In Run-Up to IPO, Mahindra LMM Eyes Capacity Expansion with New Plant as e-3W Adoption Accelerates

Mahindra Last Mile Mobility (LMM) is exploring capacity expansion beyond its Zaheerabad facility as electric three-wheelers rapidly gain share, with the company expecting electrification in the passenger three-wheeler segment to reach 70-80% in the coming years, Suman Mishra, MD & CEO, Mahindra LMM said. The company is evaluating both brownfield and greenfield options to add manufacturing capacity as it prepares for a sharp increase in electric three-wheeler volumes.

The company currently has an installed capacity of around 200,000 vehicles at Zaheerabad, Telangana but Mishra said the pace of electrification has outstripped earlier expectations, making further investments necessary. “We will need more because nobody estimated that it will be 40% now. We were all thinking it will be like staying 25-35%. So, if 30 to 50% happens in two quarters, then 70% penetration is not so far away," she said.

Capacity Expansion: Brownfield vs Greenfield Options

The company is already looking for land, industrial parks or adjacent brownfield opportunities, while also keeping the option of a new facility open. Zaheerabad itself has some room for additional lines, but Mahindra LMM is assessing the broader manufacturing and supplier ecosystem before deciding where the next investment will go.

Electric Three-Wheeler Volumes Nearing 50% Penetration

Electric vehicles accounted for around 40% of the company's passenger three-wheeler volumes in the first quarter, while Mishra expects the figure to touch around 49% this month.

The Zaheerabad facility is currently the company's main manufacturing hub and produces most of its volumes across three- and four-wheelers, including the recently-launched UDO.

Battery-Pack and Supplier Capacity Must Scale Too

Mishra said the company needs to start planning its next phase of investment now given the 18-24 months typically required to build up capacity. The capacity requirement is not limited to vehicle assembly. Battery-pack and supplier capacity will also have to be scaled up in tandem as the company's electric volumes rise.

She said the company is also working towards greater modularity in its electric vehicle platforms, allowing key components such as the motor, transmission and MCU to be shared across different vehicle categories.

Mahindra LMM wants to replicate UDO's electrification momentum in other commercial vehicle segments. Electric penetration in its cargo three-wheelers is around 20%, while the N1 electric mini-truck category is at around 10%. Mishra believes these segments could also see a sharp acceleration once the right products are available, given their usage patterns. “They drive a lot of kilometers every day, they drive in smaller zones and clusters. They can park and charge it at home," she said.

Why Metro Cities Are Lagging in e-3W Adoption

Despite the rapid adoption of electric three-wheelers in smaller cities and towns, major metros remain a weak spot, largely because of charging and parking constraints. “Metro cities are not electrifying fast enough. Like in Mumbai you hardly see. There is no parking. The issue is not necessarily lack of customer interest but the absence of dedicated parking and charging infrastructure for commercial three-wheelers," she said.

The company is working with municipalities to explore dedicated parking and charging facilities, including the possibility of using municipal parking lots to create micro-clusters for electric rickshaws.

China Dependency and Supply-Chain Resilience

EV industry faces challenges around China's role in the global electric vehicle supply chain, particularly for components and battery technology. Mishra said that Mahindra has already significantly reduced its dependence on China for its current three-wheeler portfolio. “For my 3-wheeler product, everything is made here. Except semiconductors which we are importing from everywhere else. We have also worked to eliminate dependence on permanent magnets in some applications," she said.

Mishra said supply-chain disruptions have now become a recurring feature of the EV industry, with new challenges emerging around semiconductors, magnets, PCBs and other components. “Literally every month, there is some challenge or the other. And it's not just China. Anything can happen in any part of the world," she said. The response, she adds, has increasingly been about building resilience and finding alternative sources.

Battery Technology and Residual Value for Used EVs

Battery technology remains another important area of development, particularly around energy density and durability. Mishra said the company is testing new technologies aimed at improving both energy efficiency and battery life.

The company is also working on improving the residual-value proposition for electric three-wheelers. Since most vehicles in the segment are financed, establishing the health and remaining life of a used battery could help build confidence among second owners and financiers. Mishra said the pilots have already seen significant uptake, potentially providing a way to create greater transparency around battery residual values and strengthen the used-EV ecosystem.

In the run up to the IPO in 2027, the next phase involves scaling manufacturing capacity, developing new electric platforms, building charging solutions, strengthening supply chains and extending electrification into cargo and small commercial vehicles. With passenger three-wheeler electrification already approaching 50%, Mishra believes the market's next big inflection point may arrive sooner than the industry had anticipated.