The electric vehicle (EV) market in India has predominantly been concentrated in major cities such as Delhi, Mumbai, Bangalore, and Hyderabad. However, there’s a notable shift, with Mahindra & Mahindra observing that the next wave of EV expansion will originate from Tier-2 cities.
Tier-2 Cities: The New EV Hubs
According to reports, Nalini Kanta Gollagunta, CEO of Mahindra’s automotive sector, highlights that cities including Bhubaneswar, Indore, Jaipur, and Meerut are becoming important centers for EV demand. Smaller cities provide easy access to dedicated parking, which makes it simpler to install home charging setups. Furthermore, shorter daily commutes and improvements in highway infrastructure are accelerating EV adoption. Many customers in these areas are in the over 20 lakh rupee price range, which makes purchasing electric cars accessible without significant hurdles.
Mahindra’s Three-Tiered Approach
For Mahindra, this trend reinforces its EV strategy. The company achieved a 41% revenue market share in the EV segment in Q1. This success is based on its three-tiered product approach.
Pack 3: Premium segment (e.g., BE 6 and XEV 9e), launched to strengthen the company’s EV brand.
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.
Premiumization Strategy
Mahindra focuses on positioning EVs as premium products rather than simply affordable options. Pack 3 models have successfully established EVs as desirable products for customers. Pack 2 now offers affordability while maintaining a premium touch, especially for Tier-2 cities where EV adoption is growing. Pack 1 is poised to attract a broader customer base in the future.
This is reflected in its SUV lineup, with the Scorpio being the volume driver while the XUV700 and Thar have appealed to younger buyers. The 3XO hit the 1 lakh unit mark within a year, demonstrating the balance between premium and mass-market appeal.
Challenges and Opportunities
Despite the significant opportunities, there are challenges. The reduction in GST for larger ICE SUVs may narrow the price gap between EVs and ICE vehicles. However, Mahindra believes that with the inclusion of features and tax benefits, EVs are competitively priced against ICE vehicles in 60% of the market.