Mahindra and British International Investment (BII) said late on Thursday they will each invest up to $250 million in the EV unit which will focus on four-wheel passenger electric cars.
The company sells some of India’s most popular combustion engine SUVs, including the Scorpio and Thar, and now plans to dominate the EV sector with similar models.
“We are very confident we will take leadership in this space,” Mahindra chief executive officer Anish Shah said during a press briefing.
“This is not just one investment. This is also the starting point. We will bring in more investors at higher valuations as we go forward,” he said.
Mahindra is the latest Indian automaker to tap global green funds by hiving off its clean mobility business into a separate unit, taking a page from its rival Tata Motors‘ playbook which last year raised $1 billion from TPG’s Rise Climate Fund at a valuation of about $9.1 billion.
The move also comes as companies seek to capitalise on billions of dollars worth of incentives being offered by Prime Minister Narendra Modi’s government to build EVs, as India looks to meet its climate change and carbon reduction goals.
The EV market, dominated by Tata Motors, represents only 1% of the country’s annual sales of about 3 million vehicles. The government wants this to grow to 30% by 2030.
Mahindra expects electric models to make up between 20% and 30% of its total SUV sales by March 2027. At 30% it expects volumes of about 200,000 electric SUVs a year, Rajesh Jejurikar, executive director of Mahindra’s auto and farm sector said.
Jejurikar said the company will share more details about its future product plans in August but it will unveil its first electric SUV in September, with sales likely to start in the first quarter of 2023, and four more models by March 2026.
Mahindra, which is building a ground-up EV platform called “Born Electric”, said in May it is exploring a partnership with Germany’s Volkswagen AG to source EV components for its vehicles.
Shah told Reuters in the same month that the company is exploring more such partnerships to boost its EV business.