M&M to invest Rs 12,000 crore in its EV unit; extends timeframe for BII's Rs 1,925 cr investment

Mahindra & Mahindra Ltd said on May 16 it will invest Rs 12,000 crore in its electric vehicle (EV) unit, Mahindra Electric Automobile, over a period of three years up to March 31, 2027. 

The company and its auto division expects to generate sufficient operating cash to satisfy its capital investment needs and is currently not looking to raise additional capital, it said.  

“M&M and auto division expect to generate sufficient operating cash to satisfy our capital investment needs. Therefore, M&M and BII have mutually agreed to extend the timeframe for the final tranche of BII’s planned investment of Rs 725 crore, and will jointly assess whether additional investment is required by December 31, 2024,” the company said in a filing to the exchanges. 

So far, UK-based British International Investment (BII) has invested Rs 1,200 crore while Temasek invested Rs 300 crore in Mahindra Electric Automobile Limited (MEAL). Temasek will invest the balance Rs 900 crore as per agreed timeline, the company said. 

In 2022, BII had announced deal to invest up to Rs 1,925 crore into Mahindra & Mahindra's new subsidiary, which will focus on the four-wheel passenger electric vehicles business in 2022.

BII will invest up to Rs 1,925 crore in the form of compulsory convertible instruments at a valuation of up to Rs 70,070 crore, resulting in 2.75 percent to 4.76 percent ownership for BII in the new EV company. The company will focus on four-wheel (4W) passenger electric vehicles, M&M said in a release in 2022.

M&M expected the first round of BII's investment to be completed not later than June 2023 on fulfilment of conditions precedent and the balance post-completion of certain milestones in FY24.

M&M has chalked out in a total capital infusion of Rs 8,000 crore between FY24 and FY27. M&M and BII will work jointly to bring other like-minded investors in the electric vehicle company, the company said in its filing.

Mahindra Electric Automobile Limited, a subsidiary of M&M, was incorporated on October 25, 2022. Its total income for the year ended March 31, 2024, stood at Rs 56.96 crore. The revenue from operations of MEAL for FY24 was nil.