To scale up electric three-wheelers and small commercial vehicles in the country, International Finance Corporation (IFC) will invest ₹600 crores in a new last mile mobility (LMM) company set up by Mahindra & Mahindra.

Mahindra & Mahindra said in a stock exchange filing that the ₹600-crore investment will result in ownership of between 9.97 per cent to 13.64 per cent for IFC in the new subsidiary. The investment will be in the form of compulsorily convertible preference shares valuing the new company at ₹6,020 crores.

This will be IFC’s first investment in an electric vehicle manufacturer in India and electric three-wheelers globally.

Mahindra & Mahindra’s investment in the last mile mobility business would be ₹850 crore constituting 2.18 per cent of its total net worth. The business generated a revenue of approximately ₹1,287 crore in FY22 which is 2.24 per cent of the total revenue from the company’s operations. M&M is transferring all its existing last-mile mobility operations into the newly set-up subsidiary.

Also read: Mahindra Electric Mobility merges with M&M

The new company will have the last mile mobility division, including three-wheelers (Alfa, Treo, Zor) and four-wheeler SCVs (Jeeto). The company stated that IFC’s financing will scale up electric mobility in last mile connectivity of passenger and cargo segments and will enable the development and manufacturing of new generation products in this space.

“We are delighted to have IFC as a partner in our last-mile mobility journey. Decarbonizing the transport sector is crucial to achieving the climate goals that India has set for herself. With the electrification of the last mile mobility business at scale, we will move a step further in our commitment to being ‘Planet Positive’ by 2040,” said Anish Shah, MD & CEO, of Mahindra & Mahindra.

“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,” said Hector Gomez Ang, IFC’s Regional Director for South Asia.

Experts have stated that the transition to electric vehicles will be quicker with increased investments in the electric mobility space.

“The transition to EVs in the two and three-wheeler segment will be much faster than anticipated. Battery swapping policy would also provide some fillip to the E3-wheeler segment. The small commercial vehicle segment is also showing some good promise along with buses in the commercial segment,” Hemal Thakkar, Director, of CRISIL Market Intelligence and Analytics had said to BusinessLine.

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In December, Mahindra & Mahindra Ltd announced an ₹10,000 crore investment in the next 7 to 8 years for setting up a manufacturing plant for electric vehicles including its upcoming Battery Electric Vehicles (BEVs) including its e-SUVs under the brand XUV.

Businessline had earlier reported Mahindra & Mahindra was the market leader in the electric three-wheeler segment with a 7.9 per cent market share.