Indian automotive major Mahindra & Mahindra has plans to rapidly expand its electric vehicle division with the help of global investments. For this, the multinational firm has just raised Rs 600 crore from International Finance Corporation or IFC towards a new last-mile mobility (LMM) company. The newly incorporated firm will be a wholly-owned subsidiary of Mahindra & Mahindra, with the ownership of IFC lying anywhere between 9.97 percent to 13.64 percent.
The investment agreement was made public by Mahindra & Mahindra on Wednesday, deeming it the first of its kind investment for IFC. IFC, a member of the World Bank Group, is the largest global development institution that invests in the private sector in developing countries. The agreement with Mahindra & Mahindra will be IFC’s first investment in an EV manufacturer in India, as well as its first in electric three-wheelers globally. With the investment, IFC aims to increase EV adoption across the Indian transport network.
The investment by IFC will be in the form of compulsory convertible instruments, bringing the valuation of M&M’s EV division to Rs 6,020 crore. The new subsidiary firm will focus on the last mile mobility vehicles, including three-wheelers Alfa, Treo, and Zor, as well as the four-wheeler commercial vehicle Jeeto.
“Decarbonizing the transport sector is crucial to achieving the climate goals that India has set for herself. IFC, with its focus on sustainability and boosting prosperity, is an ideal partner for us. With the electrification of the last mile mobility business at scale, we will move a step further in our commitment to be ‘Planet Positive’ by 2040. This also presents a tremendous opportunity for growth for micro and women entrepreneurs,” said Anish Shah, MD and CEO, Mahindra & Mahindra.
“With transport being the fastest-growing contributor to climate change, it is no longer a question of whether electric vehicles should be adopted at scale, but rather how quickly,” said Hector Gomez Ang, IFC’s Regional Director for South Asia. “India is the largest three-wheeler market globally, and this investment marks a significant step towards scaled domestic production of electric vehicles catering to this segment, as well as small commercial vehicles. By supporting a leading market player, IFC hopes to encourage other large automotive manufacturers to follow suit, driving EV adoption across India and helping the government deliver on its climate targets.”
Rajesh Jejurikar, Executive Director and CEO (Auto & Farm Sector), Mahindra & Mahindra, said, “The last mile mobility business presents a tremendous opportunity, both in terms of electrification and growth. Being the market leaders in this segment, we have an opportunity to drive higher EV penetration in this segment and provide a more sustainable as well as profitable option to microentrepreneurs. We are excited about leveraging the World Bank Group’s expertise in the EV sector to create a viable ecosystem with robust environmental and social practices, as well as build knowledge, innovation, and capacity.”