Mahindra Looking for Chinese Partner to Enter Hot Electric Car Market

Major Indian automaker Mahindra and Mahindra Ltd. is looking for a joint venture partner to enter China’s surging electric car market.

According to Arvind Mathew, CEO of the electric car division, Mahindra Reva Electric Vehicles Pvt Ltd., the company is actively searching for the partner – as required by the central government – with an eye to manufacture and sell into the world’s largest electric car market.

Presently, Mahindra Reva sells plug-in electrified vehicles in the U.K. and India, and is open to offering its powertrain to buyers other than its parent company, he said.

Matthew declined to say whether the company has been in discussions with Chinese companies. He did say the market holds allure for the prospect of building up PEV scale and new vehicle offerings, he said.

“The Chinese market is an attractive market as it has all range of electric cars, including two-wheelers, three-wheelers, cars and buses,” he said in an interview with Bloomberg.

Mahindra’s electric car lineup has so far been limited, making China all the more desirable to enter. The company began selling the all-electric e20 in the UK in April. It’s a small three-door hatchback marketed as an electric city car. The company launched its first all-electric sedan, the eVerito, in June in New Dehli.

Challenges

Assuming a successful joint venture in China is found, Mahindra will then be pitted against stiff competition from several companies backed by Chinese billionaires. China has placed startup and existing automakers under strict scrutiny lately. The government is narrowing down the list of companies it will allow to be given licenses to enter the PEV market; and investigations are being conducted on startups and major automakers on potential violations of rules governing China’s “new energy vehicle” subsidy program.

SEE ALSO:  Mahindra Tapping into Technology Assets to Make Autonomous Electric Cars

Indian automakers have been eyeing the Chinese PEV market for quite some time, but have been lagging behind competitors from Japan, the U.S., and Europe. Indian rival Tata Motors, through its Jaguar Land Rover unit, manufactures the Evoque SUV in China through its joint venture with Chery Automobile. Mahindra’s South Korean division, Ssangyong Motor Co., said that it’s looking to markets such as China to make up for an expected decline in shipments to the U.K. following the “Brexit” referendum to leave the EU.

Forging a joint venture with a local company in China will be necessary for Mahindra to find profitable business in the country. Vehicles imported from India and other countries are subject to a 25 percent duty, substantially raising the sticker price. Mahindra is counting on producing mass-market electric cars for a competitive price. The Chinese government requires foreign automakers to create JVs with local partners to receive the green light on entering China to set up a factory.

One analyst sees China as an essential market to enter for car sales, but also because there are lessons to be learned on what it’s like to do business with Chinese companies.

“China is not only a fast-growing electric market but also highly competitive with strong local electric-car companies,” said Kavan Mukhtyar, a management consultant at PricewaterhouseCoopers in Mumbai. “For Mahindra, what matters most is learning from the Chinese market. Eventually, Chinese electric-car companies will enter the Indian market.”

Mahindra is a vast conglomerate led by Chairman Anand Mahindra. The company has invested in airplanes, yachts, tractors, hotels, and residential homes. Last year, Mahindra bought Turin-based Ferrari designer Pininfarina SpA to build high-performance sports cars.

Bloomberg