Economic downturn in US and Europe slows down Switch Mobility's fundraising plans
Switch Mobility has over 600 bus orders in India from the Bengaluru Metropolitan Transport Corporation (BMTC), the Brihanmumbai Electric Supply and Transport (BEST), and a few private contracts.
The proposed $200-250 million fund-raising programme by UK-based Switch Mobility, the global electric vehicle (EV) subsidiary of Chennai, India-based Ashok Leyland is taking longer than expected in the backdrop of recessionary trends and economic slowdown in the US and European markets.
Dheeraj Hinduja, executive chairman of the company said: “There is adequate interest in Switch Mobility, and I do not want to give a timeline for it. But what I can say is that it may happen soon.” Hinduja said this during a post result conference call.
Although the business has been looking for a financial partner for a while, Dana, a US-based manufacturer of drivetrains has already taken a one percent share in Switch Mobility for $18 million in July 2021.
Industry observers suggest that Hinduja's comments should be seen in context of headwinds arising from continuing rise in interest rates and deterioration of economic outlook which has brought Europe on the verge of an economic recession, with the US economy not much behind.
Hinduja added that the orders for Switch Mobility’s electric double decker bus for India, for which the company bagged an order from Mumbai's transport arm BEST, will start rolling in the next one or two months. Further, he continued that in addition to India and Europe, Switch Mobility has also been getting business enquiries from some markets in the Middle East.
When it comes to growing its EV operations, Ashok Leyland is following rivals Tata Motors and Mahindra & Mahindra (M&M). Both Mumbai-based businesses have announced the sale of stock stakes in their recently formed EV subsidiaries for a total of $9.1 billion.
Switch Mobility has over 600 bus orders in India from the Bengaluru Metropolitan Transport Corporation (BMTC), the Brihanmumbai Electric Supply and Transport (BEST), and a few private contracts. Most of them are for e-mobility as a service, in which Ashok Leyland would manage the operation of the buses on behalf of the customers for a predetermined amount of time.
The company board has approved the transfer of Ashok Leyland's electric vehicle (EV) business to its step-down subsidiary, Switch Mobility Automotive (Switch), for Rs 240 crore a special deal in November 2021.
As a result, Switch, a new company formed by the merger of the UK's former Optare and Ashok Leyland's electric CV activities, now functions as an independent OEM (original equipment manufacturer) with a focus on buses and commercial vehicles in the EV market. The UK-based business Optare Plc is owned 91.63 percent by Ashok Leyland. At Switch Mobility, Optare Plc owns a share of about 98.90 percent. In turn, Switch Mobility, UK owns a 100 percent share in Switch Automotive Mobility (India).
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