Mahindra scouting for partner to inject $100 million into electric vehicle business

© Jocelyn Fernandes
Mahindra scouting for partner to inject $100 million into electric vehicle business

M&M is in talks with suitors for a partnership deal in its unlisted subsidiary Mahindra Electric Mobility, which is one of the biggest producers of fully electric vehicles in the country. A few companies have already completed the due diligence process to buy a stake, a move that will help parent Mahindra & Mahindra (M&M) achieve its goal of getting $100 million (Rs 750 crore) for product development.

Mahindra Electric Mobility makes battery electric passenger three-wheelers, a four-wheeled electric van and an electric sedan.

Talking to analysts after the announcement of the company’s June quarter results last week, Pawan Goenka, Managing Director, Mahindra and Mahindra, said: “As we look at the next 3-4 years of our product development plan, there is approximately about $100 million worth of investment that will happen (in Mahindra Electric Mobility) and we are hoping that all of that has been generated from outside sources. We are in talks with multiple people right now and some of them have already gone through the due diligence phase.”

During FY20, M&M (which has its own electric vehicle division) and Mahindra Electric Mobility clocked sales of 14,602 units (966 four-wheelers and 13,636 units of three-wheelers), recording 42 percent growth over the 10,276 units (1,811 four-wheelers and 8,465 three-wheelers) sold in FY19.

By the time stricter Corporate Average Fuel Economy norms (global norms that are aimed at lowering fuel consumption) are introduced in India by 2022, M&M will have a ‘substantial size’ of electric vehicles in its portfolio, Goenka added.

The much-delayed battery electric version of the KUV100 will finally be launched this quarter, making it the fourth launch (after Hyundai Kona, MG ZS EV, Tata Nexon EV) in the electric SUV space. In the next few quarters the electric version of the XUV300 will be launched.

M&M, through its subsidiary Mahindra Electric Mobility, has invested in development of the next-generation EV platform MESMA 350. The Mahindra Electric Scalable and Modular Architecture 350 is a 350 volt powertrain that supports motor sizes ranging from 60 kW to 280 kW, dual motor concepts and battery sizes up to 80 kWh.

No investments in poor performers

The company is sharpening its focus by getting rid of laggards. M&M has stopped investments in Korean subsidiary SsangYong, shut down electric two-wheeler business Genze in the US, and aborted a capital intensive bid for the US Postal Service in order to conserve cash and get out of loss-making ventures.

While the electric mobility space is one of the centrepieces of M&M’s game plan, Mahindra Electric Mobility (MEML) is still a loss-making company. As of FY20, MEML had clocked a loss of Rs 55 crore.