Mahindra raises $250 million from British firm for EV arm

Mahindra & Mahindra is planning to enter the electric vehicle (EV) market in a big way. It plans to unveil its EV vision on August 15 in Oxfordshire, UK, and will begin by unveiling XUV 400 in September 2022. It expects to start deliveries in January-March, 2023.

The company is hoping to sell 2 lakh electric vehicles by FY27, as it begins a new path to grab a share of the shift towards electrification. With a plan of investing over $1 billion in the EV business, M&M plans to have a portfolio of five electric vehicles in the coming five years, it said in a submission to the Bombay Stock Exchange (BSE).

Also read: India has over 10 lakh electric vehicles, 1,742 public charging stations: Govt

Rajesh Jejurikar, ED, Mahindra & Mahindra, said the company expects about 20-30 per cent of its volumes to be from EVs by FY27 and that translates to about 2 lakh units.

BII to invest in EV co

The company has  raised $250 million from British International Investment (BII) for its new wholly owned electric vehicle company. The investment was at a valuation of up to Rs 70,070 crore ($9.1 billion).

“We are very confident that we will take a leadership position in this space. We have an external endorsement of our plans through this fund infusion. This is the starting point, we will bring in more investment in the future with a higher valuation,” said Anish Shah, MD of Mahindra & Mahindra.

The impact investor will invest the money in the form of compulsorily convertible instruments, resulting in 2.75 per cent to 4.76 per cent ownership in the EV company.

BII investment to speed up e-vehicles availability

The first round of the UK development finance institution’s capital investment is expected to be completed by June 2023 and the balance will be after completion of certain milestones in FY24. M&M and BII will work jointly to bring other like-minded investors into the EV company to match the funding requirement in phases.

BII’s investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by M&M.

BII had backed the first private equity backed privatisation in agriculture in India – that of Punjab Tractors/Swaraj in 2002. Eventually, it was handed over to the Mahindra Group.

Also read: M&M to launch SUV Scorpio-N on June 27

The EV company will significantly leverage the broader manufacturing capabilities, product development, and design organisations along with the ecosystem of suppliers, dealers, and financiers of M&M.

NITI Aayog forecasts battery EV penetration of 16 per cent in 2026 and 28 per cent in 2028. According to RB global survey 2022, 85 per cent Indians are considering owning an EV, highest amongst key western markets.