Mahindra & Mahindra Will Raise Rs 4000 Crore For Making Better Electric Vehicles

Automaker Mahindra & Mahindra is in talks with global investors to raise between $250 million and $500 million to expedite its plans to build EVs.

Open to valuation changes

It is in early talks with global green funds and private equity firms, seeking a long-term investor who can help build out its EV business.

Some investors have shown interest in recent months in participating in a funding round of worth around $800 million.

While Mahindra is not actively looking to raise a higher amount than $250-$500 million, it is not opposed to it either, depending on the terms and valuation.

Initial fundraise

It wants to bring onboard a benchmark investor but does not want to dilute a large stake at present.

These plans are at an early stage and subject to changes.

Mahindra’s new EV unit it is raising funds for was valued at $9.1 billion in July after its first raise of $250 million from British International Investment (BII).

It’s unclear what valuation it is seeking or the investors are offering for the newest round.

Inviting more “climate focussed” investors

Mahindra had said that it will invest $500 million in the electric SUV space along with BII and the two will collaborate to bring other “like-minded, climate focussed investors” in the EV unit.

The talks come weeks after Mahindra shared its ambitious plan to launch five electric SUVs over the next few years.

It is targeting such models to make up 30% of its total annual SUV sales by March 2027.

Competing against Tata Motors

Its first electric SUV is expected to go on sale in January.

The funds will help the automaker compete against rival Tata Motors which dominates India’s budding electric car market.

Tata, last year, raised $1 billion from TPG’s Rise Climate Fund for its EV unit at a valuation of $9.1 billion, making it the first major clean mobility deal in India.

India is the world’s fourth-largest car market but electric models make up just 1% of total annual car sales of about 3 million units.

The government wants to grow this to 30% by 2030 and is offering companies billions in incentives to build EVs and their components locally.

Volkswagen partnership

Mahindra has partnered with Germany’s Volkswagen to procure components like electric drivetrains and batteries for its electric SUVs.

The two are exploring joint vehicle projects, building battery cells locally and developing charging solutions.

Possible future local cell manufacturing

The Indian automaker is open to making some investments in a battery cell maker to secure future supplies, and is also contemplating whether to set up manufacturing capacity for EVs.

Its fundraising also comes at a time when there is growing investor interest in India’s clean mobility transition resulting in “more money chasing few assets”.

Some of the current investor interest is a spillover from Mahindra’s first fundraise.