Tata Motors and Mahindra Clash in Bidding War over Government EV Contract

author: Michael Cheng   

Governments play powerful roles in the automotive industry. In India, the Narendra Modi government launched a colossal project to promote its 2030 sustainable transportation goals. The move comes with a large purchase order of 10,000 EVs, via the Energy Efficiency Services (EESL) agency.

Such a request, naturally, caught the attention of local and international automakers. A competitive bidding war followed, led by Tata Motors, Mahindra & Mahindra (M&M) and Nissan. In the end, Tata Motors won the bid, with the lowest offer, and was awarded the contract.

"Tata Motors is extremely proud to partner with the government of India in its journey to facilitate faster adoption of electric vehicles and to build a sustainable India," said the company.

But in a surprising last-minute twist, M&M buckled and matched Tata Motors' quote, resulting in two winners. According to M&M managing director Pawan Goenka, the company will not be making any money from the 150 EVs supplied to EESL (Tata Motors will be supplying 350 EVs in Phase I).

Tata Motors and M&M

During a conference call earlier this month, M&M's Goenka provided more information about the bidding war. Initially, before the price match, the car company's bid was Rs2.3 lakh higher (per EV ordered) than Tata Motor's offer, which came in at Rs10.16 lakh per unit.

"We find the pricing of the L1 [Tata Motors] bidder very difficult to comprehend," cited Goenka.

It's important to highlight that M&M was the only participant to place a bid for all 10,000 EVs. Tata Motors only targeted half of the entire order at 5,000 EVs.  

M&M has an opportunity to place a bid for the Phase II supply of the order. However, due to crippling losses that will come with fulfillment, the business will need to reevaluate its options before moving forward the project. Absorbing the losses, while fulfilling the EV order, could open numerous exclusive opportunities for the automaker. Tata Motors did not reveal whether or not it will earn from the order.

EESL Tender Details

Fulfillment of the tender is broken down into Phase I and Phase II. As mentioned earlier, Phase I involves the delivery of 500 EVs by Tata Motors and M&M, which is due at the end of November, later this year. Phase II requires the fulfillment of 9,500 EVs.

"As per the tender conditions, Mahindra and Mahindra can supply up to 40 per cent of the order. But they have agreed to supply 30 per cent of the order of 500 electric cars in Phase-I. Thus they would supply 150 cars and Tata Motors would supply 350 cars," said Saurabh Kumar from EESL.

Other terms of the tender includes an extensive 5-year warranty per EV. Moreover, the agency will launch another bidding war for a fleet management service provider contract for the entire EV fleet. Based on a press document released by the Government of India's Ministry of Power, the 10,000 EVs will serve as replacement for official government vehicles. The transition will take roughly 3-4 years to complete.  

Michael Cheng

Michael Cheng is a legal editor and technical writer with publications for Blackberry ISHN Magazine Houzz and Payment Week. He specializes in technology business and digesting hard data. Outside of work Michael likes to train for marathons spend time with his daughter and explore new places.