India, the world’s fifth-largest automobile market, plans to sell only electric vehicles (EVs) by 2030 in a bid to slash its oil bill by some $60 billion and emissions by 37%.
To kickstart this ultra-ambitious project, the Narendra Modi government decided in May this year to purchase 10,000 electric vehicles through the Energy Efficiency Services (EESL), a state-run agency. The tender floated by EESL is touted as the world’s single-largest EV procurement initiative.
On Oct. 04, EESL said Mumbai-based Mahindra and Mahindra (M&M) would join Tata Motors to sell as many as 500 electric cars to the Indian government. Tata Motors, which owns Jaguar Land Rover, will supply 350 and the rest will come from M&M, which took control of electric carmaker Reva in 2010. Earlier, Tata Motors was selected as the winner of a global bid for the project, but subsequently M&M, too, joined after agreeing to match the price offered by the former.
Tata Motors had bid Rs11.2 lakh per car and is likely to sell its Tigor sedan, developed at the European Technical Centre with help from Jaguar Land Rover. Meanwhile, Mahindra could offer its four-door e2o model and the Verito hatchback.
If these vehicles deliver, Tata and M&M may have an even bigger order to meet. “The purchase orders for supply of 9,500 electric vehicles in phase II will be issued on completion of phase I deliveries,” EESL said in a statement. “Both qualified parties, Tata Motors and Mahindra, will have the opportunity to supply their respective number of vehicles, as per the terms of the tender and Mahindra matching the lowest bid pricing for phase II.”
M&M has announced that it’ll invest between Rs3,500 crore and Rs4,000 crore in the next five years to ramp up its EV division—nearly eight times as much as it has put into this business so far. “We do believe that if we really want to make electric vehicles affordable, there will have to be few component suppliers who have scale and Mahindra wants to play a part there,” Pawan Goenka, the managing director of M&M, said on Oct. 05.
However, EVs in India average about 120km on full charge, making them unsuitable for long drives. The vehicles also suffer from a lack of speed—the top two India-made battery-powered cars have a top speed of 85km/hour, which can turn off buyers.
Only about 22,000 EV units—a mere 2,000 of them being four-wheelers—are sold annually in India, though the National Electric Mobility Mission Plan launched in 2015 hopes to increase this to up to seven million by 2020.
The industry has been hampered by the costly batteries, mostly imported, and a lack of infrastructure, including charging stations. “Owing to this challenge, we see EV demand continuing to be low in India,” a spokesperson for Tata Motors, India’s largest automaker, had told Quartz last month.