MG Motor India looking to raise investment for new EV entity

MG Motor India plans to set up a new entity for its electric vehicle (EV) business as part of its growth strategy for which it will be tapping external investment. 

The valuation exercise is currently underway and those associated with this project expect MG Motors India EV division to be valued at $15-20 billion. Sources say PE investors would be more than interested in picking up a stake in the business thanks to the enormous electric capabilities parent company, SAIC Motor Corp of China, has in its arsenal.

More importantly, even offering a stake of 10-20 percent to an investor will not only translate into a substantial infusion of funds but will also offer MG Motor the best route to grow its India business. “Given the present border tensions with China, there is no way the Indian government is going to give its go-ahead to any Chinese automaker for fresh investments,” said an industry observer. 

In this backdrop, offering a stake to a PE investor will be the best way forward for MG Motor which has been around in the country since 2017 when it took over General Motors’ plant in Halol, Gujarat. Also with an exclusive business in place for EVs, MG Motor will be able to bring in the  competencies of SAIC which extend to batteries, fuel cells and even hydrogen technology.

It is this vast array of strengths that explains the huge valuation of MG Motor’s EV business for India. Going forward, the company will logically look at setting up a new facility though these are early days yet. For now, the southern states especially Tamil Nadu and Telangana are on overdrive wooing investors for their EV businesses.

At present, Tata Motors is the clear leader in this space with models like the Nexon EV which have already built a strong connect with buyers. The Tigor has also joined the EV parade and more brands will follow as the company strives to build its EV portfolio. 

Tata Motors had floated a subsidiary for its electric vehicle business last October valued at $9.1 billion. TPG Rise Climate and co-investor ADQ will invest $1 billion in this entity which N Chandrasekaran, Chairman, has defined as a “market-shaping electric passenger mobility business in India”. The investors will acquire 11-15 percent in this arm and the funding is expected to be completed by the end of this calendar.