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Mahindra planning electric cabs, EV parts supply business

Livemint:  January 31, 2018

Mumbai: Mahindra and Mahindra Ltd plans to start a business that will operate a fleet of electric cabs and turn its electric vehicle (EV) manufacturing unit into a supplier of parts to EV makers.

India’s largest maker of EVs plans to turn its unit Mahindra Electric Mobility Ltd, which makes the e20Plus electric car, into a supplier of batteries, starter motors, power electronics and transmission to its parent and other vehicle makers.

“We have a different model for Mahindra Electric now, which (the company) is now a provider of electric kits and not a maker of Mahindra electric vehicles,” Pawan Goenka, the 63-year-old managing director of Mumbai-based Mahindra, said in an interview.

“So, it is like Intel Inside. In a way, Mahindra has two electric vehicle businesses—one is to make electric vehicle kits that is Mahindra Electric, and the other is about selling electric vehicles, which is Mahindra & Mahindra,” Goenka added.

“And if we get into mobility service, that will be the third business,” he said, adding the electric cab services business is likely to be named Mahindra Mobility Services.

As the momentum in favour of vehicles running on green technologies such as electricity gathers pace, the traditional business models of the automotive industry are expected to change.

Mint on 17 January reported that India’s largest carmaker Maruti Suzuki India Ltd is looking for lithium suppliers for a battery plant in Gujarat, planning to build a brand new electric car for India and working with its dealers to set up vehicle charging networks as part of its initiative to build an electric car business portfolio.

The Indian government has been categorical about promoting fully electric vehicles, and has substantially increased taxes on mild, full and plug-in hybrid vehicles. The government has stated its intent to move to an all-electric fleet by 2030.

“Our main objective is to sell more and more electric vehicles,” Goenka said.

Mahindra’s mobility service business will not be similar to that of cab-hailing services run by Ola (owned by ANI Technologies) and Uber Inc.

“That is not something Mahindra would get in, as that is the business that requires 8-10 years gestation before you start seeing financial returns,” Goenka said.

“When you are looking at fleet operations, it is best to continue to work with service providers or we should also become a service provider. Right now, we have not ruled it out. We have not made a decision. But, we obviously are not going to be captive... in a sense that electric vehicles may not just be used by a Mahindra service provider company. We need to be potentially catering to all service providers in this field,” he explained.

The aim is to demonstrate that it is a good business to get into, something like what Lithium, run by Bangalore-based Urban Technologies, does, Goenka said.

Lithium procures Mahindra’s electric cars and caters to the mobility needs of corporate customers.

Goenka’s confidence in the mobility service as a business stems from his company’s pilot projects which have been running in a few cities, including Nagpur.

“We have run 1.8 million km in six months. Feedback from drivers and customers is very positive. But, it has taken a long time to get charging stations put in. I think even now, we have only about eight and we needed about 20 to ramp up further,” Goenka said, highlighting the need for a rapid build-out of charging infrastructure, the lack of which is hobbling the growth of the EV industry.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.