Mahindra takes on Tata Motors over electric vehicle pricing2 min read . Updated: 06 Oct 2017, 06:04 AM IST
Mahindra will lose about Rs3 crore on the 150 electric cars it will supply to Energy Efficiency Services (EESL) as it matched Tata Motors’s lowest bid for the EV contract
Mumbai: Mahindra and Mahindra Ltd managing director Pawan Goenka said on Thursday that the price bid by rival Tata Motors Ltd for the government’s electric vehicle contract “is hard to comprehend."
Mahindra will lose about Rs3 crore on the 150 electric sedans it will supply to state-owned Energy Efficiency Services Ltd (EESL), Goenka told reporters in a conference call on Thursday. Mahindra matched the lowest bid of Rs10.16 lakh per vehicle made by Tata Motors Ltd as it wanted to be part of the government’s electric mobility mission, said Goenka. Its own bid was Rs2.3 lakh higher per vehicle.
“We won’t be making any money on the 150 vehicles," said Goenka.
EESL offered Mahindra half of 500 EVs in the first phase of the contract after it matched the lowest bid on Wednesday. But owing to the aggressive pricing Mahindra agreed to supply only 150.
“We do not know the basis on which the L1 bidder (Tata Motors) chose this low price," said Goenka. Mahindra has been the only EV manufacturer in India for the past five years and has “good knowledge of the EV business," said Goenka. He said he would be surprised if Tata Motors’ kilowatt/hour unit price was different from Mahindra’s.
Without commenting on specifics, a Tata Motors spokesperson said in an email that the company’s offer for the EESL tender is based on a sound business model.
Mahindra was the only one to bid for the entire order of 10,000 vehicles while Tata Motors bid for 5,000 vehicles, Goenka said.
Mahindra is evaluating if it will bid for half of the second phase supply of 9,500 vehicles because “the difference between the desired and current bids is not a small price to pay," said Goenka. The dates for bidding of the second phase will be announced after completion of the first phase of deliveries on 30 November.
The Rs1,120 crore-tender has been floated by the government to procure EVs to replace petrol and diesel cars currently used by the central government and its agencies over 3-4 years. The tender is part of the government’s agenda to make India an all-electric vehicle market by 2030.
Road transport minister Nitin Gadkari has pushed automakers to shift manufacturing to vehicles that run on non-polluting and alternative fuels such as electricity, biodiesel, ethanol and compressed natural gas “whether they like it or not".
“The biggest challenge today is that there are no volumes; this push by the government will spur investment and help expand capacity once the companies have tested their models," said Abdul Majeed, a partner at PwC India.
Mahindra also plans to participate in the government bid for 9-metre electric buses, said Goenka.