Home >Companies >Mahindra seeks to take lead in electric vehicles segment

New Delhi: Mahindra and Mahindra Ltd, the only manufacturer of electric cars in India, plans to introduce at least five such vehicles in the next three years to take advantage of a government plan to spend 14,000 crore to boost the popularity of electric and hybrid vehicles in the country.

Policy boost: Mahindra and Mahindra’s Pawan Goenka. Photo: Ramesh Pathania/Mint

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Mahindra and Mahindra seeks to take lead in electric vehicles segment

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To reduce dependence on fossil fuels India will spend at least 22,500 crore over the next eight years to promote electric and hybrid vehicles, of which the government will provide some 13,000-14,000 crore, and the remaining amount will be invested by the auto industry in research and development activities.

The government is planning to provide incentives and subsidies for all stakeholders. While the customer may get some tax incentive, the manufacturers may also get some subsidies. The idea is to offer direct subsidies on electric vehicles to make them attractive to customers, said a senior official department of heavy industries requesting anonymity.

The department of heavy industries proposed income tax incentives for buyers of electric vehicles in its budget recommendations, Mint had reported on 29 February.

“Nobody has a vehicle ready to launch. We invested in the segment with a conviction. Once NXR is a success, everybody will look into it," Goenka said. “We are working on three-four more vehicles on different platforms. One of them is also a four-door product."

Goenka said that there are two main concerns that may hamper growth in the segment.

“Initial cost of vehicle and the running range of a car," he said. “If we decide to go ahead of 100 km range, the price will go up. So, the affordability is the key. If we give an honest-looking vehicle with reasonable speed at an affordable price, people will be willing to buy."

Mahindra plans to sell its vehicles at a 10-20% premium over petrol-run vehicles.

About 130,000 electric vehicles were sold in India in 2011-12, according to the Society of Manufacturers of Electric Vehicles lobby group. Electric scooters cost between 26,000 and 43,000, while Reva cars start selling at 3.5 lakh. Japan-based Nissan Motor Co. Ltd’s Leaf electric car is the largest-selling vehicle in the world that runs on battery. It costs $33,000 (around 18 lakh) in the US and its battery cost is at least half the car’s price.

An analyst speaking on condition of anonymity said that Mahindra has a balanced approach.

“It’s still not clear how the whole episode regarding electric vehicles will turn out in India as globally it has not been a success because of the cost of the batteries," said the analyst with a consulting firm, requesting anonymity. “Mahindra will wait to see the initial response to its car NXR and then it may accelerate itself in the segment."

Last year’s national budget had proposed a plan to develop electric and hybrid vehicles. Later, the government established a National Council for Electric Mobility led by heavy industries minister Praful Patel, and a National Board for Electric Mobility to ensure uniform rules in all the states.

The policy will also benefit makers of electric scooters, including Electrotherm (India) Ltd, maker of YObykes, and the Munjal family-owned Hero Electric.

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