Mahindra Group: EV policy needs to stay on track and not lose focus by diverting attention to hybrids

India’s automotive industry is on a dream run, with strong sales across all segments. In fiscal 2024, the auto industry posted impressive numbers, with electric vehicle (EV) sales reaching a milestone of 100,000 units. However, the industry is also debating which technology should take priority – hybrids or EVs.

Mahindra & Mahindra (M&M), the leader in the SUV market, believes that the government should maintain its focus on electric vehicle policy instead of diverting attention towards hybrids.

In an exclusive interaction with CNBC-TV18’s Parikshit Luthra at the SIAM 2024 Convention, Veejay Ram Nakra, President, Automotive Division, M&M, stressed that India missed a significant opportunity to manufacture internal combustion engine (ICE) vehicles for the global market but now has a chance to become a global leader in electric vehicles.

“India is currently the third largest automotive market in the world,” Nakra said. “The time has come for us to become a formidable global player, both in the domestic and export markets.”

On M&M’s strategy for hybrids, Nakra said, “We will be ready with hybrids and will introduce them at the right time. However, I believe India will emerge as one of the major players in EVs. It is imperative that the policy is focused and consistent with the introduction of EVs on the global stage.”

Nakra said achieving 30% EV uptake in India could alone reduce fossil fuel emissions and cut the country’s oil import bill by Rs 1 trillion. While acknowledging that hybrids have a role in the market, Nakra sees them primarily as a technology for car companies to meet Corporate Average Fuel Economy (CAFE) standards.

“Cost and scale need to go hand in hand,” Nakra added. “Currently, we have 2% EV penetration, and the sector sold 100,000 electric four-wheelers last year. We need to reach 20-30% penetration. While battery costs are coming down, we still lack a large supply chain ecosystem in the country.”

Nakra also lauded the government’s efforts to promote semiconductors, the production-linked incentive (PLI) scheme and the PLI ACC. While these policies have shown promise, their full benefits will only be realised in the coming years as they mature, he added.

Currently, M&M has a single electric vehicle offering, the XUV400, but the company plans to launch four new electric vehicles by 2025.

“Our production capacity for electric vehicles is 100,000 units per year and we are going to increase it. The first two products are expected to be launched in the first half of 2025,” Nakra said.

Looking ahead to the holiday season, M&M is optimistic about strong demand.

“There are positive indicators such as good monsoon conditions, a significant increase in the long-term average rainfall and better grain prices at the mandis compared to last year,” Nakra said. “We are in good spirits and are looking forward to a strong festive season.”

M&M has also seen good demand in the last three-four months and the product pipeline is strong. There is a long waiting period for its compact SUV 3XO. When asked about discount plans, Nakra said, “We have not implemented any disproportionate schemes or incentives for the festive season.”