The narrative of electric vehicles (EVs) in India has primarily been confined to metropolitan areas such as Delhi, Mumbai, Bangalore, and Hyderabad. However, recent developments suggest a shifting landscape. Mahindra & Mahindra’s experience indicates that the next surge in EV adoption in India will originate from Tier-2 cities.
Tier-2 Cities Emerge as EV Hubs
According to reports, Nalini Kanta Gollagunta, CEO of Mahindra’s automotive sector, highlights that cities like Bhubaneswar, Indore, Jaipur, and Meerut are emerging as new centers of EV demand. Smaller cities offer the advantage of readily available dedicated parking, simplifying the setup of home charging stations. Moreover, the increasing prevalence of short-distance daily commutes and improvements in highway infrastructure are accelerating EV adoption. Many customers in these areas fall within the price bracket exceeding 20 lakh rupees, making the transition to electric cars feasible without significant obstacles.
Mahindra’s Three-Tier Strategy
For Mahindra, this shift reinforces its EV strategy. The company secured a 41% revenue market share in the EV segment during Q1. This success is built upon its three-tier product approach.
Pack 3: Premium segment (e.g., BE 6 and XEV 9e), launched to strengthen the company’s EV identity.
Pack 2: Mid-range EVs, expanding the customer base and increasing sales from 3,500 to 4,000 units per month.
Pack 1: Entry-level EVs, tailored for first-time EV buyers.
The Premium Formula
Mahindra has focused on positioning EVs as premium products rather than merely affordable options. Pack 3 models have successfully presented EVs as desirable products to customers. Now, Pack 2 maintains a premium touch while remaining affordable, particularly for Tier-2 cities where enthusiasm for EV adoption is growing. Pack 1 is expected to attract a broader customer base in the future.
This formula is also evident in its SUV lineup. While the Scorpio is a volume driver, the XUV700 and Thar have resonated with younger demographics. The 3XO surpassed the 1 lakh unit mark within a year of its launch, demonstrating a balance between premium and mass-market appeal.
Challenges Remain
Although opportunities are substantial, challenges persist. Reduced GST on larger ICE SUVs could narrow the price gap between EVs and ICE vehicles. However, Mahindra believes that with the inclusion of features and tax benefits, EVs are already priced comparably to ICE vehicles in 60% of the market.
