Britain’s BII and M&M to invest $500m in new $9bn electric vehicle entity

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Britain’s development finance institution, British International Investment (BII), will invest Rs. late night notification. M&M and BII will each invest $250 million in the new entity called EV Co. at a valuation of Rs 70,070 crore ($9 billion). Both companies have signed a binding agreement for the same.

M&M joins Tata Motors and a host of other companies, including Ashok Leyland and TVS Motor Co, which have either secured outside investors for a dedicated electric vehicle arm at an attractive valuation or are in the process of doing such deals. A group of other traditional auto companies are poised to take a similar funding route as they prepare to transition from conventional fuel vehicles to electric vehicles.

The announcement comes ahead of M&M’s planned EV strategy that it will announce next month. Last month, M&M said the company’s first “born-electric” concept will be released on August 15, 2022. It will be one of many such models that M&M will bring from 2025 as it seeks to enter in the race for pure battery-powered vehicles. The event will take place at his recently opened design studio in Oxfordshire, UK, which has been instrumental in shaping these concepts. This will be followed by a reveal of the electric XUV 400 in September 2022. M&M predicts that 20-30% of Mahindra SUVs will be electric by 2027. The EV Co will “significantly leverage broader manufacturing capabilities, development of products, design organizations as well as M&M’s ecosystem of suppliers, resellers and financiers,” the statement said. The funds will primarily be used to create and market a portfolio of world-class electric SUVs with advanced technologies.

BII will make the above-mentioned investment in the form of mandatory convertible instruments at a value of up to Rs 70,070 crore, resulting in a 2.75% to 4.76% stake for BII in EV Co. The EV Co. will focus on four-wheel drive (4W) electric passenger vehicles.

The total capital injection for EV Co. is expected to be around Rs 8,000 crore/$1 billion between FY24 and FY27 for the planned product portfolio.

“In BII, we have found a long-term, like-minded partner committed to addressing the climate emergency. Mahindra Group aims to be Planet Positive by 2040. Mahindra has been a pioneer in the field of electric vehicles, and we are confident that we will be market leaders in electric SUVs in the future,” said Anish Shah, MD and CEO of M&M. in the statement.

M&M and BII will work together to bring in other like-minded investors in EV Co. to gradually meet funding needs, the statement said. BII’s investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by M&M, the company said.

The investment alongside M&M in the new electric vehicle company supports BII’s commitment that at least 30% of its total investments will be dedicated to climate finance.

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