Companies

Tata Motors bid for e-car contract ‘incomprehensible’, says M&M

Varun Aggarwal Mumbai | Updated on January 08, 2018 Published on October 05, 2017

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Mahindra & Mahindra, which was recently awarded a contract to sell 150 electric cars to Energy Efficiency Services Ltd (EESL), took a dig at Tata Motors, which won the bid, questioning Tata Motors’ product capabilities and ‘incomprehensible’ pricing.

EESL recently issued a tender to buy 10,000 electric cars and Tata Motors was the lowest bidder, outbidding M&M’s price by about ₹2.3 lakh. In the first phase of the contract, Tata Motors was awarded a contract of 250 cars, while M&M won 150-car bid.

As per tender conditions, M&M is still eligible to get 50 per cent of the remaining contract or 4,750 cars, given it is willing to match the price quoted by Tata Motors in the phase-II of the contract.

“Both qualified parties, Tata Motors and Mahindra, will have the opportunity to supply their respective number of vehicles, as per the terms of the tender and Mahindra matching the lowest bid pricing for phase-II,” EESL said in a statement.

M&M on a conference call said the price quoted by Tata Motors is extremely low and M&M being a seven-year-old EV maker in the country, still cannot imagine how to get the cost that low.

“We find the pricing of the L1 bidder very difficult to comprehend,” said Pawan Goenka, Managing Director, M&M, pointing out that M&M has been dealing with EV suppliers from across the world for several years but has not been to get components cheap enough to be able to match the price quoted by Tata Motors for their winning bid.

Goenka also mocked Tata Motors by hinting that M&M is the only company in the country to have electric cars already on road, while others (read Tata Motors) are yet to sell even their first electric car.

He also tried to point towards the size of Tata Motors’ Tigor vs the e-Verito being sold by M&M, calling the latter the most suitable car for comfortable drive experience. He said M&M is offering a larger car with a battery that has a drive range 40 km more than the required 120 km range in the tender.

For the first phase of the contract, wherein 500 EVs are supplied to EESL by end of November, Goenka said that as per the tender M&M had the option to sell 250 cars but chose to pick an order for only 150 cars, given the vast difference in the price quoted by M&M and the winning bid.

“We do have have a margin of ₹2.3 lakh,” Goenka said, while just falling short of saying that the company is making losses on every car sold for the tender. “For Phase II, we’ll have to see if we are able to reduce our costs and if we are, we’ll have to see how many cars we’ll want to bid for.”

Goenka, however, said the company will need to reduce the size of the car or the battery to reduce cost.

“We don’t want to run into losses. We want to grow our business and we want to grow it profitably,” Goenka said.

M&M has invested ₹500 crore in its EV business since the time it acquired Reva seven years ago. The company plans to spend another ₹600 crore in the next three-four years to expand capacity to 5,000 cars a month.

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Published on October 05, 2017
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