Fleet operators set to spark Mahindra Electric’s growth
Facing stagnancy in sales of electric vehicles in the passenger segment, Mahindra Electric is toying with the idea of selling them to fleet operators such as Uber, Ola, Zoomcar and others. Accordingly, it has entered into an agreement with Zoomcar.
Cars which can be bought by individuals to be hired out under the rental platform can obtain customised financing by Mahindra Finance — another Mahindra Group company.
“The tie-up with Zoomcar is significant and is crucial to drive future growth of the company,” Mahindra Electric Chief Executive Officer Mahesh Babu said.
The company was able to sell more than 4,000 vehicles, of which 1,300 were passenger cars, in the last financial year. The figure accounted for around 0.5 per cent of the sales volume of Mahindra & Mahindra in the period.
The CEO expects the sales volume to double this year, riding on optimism over adoption of electric vehicles in many states, coupled with state government incentives. However, this year the growth story will be written by commercial vehicles and sales to fleet operators.
“The passenger car sales have been stagnant, while the sale of commercial vehicles has more than doubled, and institutional sales have been good. Now, we will be focusing on sales to fleet operators, and this is expected to drive growth,” he said. Since the acquisition of Reva Electric Car Company from the Maini family in 2010, which marked its entry into the electric cars segment, Mahindra Electric has been able to sell 4,500 cars, currently running on the roads, and has lined up an additional investment of ~6 billion to enhance its electric car portfolio.
A significant portion of Babu’s optimism arises out of its recent partnership with Zoomcar, which has set a target of building a significant fleet of electric cars.
Greg Moran, CEO at Zoomcar, said his company, which offers self-driven car rentals sourced from individual owners, has targeted a fleet size of 15,000-20,000 electric vehicles by 2020.
"Currently, electric vehicles account for less than 10 per cent of the total fleet size. But by next year, it will scale up to account for 25 per cent of the total fleet. By 2020, we plan to increase the contribution of electric vehicles to our fleet to 50 per cent," Moran added.
Zoomcar's current fleet size is 4,000 cars, which Moran plans to increase to 30,00040,000 by 2020.
The biggest disadvantage of electric vehicles is the limitation of charging stations and points and the run-time of cars on a single charge, which is slowing down its adoption. Typically meant for intra-city commutation, e2oPlus, Mahindra Electric's flagship model, can cover a 100-km distance on a single charge.