Mahindra to join EV battery cell maker race to secure supplies

India's Mahindra & Mahindra could consider investing in a battery-cell company to meet future electrification needs, its CEO said, after the company raised funds for its new electric vehicle (EV) unit at a $9.1 billion valuation.

Mahindra raised $250 million from British International Investment for the unit and is exploring a partnership with Volkswagen AG to source such EV components as batteries and motors.

While the Volkswagen deal would meet Mahindra's "short to medium term" battery needs, Mahindra CEO Anish Shah said the company was open to looking at some sort of "investment with a global leader" in the battery-cell space if it needed to secure future supplies.

"Our intent is not to get into (manufacturing) batteries," Shah said in an interview. "There are people who do it very well. We can partner with them; we could be a co-investor in some form. We don't need to own it and run it."

Mahindra plans to launch five electric sport-utility vehicles (SUVs) over the next few years. These models are expected to contribute up to 30%, or about 200,000 units, of its total annual SUV sales by March 2027.

Growing demand for EVs and disruption of supply chains across the globe are pushing automakers to look at ways of having greater control over supplies and costs. Some carmakers are spending billions of dollars on mines and factories for motors and batteries - a departure from years of relying solely on suppliers.

Automakers are also wary of situations like the pandemic semiconductor shortage that lead to production stoppages. Many companies still face order backlogs because of supply problems.

Shah said that, except for batteries and motors, most of components for EVs were not very different from those of combustion-engine cars and Mahindra produced a majority of those parts in-house.

"If we can get an agreement like we have with Volkswagen to secure (battery) supplies, that's what we will do. If there's some investment we need to make to secure those supplies, we will do that," he said.

Mahindra's plans come as Indian companies seek to capitalise on billions of dollars worth of incentives being offered by the government to build EVs, part of a policy to meet national climate change and carbon reduction goals.

India's EV market, dominated by local carmaker Tata Motors, represents only 1% of the country's annual sales of about 3 million vehicles. The government wants this to grow to 30% by 2030.