Mahindra & Mahindra Ltd has entered the high growth electric car segment with the acquisition of a majority stake in the Bengaluru-based, REVA Electric Car Co Ltd, which will be renamed Mahindra REVA Electric Vehicle Co Ltd.
As a part of the deal announced on Wednesday, M&M will own 55.2 per cent equity in REVA by a combination of equity purchase from promoters and a fresh equity infusion of over Rs 45 crore into the company.
The buyout will make M&M a strong global contender in the electric vehicle (EV) space, which according to industry estimates will touch 1.5 – 2 million units by 2020 from an insignificant number at present.
The acquisition gives the Mahindra Group access to EV technology, more so at a time when most auto OEMs globally are looking at developing EVs to tackle environmental concerns, notes brokerage firm Batlivala & Karani. However, the brokerage firm voiced doubts over REVA’s agreement with General Motors announced last year.
“While REVA will gain from Mahindra’s vehicle engineering expertise, global distribution network, sourcing clout and financial support, it remains uncertain as to what will happen to the agreement between REVA and GM on developing an electric hatchback.
“Our sense is that M&M would not like to work with a competitor,” said Mr Bhaumik Bhatia, analyst with Batlivala & Karani.
Mr Chetan Maini, chief of technology & strategy, of the newly formed Mahindra REVA confirmed to Deccan Chronicle that with this new development, GM will now look out for other partners.