Close [X]

Mahindra shifts strategy gears

 

Photo courtesy: Saggere Radhakrishna

Photo courtesy: Saggere Radhakrishna

 

 

Mahindra Electric, the electric car unit of Mahindra & Mahindra, is shifting its strategy to sell cars to fleet operators, drive trains to its parent and other car companies and build electric transport vehicles targeted at e-commerce firms such as Amazon and Flipkart.
 

 

Mahindra’s strategy shift comes after it found fewer individuals buying its electric cars in the country and a setback in its main export market - the UK - due to Brexit. Mahindra bought Bengaluru-based electric carmaker Reva and built a four-seater car - the e2o - to tap into India’s growing environment-conscious car users.
 

But high battery prices have deterred people from buying the car in the local market, which prompted the company to target fleet operators such as Lithium, who use it to ferry passengers for corporates.
 

It is sensing new business opportunity in its e-Supro, a seven seat van that can also be used as a delivery vehicle to e-commerce firms, looking at keeping transport costs low. The e-Supro will be launched early in October. At the same time, Mahindra Electric is looking at being a standard supplier of drivetrains to car and van equipment makers in India, including its parent Mahindra.
 

“I think the original equipment manufacturers (OEMs) are going to watch and see how the Verito and the Supro do. Electric vehicles are coming. OEMs have their toes in the water. They just have to figure out if they are to continue to invest or buy from somebody else,” said Arvind Mathew, chief executive, Mahindra Electric, on Wednesday.
 

For its electric delivery vehicle, the company says it will explore setting up a Lithium-like fleet model with e-commerce players such as Flipkart and Amazon, to be used to make deliveries. The sub-2 hour charging time and 100 km range mean these vans can make deliveries and return to hubs, thereby working on multiple shifts. This model will work not because it’s environmentally friendly but because it will save these companies massive fuel costs.
 

“In the long term, I see more than 60 per cent of our revenues coming from drivetrains,” said Mathew.
 

Mahindra Electric was betting on the UK market to drive exports for its cars but the currency depreciation, following Britain’s decision to exit the European Union, has impacted its plans.
 

“We did go into the UK but unfortunately our timing was bad. We entered a month before Brexit happened and that has been a fairly big hit for many of us. One is the whole market just sank and exchange went south by about 15 per cent. So, when you put that together, the business model becomes somewhat shaky. This doesn’t mean we’re going to bail on the UK, it’s just that things are becoming a lot slower. We’ve backed off on our forecast for the UK. The UK is going to take about two years to recover from Brexit,” says Mathew.