Ashok Leyland will continue to fund Switch Mobility, consider investors at right valuation later, says MD & CEO

Switch Mobility launched its double decker bus in Mumbai and other cities

Commercial vehicles maker Ashok Leyland will wait for valuations of electric vehicle companies to become more attractive before approaching the market to raise funds for its Electric Vehicle (EV ) arm Switch Mobility, the company’s top executive told Moneycontrol.

“We are not in a hurry to find an investor, because the way we are growing Switch and our other company, we have enough funds to invest. Secondly, we know that if we are more patient, the valuations in electric space will be better,” Shenu Agarwal, MD  and CEO, Ashok Leyland, told Moneycontrol on the sidelines of the SIAM annual convention.

It was earlier reported that Ashok Leyland will evaluate further investments in Switch Mobility, after a fund infusion of Rs 1,200 crore in the maker of electric buses in India and the UK, even as it remained open to external investments in the company.

Talking about the EV startups or hived off entities worldwide that have been struggling for funds, Agarwal said, “The kind of projections that they had been given in the global market are not even close to those (figures). So, it's not about funding winter. I think some companies have over-estimated some of these (EV) businesses, and are now coming to reality.”

The Hinduja Group flagship firm has launched IEV3 and IEV4 and is now working on a higher-tonnage electric light truck in the ‘Partner’ LCV category. Just like its e-buses, all the battery driven trucks will also be under Switch Mobility.

No near-term plans for battery localisation

Meanwhile, the CV maker is adopting a measured approach towards battery technology localisation. The company said its immediate priority is to develop in-house capabilities to design battery modules and packs using battery cells before venturing into the EV powertrain business.

“The first thing that you need to do before you even start thinking of investing in localisation of battery or pack is to develop the capability in-house. There are very few people who have the expertise of even creating a module or a pack from a battery cell. We have already started developing that capability (and) once we know that we have sufficient in-house strength to design a pack from a cell, the next step after that would be to invest in a pack manufacturing facility,” said Agarwal.

However, he clarified that battery development is not contingent on the battery cell chemistries in the EV market. “Instead of being forced to create a particular type of vehicle which is dependent on a particular type of battery pack, we are designing the perfect vehicle. Once we have that capability, we will not shy away from investing and creating a manufacturing unit of batteries,” Agarwal said.

At present, Switch Mobility's electric vehicles use a variety of battery technologies, including sodium-ion, modular, and NMC chemistry batteries.

“We just don't want to jump into something where we have a factory but it relies on foreign competence. We have to develop that capability, first design capability, then after that we will explore investments,” he said.

Meanwhile, Ashok Leyland has raised its capex guidance to Rs 800-1,000 crore to work on electric CVs and other technologies. “While we need to invest in electrification and the LNG side of business, we are also doing good pilots on hydrogen. Apart from setting up centres of excellence, some part will also go into sustenance activities,” Agarwal said.