IFC invests Rs 600 crores in Mahindra & Mahindra's new last mile mobility subsidiary.
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IFC invests Rs 600 crores in Mahindra & Mahindra's new last mile mobility subsidiary.

Investment by IFC will scale up electric three-wheelers and small commercial vehicles in India, providing a gamechanger for microentrepreneurs and promoting sustainable mobility.

The International Finance Corporation (IFC), a member of the World Bank Group, has announced an investment of ₹600 crores in a new last mile mobility (LMM) company that will be a wholly-owned subsidiary of Mahindra & Mahindra. The new company, referred to as “NewCo,” will focus on scaling up the production of electric three-wheelers and small commercial vehicles (SCVs) that are more affordable, thereby making them accessible to microentrepreneurs across India.

IFC’s investment marks its first foray into the electric vehicle (EV) manufacturing industry in India and the first in electric three-wheelers globally. The investment will take the form of compulsory convertible instruments, with a valuation of up to ₹6,020 crores. As a result of the ₹600 crores investment, IFC will hold an ownership stake of between 9.97% to 13.64% in NewCo.

The investment is expected to be a game-changer for microentrepreneurs in India, as it will boost their income by providing them with access to affordable electric vehicles. Moreover, it is expected to pave the way for the auto industry’s seamless shift from fossil fuels to EVs. The move is in line with the Indian government’s push to adopt cleaner and greener technologies and achieve its target of 30% electric vehicle penetration by 2030.

NewCo is set to become the new home for Mahindra & Mahindra’s last mile mobility division, which includes popular models such as the Alfa, Treo, Zor (three-wheelers), and Jeeto (four-wheeler SCV). With the help of IFC’s financing, the new subsidiary aims to scale up the adoption of electric mobility in the last-mile connectivity space, catering to both passenger and cargo segments. This will also pave the way for the development and production of next-generation products in this segment.

The transition to electric vehicles is expected to bring a host of benefits to drivers and micro-entrepreneurs, including vibration and noise-free operations and higher earnings. The move will also generate employment opportunities for women, promoting equality and inclusion while bolstering India’s climate action agenda.

Anish Shah, MD and CEO, Mahindra & Mahindra, said, “We are delighted to have IFC as a partner in our last-mile mobility journey. Decarbonizing 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, said: 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.

Also Read: 2.5 lakh electric vehicles registered in India in 2023.

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