Mahindra's EV unit receives funding from Temasek at a valuation of USD 9.8 billion

Mahindra raises USD 145 million from Temasek to boost EV sales

Indian automaker Mahindra & Mahindra (MAHM.NS) has raised USD 145 million from Temasek to boost its electric vehicle (EV) sales. The deal values Mahindra's EV division at up to Rs 805.8 billion (USD 9.8 billion).

This is the latest in a series of fundraising efforts by Mahindra as it seeks to increase its EV sales. Last year, the company raised up to USD 250 million from British International Investments (BII) at a possible valuation of USD 9.1 billion.

The Indian government is pushing for EV sales to increase from less than 2 per cent currently to 30 per cent by 2030. Mahindra is actively working to increase the percentage of its electric SUVs in a market that is dominated by its larger competitor Tata Motors (TAMO.NS).

By March 2027, Mahindra projects that between 20 per cent and 30 per cent of all SUV sales will be made up of electric vehicles. "Temasek's investment is a step forward as we execute our strategy towards future leadership in electric SUVs," said Mahindra CEO Anish Shah in a press statement.

India's EV industry is small but growing, attracting the interest of major international players like Tesla. The world's largest EV maker is in talks with the Indian government to invest in a possible facility that would produce affordable EVs, with a target price of about USD 24,000. This could pose stiff competition for regional automakers, according to analysts.

Rival Tata Motors raised USD 1 billion from TPG's Rise Climate Fund in 2021 at a valuation of about USD 9.1 billion.

Mahindra has been in talks with international investors, including green funds and private equity groups, for about a year to raise between USD 250 million and USD 500 million to further its EV ambitions.

After the deal, Mahindra shares dropped as much as 2.5 per cent, but were down 1.2 per cent at last check.

Analyst's Take

The investment from Temasek is a vote of confidence in Mahindra's EV strategy. The company is well-positioned to benefit from the growing demand for EVs in India. However, it will face stiff competition from Tata Motors and other players in the market.

Overall, the investment from Temasek is a positive development for Mahindra. It will help the company to accelerate its EV plans and become a leading player in the Indian EV market.

What's Next?

Mahindra will use the proceeds from the investment to expand its EV production capacity and develop new EV models. The company also plans to invest in charging infrastructure and other related businesses.

Mahindra is targeting a 20 per cent-30 per cent share of the Indian EV market by March 2027. The company is well-positioned to achieve this goal, given its strong brand name and established dealer network.

The Indian EV market is expected to grow rapidly in the coming years. Mahindra is well-positioned to capitalize on this growth and become a leading player in the market