China's Electric Car Market Beckons Mahindra And Mahindra

Mahindra and Mahindra Ltd.'s electric car unit is looking for a joint venture partner in China to manufacture and sell EVs in the world's biggest auto market, according to Arvind Mathew, chief executive officer of Mahindra Reva Electric Vehicles Pvt Ltd. The company currently sells electric cars in the U.K. and Indian subcontinent and is open to offering its powertrain technology to buyers other than its parent, he said.

"We are continuously looking at the Chinese market to build up scale," Mathew said in an interview Thursday, declining to say whether Mahindra Electric is already in discussions with local companies. "The Chinese market is an attractive market as it has all range of electric cars, including two-wheelers, three-wheelers, cars and buses."

Indian automakers have lagged behind their counterparts in the U.S., Europe and Japan in cracking the Chinese market, even as Chinese carmakers are venturing abroad into emerging markets. Mahindra's South Korean unit, Ssangyong Motor Co., has said it will look to markets such as China to make up for an expected decline in shipments to the U.K. following the Brexit referendum. Rival Tata Motors Ltd.'s luxury Jaguar Land Rover unit produces the Evoque SUV in China through its joint venture with Chery Automobile.

Mahindra's shares rose as much as 1 percent to 1,387 rupees in Mumbai trading on Monday. The shares have risen 8.7 percent this year.

Stiff Competition

A successful joint venture in China will pit Mahindra against stiff competition from more than 200 Chinese companies, some backed by the likes of billionaires Terry Gou, Ma Huateng, Jack Ma and Jia Yueting, all capitalizing on the surge in demand on the back of generous government incentives. The Indian conglomerate led by Chairman Anand Mahindra has interests spanning airplanes, yachts, hotels and residential homes and last year bought Turin-based Ferrari designer Pininfarina SpA to move beyond its roots in tractors.

China has identified the new-energy vehicles, which it defines as plug-in hybrids, all-electric and fuel-cell vehicles, as a strategic industry to promote its goal of energy security and pollution control. The government has targeted for 5 million EVs to ply its roads by 2020 and poured in billions in consumer subsidies, research and development grants, and construction of charging infrastructure.

For Mahindra, manufacturing in China is a necessary step because imported automobiles are subject to a 25 percent duty and don't qualify for government subsidies, making them less attractive against locally produced vehicles. That's especially for mass-market models such as those sold by Mahindra, which compete on price. China requires foreign automakers set up joint ventures with local partners to manufacture vehicles.

Highly Competitive

"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 who's advised auto industry executives. "For Mahindra, what matters most is learning from the Chinese market. Eventually, Chinese electric-car companies will enter the Indian market."

Mahindra Electric began selling the e2o in the U.K. in April. The three-door hatchback, conceived as an electric city car, starts from 12,995 pounds ($16,100). The company introduced its first electric sedan, the eVerito, in June with a starting price of 950,000 rupees ($14,200) in New Delhi.

In India, electric cars will gain popularity as air quality worsens, Mathew said. The government should consider following other countries in offering incentives for battery production and address a lack of charging infrastructure, he said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)