By John D. Stoll
MIAMI--At first blush, Mahindra & Mahindra Ltd. and the
FIA's Formula E racing series are strange bedfellows.
Mahindra is India's biggest sport-utility seller and best known
in the U.S. for its small tractors. It also has a big IT business
in the U.S., a startup scooter company, and a stable of other
businesses.
Formula E race cars are among the most progressive machines on
any racetrack in the world. In a series that began late last year,
drivers from 10 teams--including powerhouses like Audi AG, Renault
SA and Andretti Autosport--race high-performance electric cars for
an hour at a 140 mph top speed; they need to finish without running
out of battery power.
Mahindra is one of the first auto makers to have invested
millions into participating in the series. The move is less about
racking up victories, and more about preparing to take a big step
in a higher-stakes game. In the race to create a more viable global
electric-car market, Mahindra wants to be the low-cost answer to
Tesla Motors Inc.
Mahindra's $10,000 e2o is the only pure battery-operated car
built in India, a nation with big electric-vehicle ambitions that
has been slow to initiate incentives to accelerate demand. This
summer, Mahindra will launch the city car in London, with hopes
that the subcompact is a launchpad to mature markets that have been
hard to crack with Indian vehicles carrying conventional
powertrains.
"Mahindra is eager to become a global brand," Pawan Goenka, the
company's longtime automotive chief, said during an interview
before the latest Formula E race here Saturday. "If we were to do
it through electric vehicles, it may be an easier thing than to
come through the mainstream."
The move to mature markets will be challenging and could be
costly. Mr. Goenka has had lackluster support from the Indian
government and there is little local competition, so he needs
Formula E to help him navigate potential potholes.
Regulations in the U.K., for instance, likely require
significantly more safety equipment, and that will add
performance-sapping weight and cost to a car meant to appeal to
both the conscience and the pocketbook.
A broad swath of companies--ranging from General Motors Co. to
China's BYD Co. Ltd--are betting on electric cars as a way to
broaden appeal, meet regulations or enter new markets. The number
of auto makers offering viable electric cars by 2020 is expected to
balloon, but there is no guarantee demand will follow.
Mahindra's e2o is modest, with a 50-mph top speed and room for
four passengers. Smaller than a Ford Fiesta, the car can travel 75
miles on a five-hour charge, 9 miles shy of Nissan Motor Co.'s much
pricier, and roomier, Leaf. Mahindra has been working on electrics
for two decades, but its ambitions were jump-started when it
purchased control of REVA Electric Car Co. in 2010.
A trip down to pit row illustrates why the e2o's maker is eager
to race with the big boys. It is also a reminder of how far the
auto maker and its rivals have to go before electric cars are
viable for the mass market.
Dilbagh Gill, a former driver now running Mahindra's racing
effort, stood next to two of the team's cars a couple of hours
before the race as crew members made final preparations. The most
important task was charging batteries that, when fully charged,
could power an iPhone for 270 years, according to Mr. Gill.
On the track, however, the batteries last 30 minutes. Each
driver has two cars, swapping machines at the race's midpoint.
"If you're too aggressive, you're going to run out of battery
juice too soon," Mr. Goenka said. "And if you're not aggressive
enough, then you won't win the race."
In Mr. Goenka's view, the race in the marketplace is a battle of
cost. Producing Mahindra's e2o, he says, costs $3,000 to $3,500
more than a similar conventional car, and the premium needs to fall
by two-thirds.
"I believe the customer would be willing to pay $1,000 or so,"
he said. Auto makers must be able to drop prices to a point where
government subsidies aren't driving the market.
"Subsidies cannot last forever," he said. Companies like
Mahindra, which sell the bulk of its cars in emerging markets, have
a jump on building lower-cost cars, and Mr. Goenka said this is a
unique advantage.
Joining the FIA's Formula E circuit also helps because Mahindra
can share in the significant investment the race series is making
in electric-vehicle technology. That kind of collaboration has been
lacking in India, which introduces an incentive for electric
vehicles on April 1, the first of its kind in India.
Mr. Goenka said Indian policy makers "have started with small
budgetary allocation but have a rather large master plan."
Regulators aim for four million to five million electric vehicles,
including two-wheelers, by around the turn of the decade.
"India probably needs electric vehicles more than any other
country." Dependence on foreign oil and pollution are two reasons
for the nation to go electric, he said.
For now, Mahindra's effort in its home market is stuck in the
slow lane, reflecting struggles Nissan and GM have experienced in
sustaining consistent demand. Mahindra sells about 75 e2os per
month in India.
Write to John D. Stoll at john.stoll@wsj.com
Access Investor Kit for BYD Co. Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE100000296
Access Investor Kit for BYD Co. Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE100001526
Access Investor Kit for AUDI AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0006757008
Access Investor Kit for Volkswagen AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0007664005
Access Investor Kit for Volkswagen AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0007664039
Access Investor Kit for Renault SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=FR0000131906
Access Investor Kit for Mahindra & Mahindra Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=INE101A01026
Access Investor Kit for General Motors Co.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US37045V1008
Access Investor Kit for Tesla Motors, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US88160R1014
Access Investor Kit for Volkswagen AG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9286623031
Subscribe to WSJ: http://online.wsj.com?mod=djnwires