Mahindra Last Mile Mobility (LMM) is exploring capacity expansion beyond its Zaheerabad facility as electric three-wheelers gain market share, with the company expecting electrification in the passenger three-wheeler segment to reach 70-80% in the coming years, Suman Mishra, MD & CEO, Mahindra LMM, said.

The company is evaluating both brownfield and greenfield options to add manufacturing capacity as electric three-wheeler volumes increase. The company currently has an installed capacity of around 200,000 vehicles at Zaheerabad, Telangana, but Mishra said the pace of electrification has exceeded earlier expectations, requiring further investment.

"We will need more because nobody estimated that it will be 40% now. We were all thinking it will be like staying 25-35%. So, if 30 to 50% happens in two quarters, then 70% penetration is not so far away," she said.

The company is looking for land, industrial parks or adjacent brownfield opportunities while keeping the option of a new facility open. Zaheerabad has some room for additional production lines, but Mahindra LMM is assessing the broader manufacturing and supplier ecosystem before deciding where the next investment will be made.

Electric vehicles accounted for around 40% of the industry's passenger three-wheeler volumes in the first quarter, while Mishra expects the figure to reach around 49% this month.

The Zaheerabad facility is currently the company's main manufacturing hub and produces most of its three- and four-wheeler volumes, including the recently launched UDO.

Mishra said the company needs to begin planning its next phase of investment, given that building additional capacity typically takes 18-24 months. The requirement is not limited to vehicle assembly, as battery-pack and supplier capacity will also have to be scaled up alongside the increase in electric vehicle volumes.

The company is also working towards greater modularity in its electric vehicle platforms, allowing key components such as the motor, transmission and MCU to be shared across different vehicle categories.

Mahindra LMM plans to extend UDO's electrification approach to other commercial vehicle segments. Electric penetration in cargo three-wheelers is around 20%, while the N1 electric mini-truck category is at around 10%. Mishra said these segments could see increased adoption once suitable products become available, given their usage patterns. "They drive a lot of kilometres every day, they drive in smaller zones and clusters. They can park and charge it at home," she said.

Despite the adoption of electric three-wheelers in smaller cities and towns, major metropolitan areas have lower adoption, largely because of charging and parking constraints. "Metro cities are not electrifying fast enough. The issue is not necessarily lack of customer interest but the absence of dedicated parking and charging infrastructure for commercial three-wheelers," she said.

The company is working with municipalities to explore dedicated parking and charging facilities, including the possibility of using municipal parking lots to create micro-clusters for electric rickshaws.

China dependency and supply-chain resilience

The EV industry faces supply-chain challenges related to China's role in global electric vehicle components and battery technology. Mishra said Mahindra has reduced its dependence on China for its current three-wheeler portfolio. "For my 3-wheeler product, everything is made here. Except semiconductors which we are importing from everywhere else. We have also worked to eliminate dependence on permanent magnets in some applications," she said.

Mishra said supply-chain disruptions have become a recurring issue for the EV industry, with challenges involving semiconductors, magnets, PCBs and other components. "Literally every month, there is some challenge or the other. And it's not just China. Anything can happen in any part of the world," she said. The company is responding by developing alternative sources and supply-chain arrangements.

Battery technology remains an area of development, particularly in energy density and durability. Mishra said the company is testing technologies aimed at improving energy efficiency and battery life.

The company is also working to improve the residual-value assessment of electric three-wheelers. Since most vehicles in the segment are financed, establishing the health and remaining life of a used battery could help second owners and financiers assess the vehicle's value. Mishra said pilots have recorded significant uptake, providing a basis for greater transparency around battery residual values and the used-EV market.

In the run-up to the IPO in 2027, the company plans to scale manufacturing capacity, develop new electric platforms, build charging solutions, strengthen supply chains and extend electrification into cargo and small commercial vehicles. With passenger three-wheeler electrification approaching 50%, Mishra said the next significant increase in market penetration could occur sooner than previously expected.