Mahindra to Raise $1.3B for its Expansion in the EV Sector

The mobility and automotive sectors are in an exciting phase. There's a significant global shift from fossil fuel vehicles to electric ones. India is part of this change. Government bodies, OEMs, suppliers, and venture capitalists are working hard to build a strong EV ecosystem.

At GrowthJockey, we've seen reports that Mahindra, an Indian automotive giant, is gearing up for a future focused on sustainable transportation. They are developing platforms for electric SUV models. These will include various Mahindra EV vehicles, such as Mahindra EV, Mahindra EV car, and Mahindra EV SUV.

The new Mahindra upcoming EVs will be made at their new EV factory near Pune. The company plans to invest at least ₹10,000 crore in its EV business over the next two to three years.

Mahindra's Ambitious EV Expansion Plans

According to reports, Mahindra and Mahindra Ltd. are in discussions with global investors to secure $1 billion to $1.3 billion of funds for expansion in the EV sector. It looks forward to developing its electric vehicles unit and plans to build a new EV plant near Pune. Furthermore, this investment of INR 100 billion ($1.21 billion) will also challenge Tata Motors’ leadership in India’s EV market.

The company intends to raise capital in several areas during the next two financial years. It will primarily do this by divesting stakes in its EV subsidiary Mahindra EV, which is valued at over $9.1 billion.

Mahindra’s Strategic EV Investment and Expansion

In July, British International Investment (BII) joined hands with Mahindra to invest as much as $250m into Mahindra's EV subsidiary.

The company will boost production capacity by 70% in the next two years. It will mainly focus on XUV700, Scorpio, and Thar SUV models due to increased demand. From mid-2024, monthly production could rise from 29,000 units up to 49,000.

These funds, amounting to $1 billion, will be used by Mahindra over the next seven years to develop EVs at Pune. This will be done using its Inglo electric platform, while the Zaheerabad Telangana facility will manufacture three-wheeler and four-wheeler electric vehicles alike. By 2030, the company expects to be producing nearly 900,000 units annually.

For domestic and international markets, Mahindra will present five electric SUVs. They recently showcased their first-ever electric SUV, the XUV 400, which is expected to be released early next year.

In May 2022, Mahindra partnered with Volkswagen to explore using MEB components on its new ‘Born Electric’ car platform. Admittedly, the company does not have any product offerings in electric passenger cars, yet it has a 70% market share of the Indian three-wheeler electric vehicle space.

Adoption of EVs in India

In 2022, India overtook Japan as the third-largest automobile market globally. Over the past five years, there has been significant growth in electric mobility, making India one of the top EV markets by 2030.

Growth in Electric Vehicles

In 2023, the passenger vehicle segment in India witnessed considerable growth, particularly in SUVs. The electric Vehicle (EV) sector is growing faster than expected. In the next five years, the two/three-wheeler growth rate will be higher than that of four-wheelers. Almost all Indian automakers are planning to launch EV models and have multiple EV projects underway.

The current subsidies and incentives may help offset some of the initial purchase costs. As battery costs come down with increased volumes and deeper localisation, prices of electric vehicles will fall further.

Shifting Consumer Preferences

Consumer sentiment indicates that if they were to buy a car today, they would prefer buying an EV instead of a plug-in hybrid due to its full-battery electric vehicles being preferred by customers according to consumer sentiment. This growing demand is transforming India’s auto retailing landscape.

Government Policies and Industry Innovations

Electric vehicles are the leading innovation in the car industry compared to others. The government’s FAME Phase II policy targets an EV penetration rate of 30% for passenger cars by 2030.

Along with this, commercial vehicles are at seventy per cent and two/three wheelers at eighty per cent (80%). This policy will go a long way toward promoting the adoption of EVs across these segments.

More partnerships and joint ventures are being announced every day as companies accept increased EV penetration through more mergers and acquisitions.

Mahindra's Strategic Moves

For instance, Mahindra, a company famous for its SUVs and jeeps, is increasing its investments and substantially expanding its capabilities in the EV sector. This move resonates with the Indian government's target of achieving a 30% share of electric sales. This rise will be a huge one among total annual car sales from the current level of 1% by the year 2030.

Urban vs. Rural Adoption

In big cities, the adoption rates of EVs have increased quickly. However, this trend is yet to be seen in Tier-2 and Tier-3 cities.

According to estimations, over ten million units will be sold in India alone by 2030. This means that India will garner 10% of the worldwide electric vehicle industry or market space.

Future Trends for EVs in India

India's EV market offers a big opportunity. If everyone involved works together, even small steps could lead to big growth. This includes car makers, part suppliers, power companies, the government, and customers.

At GrowthJockey, we believe that if India were to truly unlock its full potential, an adoption rate of 50%, with the sale of more EVs, would be feasible.

If we really focus, we could see half of all vehicles in India being EVs by 2030. That means selling over 17 million EVs. This shows just how much the Indian EV industry could achieve if we build a strong system.

With this drive, India could become a top global player in electric vehicles and a significant manufacturer of EVs. We need to push for more EVs for a greener future. This means investing a lot in renewable energy to cut down on CO2 emissions.

Wrapping Up

As businesses focus more on being eco-friendly, electric vehicles (EVs) are catching the eye of big investors. India's EV market is still in its early days, but every part of the EV business has enormous potential for investors. As demand for EVs grows, there will be a significant need for investment across the EV industry.

Vehicle manufacturing needs a lot of money, especially for companies making electric cars, bikes, and buses. Many big car companies have set up separate EV companies and are getting money from investors who care about the environment.

Startups making electric bikes and three-wheelers might also get direct investments to grow. India's big EV market and its strong position in the car industry mean it could become a top spot for EV investment worldwide.

As discussed, India's electric vehicle (EV) scene is making significant strides. This has become easy with substantial government backing and a focus on sustainable transport. The growing use of EVs, from bikes to cars, shows how much the country is changing.

GrowthJockey believes a data-driven approach and goes into the most granular level of market variables present and builds business from 0–1, then 1–10, and 10–100. Regarding the EV sector, we have built LectrixEV as a brand from bootstrap.

FAQs

1. Why is there a need for electric vehicles in India?

Electric vehicles (EVs) are essential for India, and it is necessary to switch to cleaner ways of getting around. Traditional bikes and scooters cause a lot of pollution, which is terrible for our health.

EVs can cut down on this pollution big time. Studies show that regular bikes and scooters make up about 27% of all pollution, leading to around 1.2 million deaths every year. EVs, which produce much less pollution, are an effective way of improving air quality and keeping everyone healthier.

2. Will EVs be in demand in the Future?

The future demand for electric vehicles (EVs) in India is looking strong. Thanks to better technology and solid government support with suitable policies, people are starting to prefer electric scooters more.

According to experts, electric scooter sales will increase by around 9.82% every year from 2024 to 2028. By 2028, the EV market could be worth about $906.7 billion. This significant jump in EV sales shows that more and more people in India are choosing electric scooters, which is set to change how we travel.

3. Why is the popularity of EVs rising?

The surge in demand for EVs is due to several factors, such as government initiatives, growing awareness about sustainable transport, lower battery costs, better infrastructure, and innovations and partnerships.

Electric vehicles are becoming more efficient, and there are plenty of charging stations available. Plus, they come with cool new features that make them even more appealing. That's why more people are choosing EVs as their primary mode of transportation.