake sale of between 2.76 percent and 4.76 percent in the new company at a valuation of $9.1 billion is in stark contrast to Tata Motors, which sold between 11 percent and 15 percent in its electric vehicle subsidiary to TPG Rise Climate for a similar valuation in 2020.

"We are very confident that we will take a leadership position in this space,” Shah added. “We have an external endorsement of our plans through this fund infusion. This is the starting point.”

The new EV company, Mahindra says, will significantly leverage the broader manufacturing capabilities, product development, and design organisations along with the ecosystem of suppliers, dealers, and financiers of M&M. The funds will be utilised primarily to create an electric SUV portfolio with advanced technologies.

“BII’s investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by M&M,” Mahindra says. “According to a recent survey by Roland Berger, a leading global automotive consulting company, Indian consumers are twice as likely as their counterparts in the UK and the US to consider the purchase of an EV.” The investment also comes at a time when the company has teased three upcoming electric vehicles for India. The company is expected to showcase its first electric vehicle on August 15, being developed by Mahindra Advanced Design Europe (MADE) centre, set up in May 2021.

“Mahindra has very exciting plans to be a leader in the electric SUV space,” Jejurikar, executive director–auto & farm sectors, said in a statement. “We would share our vision that includes our comprehensive product, technology, and platform strategy at the UK event on 15 August 2022, followed by a reveal of the electric XUV 400 in September 2022.”

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. Despite that, Mahindra didn’t make significant inroads in the segment. In 2017, it was one of the companies chosen by the 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.

“At a fundamental level, we believe that we've now established with the new launches in the SUVs a very strong technology capability,” Jejurikar says. “We’ve also established a very strong market position, so strong brands, strong technology capability, no reason why we shouldn't be very successful as we move into electric SUVs. There’s every reason to believe we will get to a very good penetration in a segment which is very large, where we are already number one.”

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. Yet, EVs are in their infancy in India, and lag in markets like China and the US, as domestic sales pale in comparison to what carmakers sell on the internal combustion engine (ICE) platforms. 

Also read: After years of staying away, Maruti Suzuki is now desperate for electric mobility play


“This is something of a lifeline for them (Mahindra),” says Puneet Gupta, director for automotive forecasting at market research firm S&P Global Mobility. “Mahindra has been dependent on diesel for a long time, and as the world moves to electric, their survival is at stake. The new company will help them with getting the right technologies, particularly through partnerships from India and with global automakers who are betting on electric and thereby giving them access to resources.”

The EV sector penetration in the country currently stands at around one percent. India is already planning to push for a sales penetration of 30 percent for EVs in the private car market, with an even greater ambition of 70 percent for commercial vehicles and 80 percent for two- and three-wheelers by 2030.

All that means India’s carmakers are now quickly firming up plans to aggressively pursue the electric car market after dilly-dallying for years. For instance, after years of staying away from the EV space, Maruti Suzuki has now decided to put its money behind the sector and plans to launch a new EV by 2025, a year when numerous electric launches are expected. Under the new plan, Suzuki Motor Corporation's wholly-owned company, Suzuki Motor Gujarat Pvt Ltd (SMG), will invest Rs 7,300 crore in the construction of a battery plant near SMG’s automobile manufacturing unit by 2026. SMG will invest another Rs 3,100 crore for ramping up production capacity for EVs by 2025.

“Ideally, with Mahindra moving early with the Reva acquisition, they should have done this much faster,” adds Gupta. “But it’s better late than never.”

For Mahindra, however, the party is only getting started. And if the past few months are anything to go by, Mahindra is here for the long haul.

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