British International Investment (BII), the UK’s Development Finance Institution and impact investor and Mahindra & Mahindra (M&M) have executed a binding agreement to invest up to ₹1,925 crore each into a wholly-owned subsidiary of M&M that will be newly incorporated.

BII’s investment will be in the form of compulsory convertible instruments at a valuation of up to ₹70,070 crore, resulting in 2.75 per cent to 4.76 per cent ownership for BII in the EV company. The EV company will focus on four-wheel passenger electric vehicles meant for personal use.

The total capital infusion is envisaged to be approximately ₹8,000 crore between FY24 and FY27 for the planned product portfolio. M&M has earmarked an additional ₹2,000 crore till FY27, taking the total investments to ₹10,000 crore.

The first round of BII’s capital investment of ₹1200 crore is expected to be completed not later than June 2023 on fulfilment of conditions precedent and the balance of ₹725 crore, post completion of certain milestones in FY24.

M&M and BII will work jointly to bring other like-minded investors in the EV company to match the funding requirement in a phased manner

M&M’s, Executive Director and Head of Automotive and Farm Sectors, Rajesh Jejurikar will be the head of the new EV company and will report to the M&M’s board. Jejurikar will operate through a management council and a CEO. The management council will initially comprise of President, Automotive, President, Automotive Tech and Product Development, President Purchase and CFO of Automotive and Farm.  

According to M&M, the yet-to-be-named EV company will be completely asset light. It will depend on M&M for product manufacturing, design, product development, technology and sourcing services.

It will have access to ‘Mahindra’ brand as well as product brands like XUV, which will be done on an arm’s length basis. The new EV company can create and own its own brands, said M&M.

M&M is planning to have at least four ‘born electric’ products and the XUV400 by FY26, generating a volume of 2,00,000 units per annum.

BII’s investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by M&M, said the Mumbai-based company.

M&M will share its vision that includes a comprehensive product, technology, and platform strategy at the UK event on August 15, 2022. This will be followed by a reveal of the electric XUV 400 in September 2022. The company expects between 20-30 per cent of its SUVs being electric by 2027.

According to a recent survey by Roland Berger, a leading global automotive consulting company, the Indian consumers are twice as likely as their counterparts in the UK and the US to consider the purchase of an EV.

The EV company will significantly leverage the broader manufacturing capabilities, product development, design organizations along with the ecosystem of suppliers, dealers, and financiers of M&M.

The new entity will have access to ‘Mahindra’ brand as well as product brands like XUV

The new entity will have access to ‘Mahindra’ brand as well as product brands like XUV | Photo Credit: cueapi

Anish Shah, Managing Director and CEO, Mahindra & Mahindra said “We are extremely delighted to have BII as a partner in our SUV electric journey. In BII, we have found a like-minded long-term partner who is committed to combating the climate emergency. The Mahindra Group aims to be Planet Positive by 2040. We are confident we will be the leaders in the electric SUV market in the future.”

Nick O’Donohoe, CEO, British International Investment, said, “BII’s anchor investment will be key to attracting additional sources of private capital into this exciting venture with the Mahindra Group.”

The investment alongside M&M in the new EV company supports BII’s undertaking that at least 30 per cent of its total investments will be in climate finance