Mahindra & Mahindra Plans to raise up to Rs. 4,000 Crore to boost EV Production

Mahindra & Mahindra is in discussions with international investors to raise $250 million to $500 million in order to move forward on its goals to produce EVs.

According to Reuters, Indian carmaker Mahindra & Mahindra is in negotiations with foreign investors to finance between $250 million (approximately Rs. 2,000 crore) and $500 million (about Rs. 4,000 crore) to expedite its aspirations to produce electric cars (EVs). Mahindra is in preliminary negotiations with global green funds and private equity companies, and it is looking for a long-term investor to assist build up its EV company.

Some investors, however, have expressed interest in joining in a capital round worth approximately $800 million in recent months, according to two banking industry sources, who added that they had conducted discussions with the firm about such proposals.

According to the first source, Mahindra is not actively seeking to raise more money than $250–500 million, but it is open to the notion of increasing the transaction size based on the conditions and valuation. The source further added that these plans are at a very early stage and can change in the future and said, "Mahindra wants to bring a benchmark investor onboard but does not want to dilute a large stake at present".

After receiving its initial fundraising of $250 million from British International Investment, Mahindra's new EV company, for which it is raising the cash, was valued at $9.1 billion in July (BII). The value the investors are proposing or the amount the firm is looking for in the next round were not immediately known.

In a statement to Reuters, Mahindra said that along with BII, it has committed to spending $500 million in the market for electric SUVs. The two businesses also stated that they will cooperate to attract additional "like-minded, climate-focused investors" to the EV sector. The discussions take place only weeks after Mahindra unveiled an ambitious plan to introduce five electric SUVs over the next several years, with the goal of having these vehicles account for 30% of its overall annual SUV sales by March 2027. In January, the automaker's first electric SUV is anticipated to go on sale.

The money will enable the manufacturer assemble a war chest to fight with Tata Motors, a competitor that now controls the majority of the Indian market for new electric vehicles. The first significant clean mobility deal in India was made when Tata raised $1 billion from TPG's Rise Climate Fund for its EV operation last year at a valuation of $9.1 billion. In India, the fourth-largest auto market in the world, just 1% of the approximately 3 million units of cars sold each year are electric versions. The government is providing businesses with billions of dollars in incentives to produce EVs and their components domestically in order to increase this to 30% by 2030.

Mahindra has teamed with Volkswagen of Germany to get parts for its electric SUVs, such as electric drivetrains and batteries, and the two are investigating collaborative vehicle ideas, producing battery cells locally, and creating charging infrastructure. According to local media sources, the Indian carmaker has stated it is willing to invest in a battery cell manufacturer to ensure future supply and is also assessing the need to build up EV production capacity. Mahindra's fundraising effort also coincides with a rise in investor interest in India's shift to clean mobility, which, according to one of the two banking sources, has led to "more money chasing few assets."

According to a third banking source, some of the present investor interest is a carryover from Mahindra's initial fundraising.