Mahindra's new EV subsidiary raises Rs. 1,925 crore
Homegrown automaker Mahindra & Mahindra has raised Rs. 1,925 crore ($250 million) from British International Investment (BII) for its yet-to-be-incorporated EV subsidiary referred to as "EV Co." for now. The automaker plans to invest around Rs. 8,000 crore ($1 billion) between FY 2024 and FY 2027 in its electric vehicle portfolio. The investment will give BII a stake of 2.75-4.76% in the subsidiary.
- The tie-up between Mahindra and BII is a major boost for India's fast-growing EV segment.
- This collaboration is a nudge in the right direction for the automaker which expects EV sales to be 20-30% of its total sales.
- With surveys showing the higher propensity of Indians to go for electric vehicles, this will be a golden opportunity for Mahindra
The agreement between Mahindra and BII, the UK government's development finance institution, warrants the latter to invest Rs. 1,925 crore in the form of compulsory convertible instruments. The investment values the proposed EV Co. at Rs. 70,070 core ($9.1 billion). The first round of investment will be completed not later than June 2023 and the rest in FY24 upon the completion of certain milestones.
Mahindra's proposed EV Co. will focus on four-wheel electric passenger vehicles. The total planned capital infusion into the subsidiary will be Rs. 8,000 crore by FY27. Mahindra targets to develop "a world-class electric SUV portfolio with advanced technologies." The EV Co. will benefit from the automaker's broader manufacturing capabilities, product development and design organizations, along with the ecosystem of suppliers, dealers, and financiers.
"In BII, we have found a like-minded long-term partner who is committed to combating the climate emergency. The Mahindra Group aims to be Planet Positive by 2040," said Dr. Anish Shah, MD and CEO, Mahindra & Mahindra. "Mahindra has been a pioneer in the electric vehicles space, and we are confident we will be the leaders in the electric SUV market in the future."
The investment satisfies BII's requirement of having at least 30% of its investment in climate finance. Nick O'Donohoe, CEO of BII said, "BII's anchor investment will be key to attracting additional sources of private capital into this exciting venture with the Mahindra Group." "Mahindra will play a central role in the decarbonization of the automotive industry in India and elsewhere," he added.