Interview: Rajesh Jejurikar, Executive Director and CEO (Auto and Farm Sector), Mahindra & Mahindra | Autocar Professional


Interview: Rajesh Jejurikar, Executive Director and CEO (Auto and Farm Sector), Mahindra & Mahindra | Autocar Professional

Mahindra & Mahindra which has had a slow start in the electric vehicle (EV) race with the XUV 400, aims to step on the accelerator to up its zero-emission game in 2024. ­­The plan is to unleash over a half a dozen EVs in the coming three years.

With an updated XUV 400 round the corner and the ground up BEVs taking shape, Rajesh Jejurikar, Executive Director and CEO (Auto and Farm Sector) at Mahindra & Mahindra shares his insight on how the company aims to retain its edge on the internal combustion engine, role of hybrids and how the company intends to use the lead in internal combustion engines (ICE) to leapfrog into the EV space with its well proven attributes of design, tech and value aiming to create new segments in the market.

What is your view on the current demand environment for SUVs­­?

Anything beyond Rs 13 to 14 lakh, the demand is very strong, however below Rs 10-12 lakh is a bit of a stretch — I think it is because of the inflationary pressure. It will probably take a few months for that segment to pick up. Right now, we have only two products that are placed in that segment, the Bolero Neo and XUV 300. From an offtake point of view, we remain positive.

The booking for the Thar four-wheel drive continues to remain strong and it has gone back to its earlier level, the rear wheel drive has got new customers, that is what is keeping the booking pipeline going for Thar. We are selling about 6,000 units per month and we are fully maxed out on that capacity.

The XUV 700 demand continues to be very strong on the higher end version. We have been able to bring down the waiting period, below the AX7, AX7L, but the demand is very high on the top end as we ramp up. That is one of the challenges we had. We are not getting the right mix from a supply point of view.

The big surprise has been the Scorpio Classic. We are getting very healthy bookings for the model, maybe it is the combination of the refreshed look and the aspiration value created by the Scorpio N — which has got demand going. We had thought that once we start supplying the lower end of Scorpio N, which we had not done in the first five months after the launch, there will be an impact on the Scorpio Classic, but that has not happened. We are actually seeing two segments emerge. They are different and they are not cannibalising, that is why we are seeing the Scorpio booking numbers grow. In our mind, it was a watch out — will people buy Scorpio classic? It is clearly playing out differently than we thought.

Our booking momentum continues and we have a healthy order book of 1.86 lakh units and the cancellations have remained below eight percent.

With strong booking numbers, how do you intend to cater to higher demand?

What we have shared so far is the capacity that will be ready by the end of March, which is 49,000. There will be new capacity that will come up next year, as we bring in the Thar 5-door and subsequently for EVs, there is a capacity plan which is higher than this, which we will share as we touch 49,000 around March. The current capex has been triggered, we will have a reasonably fresh capacity increase, which will cater to both EV and ICE in the future.

What is the update on the XUV 400 and how will the new Born EVs be positioned?

We wanted to back-end our sales towards the end of the year. We had said that for a reason. We wanted to make a set of upgrades to our products, which are on the way. There are other changes and upgrades planned. We will see an uptick on the volumes going ahead, they are intentionally low at the moment.

This segment that we are playing in, it is not easy, for a variety of reasons. The EV to ICE conversion does not give you the cost structure and exact product that you want.

They are incomparable. We have thought through the Born EV strategy. It is a holistic strategy based on an Inglo platform, which has a very high commonality of over 80 percent, on which we are creating a series of top hats or products. As Anish Shah has said, we are developing them as world class products, some of you got a glimpse of that, a lot of media saw that in Cape Town earlier in the year.

We had shown the design intended BE05, what we had shown out as an initial proto, we had said that the final product would be 95 percent of that, and we showcased that. 

The products on Inglo are coming out exceedingly well. We have been driving that, they have been tested for over 3,00,000 kms, they are going to be a wow product. I won’t compare them to 400; they are a league apart, without trying to demean our own product.

With our BEVs, we are taking a leap in technology. These products are going to be a leap ahead in this new emerging space in the future.

How differently is M&M going to approach BEVs in the future?

Electric is a form; it is not the strategy. The electric alternative is enabling us to create products, which are going to be very tech savvy, with standout design. We think that is what will create the category. As we have done with some of our recent successful products — XUV 500, XUV 700 or Scorpio N — we have created categories where none existed. Our Born Electric strategy will be about exactly that.

We are going to be marketing them around lifestyle. We are not thinking this is an EV which has to penetrate the ICE market. That is why from our own internal strategy, EVs are a part of our total SUV mix.

We know that many of our customers fit the right profile for an EV purchase, for example coming from multi car households, range anxiety is less of an issue. They are the kind of people who want to stand out, be differentiated, so the role of tech, the role of design, is going to play a key role.

EV driving creates a completely different experience, it is super quiet, smooth, very peppy, our customers buy us for this reason. Hence they will buy our EV for the same reasons. Our BEVs offer a new lifestyle experience, which carries our brand and our brand DNA to electric.

EV penetration is still a big question mark globally, do you foresee any adoption challenges?

We are trying our best to anticipate the EV and ICE mix. We are making sure we have enough focus on ICE, even as we bring out a whole new EV portfolio, which is on schedule. We don’t think it is early, by the time we come to 2025, with the products that we would bring out, EVs will be aspirational lifestyle products, not bought because they are an EV. So it is not going to be about, if you want to buy an electric, buy this, it is going to be, I want to buy this and it happens to be an electric vehicle.

How are you future proofing your ICE business?

One of the things we may put out at some stage — the next cycle of investment — is to really assure you that we are doing enough on the internal combustion engine to make sure our products remain robust, refreshes are done periodically and there are completely new updates being planned. There are things in the pipeline, there is adequate and more than adequate focus on the ICE vehicles for the future.

Even if penetration were to reach 30 percent in the next three to five years, there will still be a very large percentage of the market that is 70 percent which will be ICE. So clearly for us that is as important. We have to fortify our position of strength.

Hence a lot of the manufacturing capacities are going to be fungible. We will be able to use it in Chakan (Pune), while there may be specific investment like the body shop, but we are creating fungibility with EV to some extent.

What is your take on the adoption challenge in the electric three-wheeler business?

The advantage in the electric three-wheeler category is that the charging infrastructure is not as important, as they operate in a limited periphery. The users do not go too far from base charging, so that is the barrier that gets overcome.

You always find the initial adoption curve in the commercial segment is always slower, once the customer gets the hang of the concept, then the inflection starts picking up – the word of mouth, etc. helps.

In the CV segment, the sales pitch of total cost of ownership (TCO) of an EV versus a TCO of a CNG and diesel is superior, but there is a limited believability, there is more fear.

But as you break through that barrier, customers start using it and you start getting word of mouth and referrals, that is when the inflection points kick in. That is what is starting to happen now.

As you see more customers benefit from the product, despite the higher upfront cost, there is a benefit. Therefore, we are very optimistic on this curve moving up, assuming the policies will remain (the same).

Peers are EBIDTA negative on their EV business. How do you see blended margin for Mahindra & Mahindra’s auto business post the launch of the EVs?

The Born EVs are coming into a separate company, so we will have to show you as we go along, the EV portfolio separately. We would want to show core auto margins, and we would want to show you EV margins separately, then we may show you blended margin together.

There would be some EV margin we would make in M&M for manufacturing or for the services offered, just like how it was when we used to publish financials of M&M + Mahindra Vehicle Manufacturers (MVML). But we can give you a view of an EV end to end – but we are still a year and half away.

What are M&M’s view on hybrids?

Hybrid is a relatively expensive product, only one company sells it at present and it is expensive. I think, for segments in which the running and usage is very high, especially the fleet, it may make sense. The fuel efficiency offsets the higher upfront investment cost. There are segments, where it makes sense — because the usage pattern allows you to get the return on the same.

For most customer usage situations, the vehicle is not being used for many kilometres. The additional cost of the hybrid may not give the return to the customers. They are not using the product enough to benefit from fuel efficiency.

For us hybrid is not a part of the sustainability initiative but it is to see how it helps in improving fuel efficiency of a product in a segment, there is a value to do a hybrid. From an overall sustainability journey to zero cost of usage, electric is the way the market will grow, as it gives a totally different driving experience, it is quieter, peppier, you don’t get that with a hybrid.

We think hybrid may be a good option for some segments, at some stage we may decide to take up hybrid programmes for products that will be playing in segments of that kind. But at the moment, we are betting on electrification, which we think will work very well on our portfolio, our customers will want many of the things our EV portfolio will offer, customers who are inclined to buy our DNA. We think that is a better path to go on to.

There are segments in which hybrid may make sense at an appropriate time, we may take programmes on, we are not doing a lot on that at the moment. We want to get the first cut of our EVs out.

Is M&M getting the PLI benefit?

We have received a PLI certificate for our three-wheeler or the Last Mile Mobility business. We have not yet applied for the final certification for the XUV 400, but we will do it closer to the end of the next quarter, we are hopeful that we will receive it at the end of the last quarter of FY24.

This interview was first published in Autocar Professional’s December 15, 2023 issue.

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