Mahindra & Mahindra group will manufacture all key components that go into an electric vehicle itself as India’s largest utility vehicle maker prepares for the next transition in the automobile industry amid the government’s push to cut dependence on fossil fuels.
The $13-billion group will set up joint ventures through Mahindra Electric Mobility Ltd., 98.8 percent owned by Mahindra & Mahindra Ltd., to make electric car parts, Pawan Goenka, managing director at M&M, said in an investor call after its second-quarter earnings. “We will make the battery, motor, electronics and transmission in-house and supply to M&M,” Goenka said.
The Anand Mahindra-led group will supply 150 of the 500 electric sedans in the first phase of the government’s order to procure 10,000 electric vehicles. Tata Motors Ltd.—that quoted the lowest price— will provide 350. The order is part of Prime Minister Narendra Modi’s push to make all cars electric by 2030 to lower oil imports and curb emissions.
Goenka said M&M will set up a battery plant. “We will buy cells from outside India and assemble them to make modules and battery packs.” The automaker will also set up plants for motors and transmission in joint ventures with overseas partners, he said.
Mahindra Electric has already finalised a long-term sourcing arrangement for lithium-ion cells. Setting up a battery assembling plant will reduce costs, Goenka added.
The most expensive component of an electric vehicle is the battery pack. The average cost of lithium-ion cell is around $200-230 per kwh, which is expected to nearly halve to around $120-125 in the two, three years, Goenka said. “That will make electric vehicles more affordable.”
M&M has already said that it will invest close to Rs 600 crore in technology and components for electric vehicles. In addition, it will also invest on product development. The company currently has 3,000 e-vehicles on the road. It aims to make all types of electric vehicles—from three-wheelers to buses.
- Three-Wheelers: The company started selling a lead-acid battery-powered e-alpha in Delhi in October. It’s finalising the launch of a lithium-ion version and an e-rickshaw in the quarter ending March.
- Passenger Vehicles: It already makes E-Verito sedan, which it will supply to the government, and e2o plus small car that’s part of the cab aggregator Ola’s Nagpur project.
- Small Commercial Vehicles: The company sells e-Supro electric vehicle for delivery service in New Delhi and for passenger transport in Himachal Pradesh.
- Buses: Mahindra expects to launch its buses by the end of next year. A pilot batch is expected sooner.
5,000 Cars Monthly A Leap Of Faith
The company has no plans to increase its electric vehicle manufacturing capacity from 5,000 units a month. “If we see demand going up, we will be happy to invest more. But right now, we are not committing to more. 5,000 itself is a leap of faith. Other than the one large order, there is no specific demand that we see on the ground today,” said Goenka .
State-run Energy Efficiency Services Ltd. will order 9,500 electric vehicles in the second phase of the government’s order and the lowest bidder, Tata Motors, can supply 4,750. Mahindra & Mahindra will be given an opportunity to match the bid to provide as many as 4750 more, Goenka said. “We certainly are in the race to fulfill the order, he said.
Mahindra Electric reported a net loss after tax of Rs 113 crore on a revenue of Rs 120 crore in the year to March. Goenka said the “electric vehicle pricing right now cannot be PAT (profit after tax) positive. This is a growing segment, a lot of investment in technology happens”.