India’s Mahindra & Mahindra could consider investing in a battery-cell company to meet future electrification needs, its CEO said, after the company raised funds for its new electric vehicle (EV) unit at a $9.1 billion valuation.

Mahindra on Thursday raised $250 million from British International Investment for the unit and is exploring a partnership with Volkswagen AG to source such EV components as batteries and motors.

While the Volkswagen deal would meet Mahindra’s “short to medium term” battery needs, Mahindra CEO Anish Shah said the company was open to looking at some sort of “investment with a global leader” in the battery-cell space if it needed to secure future supplies.

“Our intent is not to get into (manufacturing) batteries,” Shah said in an interview. “There are people who do it very well. We can partner with them; we could be a co-investor in some form. We don’t need to own it and run it.” Mahindra plans to launch five electric sport-utility vehicles (SUVs) over the next few years. These models are expected to contribute up to 30%, or about 200,000 units, of its total annual SUV sales by March 2027.

Growing demand for EVs and disruption of supply chains across the globe are pushing automakers to look at ways of having greater control over supplies and costs. Some carmakers are spending billions of dollars on mines and factories for motors and batteries - a departure from years of relying solely on suppliers.

Automakers are also wary of situations like the pandemic semiconductor shortage that lead to production stoppages. Many companies still face order backlogs because of supply problems.

Shah said that, except for batteries and motors, most of components for EVs were not very different from those of combustion-engine cars and Mahindra produced a majority of those parts in-house.

“If we can get an agreement like we have with Volkswagen to secure (battery) supplies, that’s what we will do. If there’s some investment we need to make to secure those supplies, we will do that,” he said.

Mahindra’s plans come as Indian companies seek to capitalise on billions of dollars worth of incentives being offered by the government to build EVs, part of a policy to meet national climate change and carbon reduction goals.

Mahindra and Mahindra aims to lead sales of electric sport-utility vehicles (SUVs) in the country, its CEO said on Friday, a day after the automaker raised money for its new electric vehicle (EV) unit at a $9.1 billion valuation.

The Mumbai-based company sells some of India’s most popular combustion engine SUVs, including the Scorpio and Thar, and now plans to dominate the EV sector with similar models.

“We are very confident we will take leadership in this space,” Mahindra Chief Executive Officer Anish Shah said during a press briefing.

“This is not just one investment. This is also the starting point. We will bring in more investors at higher valuations as we go forward,” he said.

Mahindra is the latest Indian automaker to tap global green funds by hiving off its clean mobility business into a separate unit, taking a page from its rival Tata Motors’ playbook which last year raised $1 billion from TPG’s Rise Climate Fund at a valuation of about $9.1 billion.

The move also comes as companies seek to capitalise on billions of dollars worth of incentives being offered by Prime Minister Narendra Modi’s government to build EVs, as India looks to meet its climate change and carbon reduction goals.

India’s EV market, dominated by Tata Motors, represents only 1% of the country’s annual sales of about 3 million vehicles. The government wants this to grow to 30% by 2030.

Separately, with Tesla registering phenomenal growth over a year, the electric vehicle (EV) shipments grew 79 per cent year-on-year (YoY) in the first quarter of 2022 to reach 1.95 million units, says a new report. According to market research firm Counterpoint, of these, battery electric vehicles (BEVs) accounted for 73 per cent and plug-in hybrid electric vehicles (PHEVs) for the rest.

“With EVs comprising just 12 per cent of the total passenger vehicle shipments during the first quarter of 2022, there is a lot of scope for expansion. Fresh players are entering the market to benefit from the opportunity,” Senior Research Analyst Soumen Mandal, said in a statement.

“To counter new entrants, existing players are using leading-edge technologies to have improved battery, superior IVI system, and higher levels of ADAS in their EV models as major selling points,” Mandal added.

Tesla is currently the global EV market leader. The company’s shipments grew 68 per cent YoY in the first quarter and are expected to cross 1.3 million units by the end of 2022.

BYD Auto emerged as China’s top EV seller during the first quarter. Its EV shipments increased by a whopping 433 per cent YoY to reach more than 0.28 million units.

China remained the market leader in EV shipments, followed by Europe and the US. China’s EV shipments increased 126 per cent YoY in the first quarter of 2022 to reach more than 1.14 million units from just 0.5 million units in the first quarter of 2021.