“ICE continues to be an important part of the portfolio, and will continue to be important for consumers over the next 5-7 years,” Anish Shah, Managing Director & CEO, M&M, told the reporters during the post-earnings media call.
The company has deployed INR 27,000 crore for the automotive business expenditure in the next three years. This includes INR 14,000 crore for ICEs and INR 12,000 crore for EVs. About INR 1,000 crore will be spent on other sub segments.
Out of the INR 14,000 crore for ICEs, about INR 8,500 crore is invested for SUVs, INR 4,000 crore for commercial vehicles (CVs) and INR 1,500 crore for sustenance.
Talking about allocating a higher sum for ICEs than EVs, Rajesh Jejurikar, Executive Director & CEO (Auto and Farm Sector), M&M, said, “The ICE segment is growing at a healthy rate, and we make very good financial returns in the current portfolio that we sell. So it makes sense for us to stay invested in a business where our brands are strong.” Currently, Mahindra sells just one product in the EV portfolio– XUV400.
However, from 2027 onwards its spending on ICE will depend on how quickly EVs ramp up. “At that point, we will assess whether the ICE makes sense or not based on what happens over the next three years.”
Globally, the demand for EVs has been slowing but Mahindra sees no change in its long-term projections and is even confident that the company can take a premium spot in SUV volumes in the country for electric powertrains. Mahindra has earlier stated that it aims for EVs to be 20%-30% of its SUV portfolio by 2027.
“India’s automobile industry is still at 2.5% penetration in EVs, and we haven't really seen the born-electric momentum in India pickup. Once it comes in, you will see how it redefines the entire EV play,” Shah said.
“Going from here to about 20% EV penetration is not too much of an issue. As we hit the 15%-20% mark, development of the EV ecosystem is going to help take it further from there,” he added.
Consideration for hybrids
In India, automakers like Maruti Suzuki, Toyota Kirloskar, and Honda Cars sell hybrid vehicles in their portfolio.
Shah said he views hybrids as an extension of ICEs– a separate but slightly different powertrain. “At this point in time, we feel good about the focus on EVs but we are ready for hybrids too. We are looking at hybrid technology closely and we will continue to adapt as it moves on.”
However, he added that while hybrid vehicles may have some benefit from a fuel efficiency standpoint, it is still very marginal. "Hybrids are more expensive to build because there are two powertrains in a car."
Product plans
The company has been working on its born-electric Inglo platform and is currently “at an advanced stage of validation and starting the production.” It is targeting a market launch for its BEV portfolio during January- March 2025 period.
Mahindra believes its “design” and “technology” will play a key role in differentiating itself from the competition.
It is also actively looking at cell localization. “There are conversations that we are having with a company in that space. No final workout or conclusion has been done though.”
By 2030, the automaker plans to bring in 9 ICE SUVs, 7 BEVs and 7 LCVs. In the ICE segment, the plan is to launch 6 new SUVs and 3 lifecycle upgrades, one of which was introduced last month– XUV 3XO.
On Wednesday, Mahindra claimed to have received 50,000 bookings for the new 3XO in just an hour. Deliveries are set to begin from May 26. The company has currently produced 10,000 units and has a capacity to make 9,000 units per month in the upcoming months.
For FY25, the automaker expects to “grow in mid-to-high teens”, and the growth will be higher than the industry.
Investments and funding
Going forward, Mahindra’s auto division expects to generate sufficient operating cash to satisfy its capital investment needs. Earlier, the automaker has received investments of about INR 1200 crore from British International Investment (BII) and INR 300 crore from Temasek for MEAL.
Shah said M&M and BII have mutually agreed to extend the timeframe for the final tranche of BII’s planned investment of INR 725 crore, and will jointly assess whether additional investment is required by December 31, 2024. Temasek will invest the balance of INR 900 crore as per agreed timelines.
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