Mahindra and Mahindra Ltd. will invest Rs 10,000 crore for its electric vehicle portfolio in the next five years, Chief Executive Officer Anish Shah said, a day after the automaker agreed to sell stake in its new EV arm to British International Investment Plc.
The SUV maker plans to invest Rs 2,000 crore each in FY23 and FY24, and Rs 6,000 crore between FY25 and FY27, Shah said during a press meet.
M&M has executed a binding agreement to sell stake in the new EV arm to the U.K.'s sovereign fund. The automaker incorporated a wholly owned subsidiary to undertake four-wheeler passenger car business and will transfer the EV assets to new company. The new firm will see a capital infusion of Rs 3,850 crore ($500 million), equally split between M&M and British International.
British International will invest via compulsory convertible instruments, which, upon conversion, will lead to 2.75-4.76% ownership in the EV company.
M&M, Shah said, is targeting battery-powered SUVs to form up to 20-30% of its total SUV portfolio by 2027. “At 20% of its portfolio, the stake will be 4.76% for BII; and at 30% of EV portfolio, the stake will be 2.75%, the valuation being $9.1 billion (more than Rs 70,000 crore).”
According to Rajesh Jejurikar, executive director (auto and farm equipment) at M&M, the company is “targeting 200,000 units by 2027, which comes to around 17,000 units a month”.
M&M currently does not have any electric car in the market, but Jejurikar said it hopes to have five products by 2027, which will give it the targeted volume.
“There will be four born-electric products that will be unveiled on Aug. 15 in the U.K. We will unveil the XUV-400 in September, and start sales in the January-March 2023 quarter,” Jejurikar told BQ Prime. “We hope to bring in new investors and partners in the next 12-18 months as we scale up our operations.”
The yet-to-be-named EV company will be asset-light and the company will have related-party relationship and service agreements with parent M&M for manufacturing, sourcing, suppliers and distribution, Jejurikar said. All the IPs related to electric passenger vehicles will be transferred to the new EV.
Reacting to the deal that was announced late Thursday night, shares of M&M touched a record high on Friday.
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