Dr Pawan Goenka: 'We are looking at a 10X volume growth in Mahindra Electric this year.'

Under a set of MoUs signed with the Maharashtra government today, Mahindra & Mahindra (M&M) will make additional investments in its Chakan facility for electric mobility and also partner the government in deploying 1,000 EVs over the next one year. In an exclusive interview with Autocar Professional's Sumantra B Barooah and Nilesh Wadhwa, soon after flagging off a batch of EVs that will be part of Zoomcar, a self drive car rental service, Dr Pawan Goenka, managing director, Mahindra & Mahindra talks about the growth plans of Mahindra Electric.

It’s a big day for Mahindra Electric and electric mobility EV market?
Certainly. The reason I say so is because Maharashtra is the first state, where the state government has taken an initiative to promote electric mobility. The three thing that they have done today is flagging off the Zoomcar EV vehicles, flagging off the EESL vehicles and charging stations. I think that pretty much defines electric mobility in a way. And with the personal involvement of the honourable Chief Minister, I am sure what Maharashtra has done today, many states will follow. That’s why this becomes very important for the whole electric mobility movement.

How do you see the environment from the consumer point-of-view in terms of adopting EVs?
I think we need to put this into two buckets – first is the experience of using electric vehicles. That is very positive. In fact the electric vehicles with Zoomcar are already on waitlist.  They have been instantly booked, the driving experience is very good, there is no question about it. Where there is some concern is the financial viability which for private/personal users becomes an issue because the driving (usage) is not very much. But for fleet operations I think it is almost there, wherein a lot of operators are finding value.For instance, Zoomcar is a fleet-operator and they are ordering more and more cars. It must be working for them. So, I think in the commercial operations it is doing quite well, but in the personal usage it may take some time.

I believe you are looking at a 10X growth for Mahindra Electric this year.
Yes, we are looking at a 10X growth. The EESL phase-2 order for 4,800 vehicles itself is 5x of last year's volume. On the other hand we will be launching electric three-wheelers in the second half of the year, which again I am sure will give us very large volumes, so I think we will be having a very large volume growth. But 10X is still a very small base, that by itself is not enough. It needs to be 10x times 10x times into three times.

With orders coming in from fleet operators and institutions, would Mahindra be able to execute the orders on time?
Well, we are putting money in the capacity. We are confident that the volumes will grow. We would end this year with a capacity of about 1,500 four and three wheelers, that will take the capacity to around 6,000 units by end of 2020. We have fairly high confidence that electric mobility will grow.

You have mentioned that the company's capex will be Rs 15,000 crore for three years, with a large portion going towards product development. Does that also include new electric vehicles?
Yes, of course. Next year around this time we will launch another electric vehicle. And after a year from that time we will launch another electric vehicle. We are also working on an electric bus, e-three-wheeler, and quite a few other products.

Of the total capex lined up, how much have you earmarked towards electric vehicles?
Rs 900 crore for the next two to three years.

The big bet M&M made on the acquisition of Reva Electric seems to be yielding results. When do you expect Mahindra Electric to break-even?
That will take some time, because it includes a lot of fixed costs that we have. The volume is still not big enough to translate towards breakeven. But now we are at variable cost breakeven.

Also read: Mahindra signs MoU with Maharashtra government for electric mobility

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