Schedule a Call Back
IFC to invest Rs 600 cr in M&M’s new electric three-wheelers company
Industry News- Mar 22,23
Funding to help electrify the country’s last mile mobility and boost penetration of electric three-wheelers, supporting India’s climate goals
Mumbai
In a bid to scale up electric three-wheelers and small commercial vehicles (SCVs) that are more affordable, IFC - a member of the World Bank Group - is investing Rs 600 crores in a new last mile mobility (LMM) company - a wholly owned subsidiary of Mahindra & Mahindra that will be newly incorporated (NewCo). A game-changer for micro entrepreneurs in India, the funding will transform lives by boosting their income and paving the way for the auto industry’s seamless shift from fossil fuel to electric vehicles (EVs).
IFC’s first investment in an EV manufacturer in the country and the first in electric three-wheelers globally will be in the form of compulsory convertible instruments at a valuation of up to Rs 6,020 crores. The Rs 600 crores investment will result in an ownership of between 9.97% to 13.64% for IFC in NewCo.
NewCo will house the last mile mobility division, including three wheelers (Alfa, Treo, Zor) and four-wheeler SCV (Jeeto). IFC’s financing will help scale up electric mobility in last mile connectivity - passenger and cargo segments - while enabling the development and manufacturing of new generation products in this space. Electric vehicles enable vibration and noise free operations, generate higher earnings for drivers and enable micro entrepreneurship. The business will further generate employment for women, driving equality and inclusion while bolstering India’s climate action agenda.
Anish Shah, MD & CEO, Mahindra & Mahindra, said, “We are delighted to have IFC as a partner in our last mile mobility journey. Decarbonising the transport sector is crucial to achieving the climate goals that India has set for herself. IFC, with its focus on sustainability and boosting prosperity, is an ideal partner for us. With the electrification of the last mile mobility business at scale, we will move a step further in our commitment to be ‘Planet Positive’ by 2040. This also presents a tremendous opportunity for growth for micro and women entrepreneurs.”
Hector Gomez Ang, IFC’s Regional Director for South Asia, added, “With transport being the fastest-growing contributor to climate change, it is no longer a question of whether electric vehicles should be adopted at scale, but rather how quickly. India is the largest three-wheeler market globally, and this investment marks a significant step towards scaled domestic production of electric vehicles catering to this segment, as well as small commercial vehicles. By supporting a leading market player, IFC hopes to encourage other large automotive manufacturers to follow suit, driving EV adoption across India and helping the government deliver on its climate targets.”
While transport remains key to India’s growth, it poses the twin challenge of heavy reliance on oil imports and severe air pollution. Decarbonizing the transport sector, which contributes about 13 percent of the country’s greenhouse-gas (GHG) emissions, can help substantially reduce the impacts related to GHG emissions and other air pollutants. This is vital given that India has committed to reducing its emissions profile by 45 percent by 2030, and simultaneously aims to achieve 80 percent EV penetration for two-and three-wheelers, 70 percent for commercial vehicles, and 30 percent for private cars.
Rajesh Jejurikar, Executive Director and CEO (Auto & Farm Sector), Mahindra & Mahindra, said, "The last mile mobility business presents a tremendous opportunity, both in terms of electrification and growth. Being the market leaders in this segment, we have an opportunity to drive higher EV penetration in this segment and provide a more sustainable as well as profitable option to microentrepreneurs. We are excited about leveraging the World Bank Group’s expertise in the EV sector to create a viable ecosystem with robust environmental and social practices, as well as build knowledge, innovation, and capacity.”
Carsten Mueller, IFC’s Regional Industry Director for Manufacturing, Agribusiness and Services, Asia, said, “Through this partnership with Mahindra & Mahindra, we aim to leverage private sector innovation and technology to accelerate the transition to EVs and help strengthen India’s e-mobility ecosystem. Green and sustainable transportation will be critical in the fight against climate change, and EVs provide exciting solutions to reduce greenhouse-gas emissions, while curbing air and noise pollution and benefiting entrepreneurs and communities everywhere.”
While growing e-commerce activity and urbanisation in India are driving a significant increase in last mile transportation, electric two- and three-wheelers can potentially lead the transport sector’s clean energy transition. This investment should send a signal of confidence regarding the prospect of such vehicles in India, enabling improved connectivity and logistics for passengers and goods, creating green jobs and driving the Indian economy.
Khaitan & Co are legal advisors to Mahindra & Mahindra and Cyril Amarchand Mangaldas are legal advisors to IFC for the transaction.
IFC
World Bank
electric vehicles
M&M
Mahindra & Mahindra
electric three-wheelers
Rajesh Jejurikar
Anish Shah
Hector Gomez Ang
Planet Positive
Related Stories
Other Industrial Products
India: Leading global manufacturing
On April 11, 2024, the Asian Development Bank (ADB) - following the International Monetary Fund (IMF), World Bank, and Moody’s - raised India’s GDP growth forecast for 2024-25 to 7 per cent from..
Read moreAuto & Auto Components
Hyundai Motor and Kia partner with Exide Energy for EV battery localization
Partnership with Exide Energy enables Hyundai Motor and Kia to equip future electric vehicles in the Indian market with locally produced lithium iron phosphate (LFP) batteries
Read moreAuto & Auto Components
Electric vehicle sales in India zoom
Backed by supportive government policy and low running costs, sales of electric vehicle (EV) grew across all segments in India in 2023, says Bloomberg New Economy Forum report.
Read moreRelated Products
Tata Motors unveils facilities for development of Hydrogen propulsion tech
AUTO COMPONENTS & ACCESSORIES
Tata Motors, India?s largest automobile company, unveiled two state-of-the-art & new-age R&D facilities for meeting its mission of offering sustainable mobility solutions. The unveilings constitute of Read more
Tata Motors plans petrol powertrain for Harrier and Safari SUVs
AUTO COMPONENTS & ACCESSORIES
Tata Motors is in the process of developing a new petrol powertrain for its premium sports utility vehicles, the Harrier and Safari, as confirmed by a senior company official. Currently, these models Read more
Electric Vehicle Charger
AUTO COMPONENTS & ACCESSORIES
RRT Electro is engaged in manufacturing of customized Power Electronic Products over two decades having capability to Design, Develop, Prototyping, Regulatory Compliance testing & Certification, Manuf Read more
latest News
Subscribe to iNoW
For Industry News on WhatsApp, Give a Miss Call on: +91 84228 74016
