Mahindra Auto Division CEO On EV Strategy

You’ve been in the job for a year. You have an aggressive EV strategy, but the EV market in India is not developed at all. I think about 2.3% of all passenger cars sold in India right now are EVs, which is non existent really compared to our neighbor to the north here, China. So what is your next step in getting that first SUVEV to the market? Yeah, Steve, like you said, it’s early days for us in the EV market in India. And there’s just 2-3 years when we have really good cars come out there. We launched our car about 4-5 quarters ago and we’re already almost 10% of the market at this point in time. But really, these are mainstream E VS that we have. And our view is that we need to take our traditional DNA of making strong, authentic SU VS to the EV space. And that’s why we launched 5 new. We announced 5 new E VS Three of them would be coming out in about a year or so. And these are what I would call unapologetic SUVs, which happen to be EVs lifestyle vehicles full of technology and full of features which customers want without the range of anxiety with the batteries that we’re putting in there as well. You’ve built the plant in Western India. They’re already starting to crank them out. That’s right, about 220 days in record time. You put out a factory, it can turn out 200,000 vehicles in a year and we rolled out our first set of vehicles about three months ago. How are you going to get to what I’ve heard, the target is by 2027 you want about 20 to 30% of your output to be EVs. Is that attainable? Yeah, no, absolutely. We are quite optimistic about that goal. And what gives us confidence is if you see our portfolio even today we make cars in the mid to upper end of the price segment in the market. And even with that, we are the number one SUV player from a revenue, from a revenue perspective in the past three quarters, if you look at it and from a volume as well, we are #2. So we are quite optimistic that we can take the same excitement. We’ve seen our ICE SUV products into the EV range. Yeah, how about you know your local supply chain for batteries? I know you have a a venture with Volkswagen, but my understanding it’s not necessarily classified as localization. And I know your competitors like Tata and Mahendra Suzuki, they are building some of the battery plants in India, but we haven’t heard the similar kind of plans for you. How are you going to bring down the cost and to streamline your battery supply chain so you can keep those costs low? Yeah, most of the localization which have happened so far is largely around battery assemblies, not necessarily at a fundamental level making the battery units themselves. And we have our own assembly plant came up along with the factory as well. So I think the next level localization has to happen at a more fundamental level. And our partnership with Volkswagen, other players is much more of a holistic partnership over a longer period of time. And we were hoping that over a period of time we can bring through localization into the market on sales as well. How do you see that partnership growing? I know Volkswagen is also trying to sell its own cars EVs into India. Can there be the joint car from Volkswagen and Mahindra and Mahindra? Yeah. So very early days to talk about anything beyond the components that we have agreement with Volkswagen at this point in time. But we’re definitely looking at them as a very strategic partner for us in the long term to come. You’re also getting other strategic investment from the likes of Temasek and the like. What, what are their expectations for the Indian market since you’re in such early days right now? Yeah. So the investors that we’re getting in like Tamas at BII, these are all recognition of the excitement in the market at this point in time and the credibility that Mahindra has with their SUV portfolio out there. And they were all convinced with the EV strategy that we have put out and they’ve seen the development we’ve had with the early products that we are driving right now, the test runs which are running. And so it’s a reflection of the strategy we have. What’s your biggest challenge though at this point in time? The category itself is in early days and so forming the momentum for the category is well we’re all working on the whole industry at this point in time and the government is stepping in as well. So that’s really where it is. It’s an early stages in the category and the the strength of the portfolio will show up in a year. What do you make of a company like Tesla that Elon Musk was supposed to go there a couple of weeks ago he sort of he cancelled, he diverted to China and had his big announcement that they’re going to get full self driving FSD system with Baidu approved in China. They they are obviously further, much further along and they he’s talked about he wants to invest a lot into the India market and India also has relaxed some of the import duties that were in place as long as they invest what what does a big player like that and potentially Chinese players as well coming into the market. How do you compete against that that are already well developed? Yeah. So firstly, it’s the third largest market in the world, passenger auto market, that’s right. And the market is growing quite fast. The UV segment grew 27% last year. So it’s natural that people want to come in And for us competition is welcome. We have confidence in the portfolio that we have at this point in time. We actually think global competitors coming in should bring in a lot of credibility for the segment. Like I said, it’s early days in the EV segment, so it should get excitement and credibility to the segment and that I’m hoping will help us grow the category. So welcome to have some competition coming in. Now the 5E VS that you’re planning are all SU VS as you’ve said. Can you electrify, what are your plans to electrify more of your fleet and how much funds do you need to do that? Yeah. So at this point in time, these five SU VS, we’re calling it the Bonn electric portfolio that we have. So these are ground up developments, brand new development we have done. But over a period of time we we plan to take the rest of the portfolio which is our ICE portfolio at this point in time also and electrify them as well. But that will happen after these five SUVs come out in the next three years, what kind of fundraising do you need? So at this point in time, we are well funded. The investors who are coming are strategic investors for us. They bring in expertise, they bring in best practices for us. So the CapEx plans are something we’ve announced in the past and the public as well. But we are well funded for the plans we have. And when you you mentioned that the new one next year sometime when do you expect that you know you’re up to scale? I mean what time frame are we talking about? China’s gone from zero to 60 on their scalability pretty quickly. Do you have the same capability or is there infrastructure issues still? No, I don’t see there’s infrastructure issues at this point in time. The, the capacity that we’ve built up has some fungibility if the volume scales up as well at this point in time. So we’re not concerned about any infrastructure challenges, supply chain challenges, that’s everyone has that, raw materials and everything. How do you overcome those? Yeah. So I think if there’s anything we’ve learned from COVID is to be very strategic about our supply chain in general and specifically about certain components like semiconductors and batteries. Over the last three years, we have learned a lot in terms of how to have very strategic partnerships with these players, have dialogues to secure the supply we need. So based on those learnings, I think we’re quite confident that we’ll be able to weather through any supply chain and descriptions which might come. Now, you haven’t opened up the order book yet for your SUVs. That’s right. Can you give me an indication of what is a realistic total sale by the first year? Say again, very hard to say when the hockey stick will start to play out at this point in time, but what we have is a plan which can turn out 200,000 per year, but fungibly we can take it up if you need to.