Not looking for investors now; equity infusion will drive Switch Mobility's future, says Dheeraj Hinduja

Chennai-based Ashok Leyland, which has approved an equity infusion of Rs 1200 crore in its electric vehicle arm, Switch Mobility, has currently put a pause on raising external funding for the time being as it believes that it is enough to meet its development needs for the coming few years. 

Dheeraj Hinduja, the Executive Chairman of Ashok Leyland, clarified in a post-results conference call, that the current infusion will help Switch Mobility meet its development needs for the coming few years and that it is not on the lookout for an investor at present.  

"This infusion gives further confidence that the business plan for Switch Mobility is robust. The launch of LCVs will garner much higher volumes in the future. We have an order book of 10,000 E LCVs, and with the launch of the electric buses in the European market, bus orders from the UK and India will further boost volumes," added Hinduja.  

Autocar Professional reported in July this year that, having engaged over a couple of dozen investors over an 18-month period, Ashok Leyland decided to infuse funds into Switch Mobility to cater to its growth plans. 

Speaking to the media at the time of the Q1 results, post the earnings call, Hinduja stated that the company's EV business under Switch Mobility is crucial for future-proofing the company. He added that while they continue to look at external investors, the Ashok Leyland board has approved an in-principle investment in Switch Mobility. The business has been looking for a financial partner for a while. Dana, a US-based manufacturer of drivetrains, has taken a one percent share in Switch Mobility for $ 18 million in July 2021.

While Switch Mobility's bus business remains robust, the company has plans to produce around 3,000 units per year of its IeV series electric light commercial vehicles and has already invested Rs 100 crore in developing the products.

According to the plans, manufacturing will take place at Ashok Leyland's Hosur site, which will undertake some contract manufacturing of the vehicle, while Switch Mobility will do the assembly of its EV parts. The IeV series will be built on a modular architecture, thereby allowing it to accommodate a wide range of applications and scalability. The targeted segment includes cargo, containers, garbage vans, and refrigerated vans, among others. 

The Board of Directors of Ashok Leyland, in their meeting held on Thursday approved an investment of Rs 1200 crore in Switch Mobility as equity through its
holding company, Optare PLC UK.

The funds infused will be used for capital expenditures, R&D and meeting operational requirements both in the UK and India. The funds will be infused
over the next few months, after necessary statutory approvals in one or more tranches, the company said in a statement.

As of date, Switch in India and UK has over 800 plus buses plying successfully and has an order book of over 1200 buses. Switch India had a successful launch of India’s only double-decker e-bus last year.   

In September 2023, Switch India launched its state-of-the-art e-LCVs. The company has signed MoUs (Memorandum of Understanding) of over 13,000 vehicles for its much-awaited e-LCVs, which it will start delivering from the fourth quarter of the current fiscal. 

Dheeraj G Hinduja, Executive Chairman, Ashok Leyland, stated, "“Electric Vehicles
especially in buses and light trucks, have a very bright future as Governments and private customers are driving the green agenda. We are very happy with the progress made by Switch, and we will continue to invest in building its capabilities. We are confident that Switch will grow further in the European markets with the launch in 2024 of our new E1 12-metre bus developed specifically for the European market Our portfolio of electric buses will cover value and premium segments meeting all price points for many global markets.”

Shenu Agarwal, Managing Director and CEO, Ashok Leyland, said, “The market for EVs is growing rapidly, driven by the trend towards carbon neutrality. The government's support is further helping the market to expand. We will continue to build capability in this business by investing in product development as well as in expanding operations. Both India and European markets are going to be important growth centres for EV trucks and buses. In the In the coming year, we are expecting our e-LCVs to drive faster customer adoption. The balance
sheet of Ashok Leyland can comfortably fund the initiatives of Switch.”

Talking about the electrification adoption, Hinduja did admit that the transition toward electrification has been slower than expected – but it depends from country to country. As for India, he said, "We have been a positive surprise towards electrification in the country. We expect that the penetration will be to the tune of 20 percent in buses by the end of the decade."