The International Finance Corporation (IFC), part of the World Bank Group, will invest in ¥6 billion in a new last-mile mobility company owned by the Mahindra Group. The Indian conglomerate plans to use the investment to scale up more affordable electric three-wheelers and small commercial vehicles. The last mile travel company will be newly incorporated (NewCo) and become a wholly-owned subsidiary of Mahindra & Mahindra.
This is IFC’s first investment in electric vehicles in India and the first investment in electric three-wheelers globally.Investments will be in the form of mandatory convertible instruments valued at up to ¥60.2 million, which would result in ownership between 9.97% and 13.64%.
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Mahindra’s new last-mile mobility company will integrate the brand’s existing electric three-wheelers, including the Alfa, Treo and Zor, with the low-cost four-wheeler Jeeto. IFC’s new investment will help expand the development and manufacturing of next-generation products in this area. According to the company, this in turn will help boost the micro-entrepreneur segment and especially help create job opportunities for women.
Commenting on the investment, Anish Shah, Managing Director and Chief Executive Officer, Mahindra & Mahindra said: “We are delighted to have IFC as our partner in the last mile mobility journey. Our climate goals are critical. Focused on sustainable development and promoting prosperity, IFC is an ideal partner. With the mass electrification of last-mile mobility, we will move closer to becoming a ‘Protecting the Planet’ by 2040 commitment. It also presents a huge growth opportunity for micro and women entrepreneurs.”
Hector Gomez Ang, Regional Director for South Asia at IFC, said: “With transport becoming the fastest-growing contributor to climate change, the question is no longer whether electric vehicles should be adopted at scale, but how quickly. India is the world’s largest In the three-wheeler market, this investment marks an important step towards the domestic scale production of electric vehicles for this segment, as well as small commercial vehicles. By supporting leading market players, IFC hopes to encourage other major automakers to follow suit, Drive the adoption of electric vehicles in India and help the government meet its climate goals.”
Rajesh Jejurikar, Executive Director and CEO (Automotive and Farm Sector), Mahindra & Mahindra, added: “The last mile mobility business presents a huge opportunity in both electrification and growth. As the market leader in this segment, we have the opportunity to Drive higher adoption of electric vehicles in this sector and provide micro-entrepreneurs with more sustainable and profitable options. We are pleased to leverage the World Bank Group’s expertise in electric vehicles to create a robust a viable ecosystem of environmental and social practices, and as a means of accumulating knowledge, innovation and capacity.”
The new last-mile mobility company is also showing potential as e-commerce businesses grow and small towns urbanize. This will create new demand and opportunities for electric two- and three-wheelers as last-mile connectivity solutions. Mahindra also said that with the advent of electric two- and three-wheelers, there will be less air pollution due to less dependence on oil imports. Currently, the transport sector accounts for around 13% of the country’s greenhouse gas emissions.
First published date: March 22, 2023 at 15:24 PM CST