M&M Draws Up Over $3-Billion Capex Plan With Smaller EV Outlay

Mahindra & Mahindra Ltd. has drawn up a three-year investment plan that has a smaller outlay for electric vehicles.

The maker of the Scorpio SUV plans to invest over the next three years a total of Rs 27,000 crore (about $3.25 billion) in its automotive business, including Rs 12,000 crore in its electric mobility arm—Mahindra Electric Automobile Ltd. British International Investment Plc and Singapore’s state-owned Temasek Holdings Pvt. Ltd. have so far invested Rs 1,200 crore and Rs 300 crore, respectively, in the EV unit.

“M&M will generate enough cash to cover the planned investment,” Anish Shah, group chief executive of India’s largest SUV maker by revenue, said in a post-earnings media scrum. The UK agency and Temasek will hold off future investments of Rs 725 crore and Rs 900 crore, respectively, for at least the next six months.

The funding will allow Mahindra to expedite its slow transition to electric mobility and catch up with rival Tata Motors Ltd., which has cornered three-fourths of India’s nascent electric car market with at least four models. M&M has one in XUV 4OO.

But Mahindra is in “advanced stages” of starting production of its born-electric portfolio of SUVs, Rajesh Jejurikar, CEO of M&M’s automobile and farm division, said. The firm will launch the first of its six thoroughbred electric SUVs in January-March 2025. M&M is also in discussions with a company to make batteries for its electric cars, Jejurikar said.

Still, the Thar-maker isn’t letting go of its diesel-guzzling ways.

Of the Rs 27,000-crore capex outlay, Rs 14,000 crore is earmarked for the development of SUVs powered by internal combustion engines. The outlay for EVs is smaller at Rs 12,000 crore. By 2030, the company plans to launch nine ICE SUVs, seven light commercial vehicles and seven electric SUVs.

“We have a very aggressive plan on the ICE portfolio over and above the EV commitments made recently,” Jejurikar said. “We will be investing about Rs 8,500 crore for ICE SUVs, about Rs 4,000 crore for CVs, and Rs 1,500 crore on sustenance plan.”

A part of the planned capex will be earmarked for M&M’s expansion plans.

The automaker aims to raise its production capacity to 64,000 units per month by the end of FY25 and 72,000 units per month by the end of FY26, from 49,000 units per month as on March 31, 2024. The company aims to make 8,000 electric SUVs per month by the end of FY26.

“EVs will be 30% of M&M’s SUV portfolio by FY27,” Jejurikar said, highlighting the focus that the company still has on its “traditional” business. “From FY27 onwards, we will assess EV capex plans as per demand trends.”

M&M is part of the camp that has pushed back against any revision in taxation of hybrid vehicles, even as electric cars await wider adoption. 

Just four “strong hybrid” cars offered by the likes of Maruti Suzuki and Toyota India clocked more volume than the 90,000 electric cars sold in FY24. Electric cars made up just 2.3% of India’s PV market last year. Since then, there has been a clamour to reduce hybrid tax, so much so a proposal to that effect is said to be on the Finance Minister’s table, according to reports.

“I know there has been a lot of debate on this, but government incentives typically are to enable an industry to transition to a place that is better for the economy,” Shah said, at the media briefing. Most countries stopped incentives for hybrid cars more than 20 years ago, he said.

“Now, from a consumer's standpoint, if that (hybrid tax) becomes a bigger factor, we will be ready for that,” Shah said, when asked about M&M’s hybrid plans. “We view hybrids as an extension of ICE… To that extent, if that’s required, we will be ready for that.”

On Thursday, M&M shares rose to an all-time high after the announcement of the quarterly earnings, but pared some of the gains to end the day 3.05% higher at Rs 2,375.85 apiece. The benchmark Sensex rose 0.93% to 73,662.72 points.