Mahindra India Invested IDR 136,2 Trillion To Build Battery And Electric Car Factory

Mahindra Racing represents India determination in Formula E (Photo: twitter @MahindraRacing)

JAKARTA - Mahindra & Mahindra India is considering investing in a battery cell company to meet future electrification needs. This was stated by their directors after the company raised funds for its new electric vehicle (EV) unit with a value of 9.1 billion US dollars (IDR 136.2 trillion).

Mahindra on Thursday, July 7 raised $250 million from British International Investment for the unit and is exploring a partnership with Volkswagen AG to source EV components such as batteries and motors.

“The Volkswagen deal will meet Mahindra's "short to medium term" battery needs," said Mahindra CEO Anish Shah who said the company was open to seeing some sort of "investment with global leaders" in the battery cell space if needed to secure supply in the future.

"Our intention is not to get into (manufacturing) batteries," Shah said. "There are people who are doing really well. We can partner with them; we can be co-investors in some form. We don't have to own it and run it."

Mahindra plans to launch five electric sports vehicles (SUVs) over the next few years. These models are expected to contribute up to 30%, or about 200,000 units, of total annual SUV sales by March 2027.

Rising demand for EVs and supply chain disruptions around the world are prompting automakers to look for ways to have more control over inventory and costs. Some automakers spend billions of dollars on mines and factories on motors and batteries. This is clearly a departure from years of relying solely on suppliers.

Automakers are also wary of situations such as a semiconductor shortage due to the pandemic that has led to production shutdowns. Many companies are still facing a backlog of orders due to supply issues.

Shah says that, with the exception of batteries and motors, most components for EVs are not much different from combustion engine cars and Mahindra manufactures most of the parts itself.

"If we can get a deal like we have with Volkswagen to secure supply (of batteries), that's what we will do. If there's an investment we need to make to secure that supply, we'll do it," he said.

Mahindra's plan comes as Indian companies seek to take advantage of billions of dollars in incentives offered by the government to build EVs. This is part of a policy to meet national climate change and carbon reduction targets.

India's EV market, which is dominated by local automaker Tata Motors, represents only 1% of the country's annual sales of around 3 million vehicles. The government wants this to grow to 30% by 2030.