Mahindra Electric plots aggressive growth and a raft of new models

Mahindra & Mahindra is bullish on growth at its electric vehicle arm – Mahindra Electric. In FY2018, Mahindra Electric sold 4,026 units. This year it plans to grow that number 10-fold by banking on the growing number of bulk orders for existing models, and planned new product launches to realise the target. The company also plans to enter the electric commercial bus and autorickshaw market, while also launching new products in the passenger vehicle segment. The company is expected to launch the Treo electric three-wheeler, first showcased at the 2018 Auto Expo, by November 2018.

Speaking to Autocar Professional, Mahesh Babu, CEO, Mahindra Electric says, “We are going to launch the Treo soon. With the e-Alfa Mini, the Treo and then the other four products that we have now, there is a good chance that we will see 10x growth this year.”

Impressive as the 40,000 units in a year by one player in the EV market, which saw cumulative sales of 56,000 units (of which 54,000 units were two-wheelers and 1,200 four-wheelers) last fiscal may seem, Mahindra & Mahindra (M&M) sees a much bigger scope of growth. "10x is still a very small base; that by itself is not enough. It needs to
be 10x times 10x times three times," Dr Pawan Goenka, MD, Mahindra & Mahindra, tells Autocar Professional.

The electrified version of the KUV100 crossover

A capex plan of Rs 900 crore over the next two to three years has been lined up specifically for the company's EV business. "Next year, around this time, we will launch another electric vehicle. And a year after that, we will launch another," adds Dr Goenka.

Revised sales strategy

What is also helping Mahindra Electric gain traction is its shift of strategy about a year-and-a half ago. The EV maker changed its primary focus from personal segment buyers to fleet buyers. While fleet buyers seem to be appreciating the advantages an EV offers, not many personal segment buyers are warming up to the idea of buying an EV. "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," says Dr Goenka. 

“We changed the sales/marketing strategy a year-and-a-half ago. If you look at the operating cost of an EV, it is much lower compared to a traditional ICE vehicle. Our EVs with Lithium, Ola, Bangalore-based Bhagirathi and other corporate companies ply more than 150-200km per day, where the breakeven comes much early. In fact, over the past two to three years, our cars have run close to 200,000km. Our first batch of cars have already crossed 180,000km with Lithium; this usage in an electric car will give an operation cost of around 70 paise per kilometre, or savings that are equal to buying another car,” adds Babu.

The new Treo electric three-wheeler slated for launch in November this year

The EV payback in a typical fleet operation that runs for more than 200km a day is around two to three years, “a very good breakeven period,” points out Babu.

The company is now looking to ramp up its capacity to meet growing demand from various fleet buyers. “We have already announced 10,000 LoIs (Letters of Intent/Interest), which include 1,000 LoIs with Bhagirathi, Lithium is buying more cars, Zoomcar is now tying up for 400-500 cars, we already have commitment from Uber, Ola has already piloted a program, and all this has set the mood slightly towards public and fleet mobility,” says Babu.

For meeting upcoming demand, the company has announced a Rs 900 crore investment towards expanding its manufacturing capacity, both at the Chakan and Bangalore plants.

e-Verito sedan

Being an early mover comes with its own set of advantages and challenges and, according to Babu, “When any new technology comes, I think initially there is no competition. It is important for everyone to come together in the market. Once the market is matured enough, then you get to see the competition. Now everyone has to put efforts to take electric mobility forward; we have been here for very long for now.”

Demand and supply

The demand for EVs in India has been growing very slowly. As per the Society of Manufacturers of Electric Vehicles (SMEV), in FY2017, a total of 13,957 electric vehicles were sold including two-wheelers and PVs.  A majority or 92 percent of the sales came from two-wheelers. One of the key factors affecting adoption has been delay in subsidies and lack of charging infrastructure.

Initially, the low demand for EVs saw few suppliers gearing up to invest towards electric vehicles. The lack of a robust supply chain meant that OEMs like Mahindra Electric faced difficulty in meeting bulk demand. According to Babu, the tender from the state-run Energy Efficency Services Ltd (EESL) has given confidence to suppliers, who are now optimistic about the growth momentum.

M&M's Rajan Wadhera and Dr Pawan Goenka with the e-Alfa Mini three-wheeler launch in September 2017.

"Initially, there were challenges from the supply chain, when we were moving from let's say 500 to 1,000 units. But since EESL announced the first tender, the suppliers, who were earlier sitting on the fence, are coming in. In fact with the government's tender to procure 10,000 EVs last year, the supply chain has geared up its confidence towards electric mobility. Now, they have started investing and are seemingly looking ready for EVs," adds Babu.

Clearly, Mahindra Electric is hungry for sales numbers to come its way and given its first-mover advantage and experience in vehicle electrification, it is plugging into all the EV opportunities that are presenting themselves.

(This article was first published in the 15 June 2018 issue of Autocar Professional)