SEOUL, July 11 (Reuters) – South Korean battery maker LG Energy Solution (373220.KS) is set to supply batteries to Mahindra & Mahindra’s (MAHN.NS) first electric sports utility vehicle (SUV), a source familiar with the matter said on Monday.
The batteries will power the Indian automaker’s XUV400 SUVs, likely scheduled for delivery between the fourth quarter and January, the source said.
The source, who did not confirm the size of the supply deal, declined to be identified as the plans were not yet public.
Before LG Energy Solution was split off from its parent company LG Chem (051910.KS), Mahindra in 2018 signed a deal with LG Chem to collaborate on the supply and technology of lithium-ion batteries based on nickel, cobalt and manganese chemistry, according to a Mahindra statement.
LG Energy Solution declined to comment. Mahindra did not immediately respond.
Mahindra last week raised $250 million from British International Investment for its new EV unit at a valuation of $9.1 billion.
The automaker has plans to launch five electric SUVs over the next few years starting with the XUV400 in September. These models are expected to contribute up to 30%, or about 200,000 units, of its total annual SUV sales by March 2027.
Its chief executive told Reuters in an interview that Mahindra could consider investing in a battery-cell company to meet future electrification needs.
India’s Mahindra & Mahindra (MAHM.NS) 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 (VOWG_p.DE) 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.
India’s EV market, dominated by local carmaker Tata Motors (TAMO.NS), represents only 1% of the country’s annual sales of about 3 million vehicles. The government wants this to grow to 30% by 2030.