South Korean battery maker LG Energy Solution is set to supply batteries to Mahindra & Mahindra’s 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, 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 (roughly Rs. 2,000 crore) from British International Investment for its new EV unit at a valuation of $9.1 billion (roughly Rs. 72,200 crore).
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 percent, 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.
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 shortage that lead to production stoppages. Many companies still face order backlogs because of supply problems.
Mahindra’s plans come as Indian companies seek to capitalize 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, represents only 1 percent of the country’s annual sales of about 3 million vehicles. The government wants this to grow to 30 percent by 2030.