Mahindra to invest ₹12000 crore in EV business till FY27, remain aggressive on IC-engine biz

Mahindra & Mahindra to invest 26,000 crore in electric vehicles and conventional IC-engine business by 2030. Strong Q4FY24 performance saw record sales of 126,000 units, with revenue from operations increasing 11.24% year-on-year.

Alisha Sachdev
First Published16 May 2024
The company said its investment in its EV unit—Mahindra Electric Automobile Ltd (MEAL)—will be self-funded..
The company said its investment in its EV unit—Mahindra Electric Automobile Ltd (MEAL)—will be self-funded..(REUTERS)

Mahindra & Mahindra (M&M) Ltd, India's most prominent sports utility vehicle (SUV) maker, is looking to continue to build its conventional SUV business even as it adds muscle to electric vehicles (EVs). The approach follows the company's high growth in conventional SUVs, the uncertainty of the scale of EV growth going ahead, as also the rising visibility of hybrid vehicles.

And so, even as M&M said it will invest 12,000 crore in the EV business over the next three years, it has also marked out a larger capex of 14,000 crore for its conventional IC-engine business. The latter will see six brand new SUVs and three model refreshes by 2030, the company said on Thursday while announcing its Q4 results for FY24.

The 26,000-crore capex push follows the company's strong show in its core automotive business, with standalone net profit for the auto and farm business rising 32% to 2,038 crore for the quarter ended March, compared to the same period a year ago. The automaker said it clocked record sales of utility vehicles at 126,000 units during the quarter.

Read more: For EV makers, the lithium price crash should be good news. It isn’t.


M&M’s revenue from operations in Q4FY24 increased 11.24% year-on-year (y-o-y) to 25,108.97 crore from 22,571.37 crore.

Its operating income during this quarter rose 12% y-o-y to 3,119 crore from 2,789 crore in Q4FY23, while Ebitda margin remained flat at 12.4%. Ebitda refers to earnings before interest, tax, depreciation and amortization.

The company’s shares closed 3.05% higher at 2,372.85 on Thursday.

Capex funding and external investments

The company said its investment in its EV unit—Mahindra Electric Automobile Ltd (MEAL)—will be self-funded, as it expects to generate all of the operating cash needed through its revenue.

It has, therefore, decided to extend the timeline for the final tranche of its investor British International Investment (BII)’s 725-crore investment, whereas it will receive 900 crore from Singapore-based Temasek “as per agreed timelines”.

UK-based BII had announced a deal to invest up to 1,925 crore in MEAL in 2022, while Temasek joined MEAL's cap table with a 1,200-crore investment in 2023. BII and Temasek have so far invested 1,200 crore and 300 crore, respectively, in the business.

Read more: Norway fund giant Norges cuts off Adani Ports


Why the parallel approach

While M&M expects its upcoming grounds-up EVs to account for 20-30% of its SUV sales by 2027, it will “aggressively” go after building up its internal combustion engine SUV business as it has been generating “good financial returns” for the company, Rajesh Jejurikar, executive director & CEO (auto and farm sector), M&M Ltd said in a post-earnings conference. “We will continue to have a very strong IC-engine portfolio over the next many years,” he added.

Anish Shah, managing director, Mahindra & Mahindra said that the company’s split of capex into EV and IC-engine business beyond 2027 will depend on the pace of EV adoption over the next three years, indicating that large automotive OEMs aren't putting all their eggs in one basket just yet. This leaves room open to revise plans for EV investments depending on how the market responds to the vehicles.

“FY2027 onwards, a lot will depend on how quickly EVs ramp up. At this point we will assess whether the IC-EV mix changes or not, depending on what happens over the next three years,” Shah said. He, however, reiterated that at this time, the company “feels good about our focus on EVs”, but are “ready for hybrids”, which have been gaining popularity in India and globally over the past one year.

Read more: Exit season at Ola: After CEO, CFO resigns months after taking charge


M&M said it will add 15,000 units in monthly production capacity by the end of FY25 to build a total capacity of 64,000 units a month, up from 49,000 units at the end of FY24. The addition would involve an increase of 5,000 units for its existing SUV models, and 10,000 units for EVs in FY25, with a further ramp up to 72,000 units with an additional 8,000 units of EV capacity by FY26.

Jejurikar shared that the SUV maker received 50,000 bookings for its latest SUV, the XUV3XO, in just one hour. Its total open orders by the end of Q4FY24 stood at 220,000 units comprising largely of orders for the Scorpio and Scorpio-N.


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