Mahindra CEO Rajesh Jejurikar: E3W Price Increase Won't Dampen Demand

Key Highlights:
•    Mahindra's CEO says the price rise for electric three-wheelers won't affect demand.
•    The price hike is due to reduced subsidies from the new EMPS scheme.
•    Despite the Rs 15,000 increase, demand remains strong due to low ownership costs.
•    Mahindra expects PLI scheme benefits to offset reduced government support.
•    Mahindra plans to add 40 new exclusive dealerships to expand its market.

Rajesh Jejurikar, Executive Director and CEO of Mahindra & Mahindra's Farm and Auto sectors, stated that the price rise for electric three-wheelers would have no effect on demand.

Speaking at the company's Q4 and FY24 results meeting in Mumbai, Jejurikar said that even with the slightly higher costs, they have observed the impact on the customer's per month EMI.

"The payback is only a few months. As a result, we do not see the slight price or EMI increase that we implemented having any effect on demand. We've made that correction, and demand remains strong, so we're not concerned," he said.

Transition from FAME2 to EMPS

He stated that, despite a Rs 15,000 price rise caused by the transition from the government's FAME2 to the new Electric Mobility Promotion Scheme (EMPS), demand for electric three-wheelers remains strong, backed by a low total cost of ownership.

Government Subsidy Cuts

Many electric three-wheeler manufacturers, including Mahindra & Mahindra, were compelled to raise prices after the Indian government halved subsidies for electric three-wheelers and two-wheelers. 

The EMPS scheme now offers up to Rs 25,000 in support for e-rickshaws, down from Rs 50,000 under FAME 2. Similarly, subsidies for small freight and passenger vehicles have been reduced to Rs 50,000 from Rs 95,000.

Mahindra & Mahindra confirmed lowering its electric three-wheeler costs, along with other industry participants, in reaction to the government's halving of subsidies as it transitions from the FAME 2 scheme to the current EMPS scheme.

When questioned if the introduction of new players and coupled price increases would hinder growth in FY25, he stated that demand remains high. 

PLI Scheme Benefits

Addressing the potential benefits of the Production Linked Incentive (PLI) scheme for the auto sector, Mahindra & Mahindra has received all necessary eligibility certifications. The company expects to begin reaping these incentives during the current fiscal year, helping to offset the reduction in government support for electric three-wheelers under the EMPS program.

A senior corporate executive stated that this would help offset a decline in government support for electric three-wheelers under the new EMPS program, with long-term prospects for electric mobility remaining good, bolstered by healthy demand from various e-commerce players.

Market Expansion Strategy

The official also stated that Mahindra & Mahindra, as part of its electric three-wheeler business, is looking to continuously scale up its dealer network by adding 40 LMM exclusive dealerships, according to a senior company official discussing the company's network expansion strategy to increase its market penetration.

Also Read: Mahindra & Mahindra Plans to Launch 7 New Light Commercial Vehicles

CMV360 Says

Mahindra's recent price increase for electric three-wheelers, driven by reduced subsidies under the new EMPS scheme, is unlikely to impact demand significantly. CEO Rajesh Jejurikar emphasized that the minimal effect on monthly EMIs and the vehicles' low total cost of ownership ensure continued strong demand.

Additionally, the company's strategic expansion, including 40 new exclusive dealerships and anticipated benefits from the Production Linked Incentive (PLI) scheme, positions Mahindra to offset the subsidy cuts and maintain its market growth trajectory.