After initially hesitating to participate in the second phase of world’s largest electric vehicle tender, for cost reasons, Mahindra & Mahindra on Friday said it will make the bid for the remaining 9,500 EVs to be supplied to state-run Energy Efficiency Services Ltd (EESL).

“We have decided that we will be bidding for the phase 2 of the EESL tender. However, we are yet to take a call on how many vehicles we’ll be bidding for,” said Managing Director Pawan Goenka.

EESL had recently issued a tender to buy 10,000 electric cars, wherein Tata Motors came out as the lowest bidder, outbidding M&M’s price by about ₹2.3 lakh.

However, M&M was still the L2 bidder for the tender and as per the contract still had the option to bid for 4,000 of the 10,000 EVs to be supplied if it matched the L1 price.

M&M however, chose to bid only for 150 vehicles in the first phase, which were to be delivered by November 15.

According to Goenka, M&M is losing money on every car supplied by M&M in the first phase of the contract, leaving very little doubt on whether the company will bid for the remaining batch.

Tata Motors had responded to M&M’s statement saying they were willing to supply all 10,000 cars, if M&M chooses not to exercise its option to bid.

But with Goenka’s statement on Friday, the eagerly watched EESL contract, will finally see two large players racing against time to supply the biggest batch of EVs in the world.

“We are renegotiating contracts with our suppliers for higher volumes in order to reduce cost. In phase 1, we will be losing money, but we will try to align our costs in the phase 2,” Goenka said.

M&M is also taking other measures to reduce costs such as trying to locally manufacture everything except for the battery cells.

This will include manufacturing electric motor, electric powertrain and assembling the batteries in India.

Mahindra, which is currently the only EV maker in the country with a passenger car offering, has been struggling for the last seven years to improve EV sales, without much progress.

According to Goenka, things have started to look up in the past six months, wherein the company has been supplying cars to fleet operators such as Ola and Bengaluru-based Lithium.

“The EESL contract will be a tipping point for electric vehicles in India,” Goenka said.

On Friday, M&M also announced its partnership with Uber, wherein Uber will be using “a few hundred” EVs from M&M for its fleet in New Delhi and Hyderabad.

However, finer details are still being evaluated and Uber hopes the first EV to be added to its fleet by end of February.

Goenka said M&M sold about 2,000 EVs in 2016 and has been able to sell only 600 cars in the first seven months of 2017.

The company has a production capacity of 500 cars right now, most of which is lying idle given the dismal sales.

However, Goenka said that within the next two-three years the company will scale up the capacity to 5,000 cars a month as it expects a huge surge in sales post the EESL contract.

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