Mahindra & Mahindra is a publicly listed auto manufacturer headquartered in Mumbai. In 2019 it had US$13.4 billion in revenue and sales of over 360,000 vehicles. Its largest sales regions are India and South Korea, with small sales in other regions.
Similar to other Mahindra Group companies operating in different sectors, M&M has set science-based targets aligned with a well below 2-degree scenario. The company aims to reduce manufacturing emissions (scope 1 and 2) by 47 percent per vehicle produced and to reduce scope 3 emissions (including vehicle in-use emissions) by 30 percent for each vehicle sold between 2018 and 2033. It has even set separate science-based targets for its electric vehicle subsidiary to reduce scope 1 and 2 manufacturing emissions by 35 percent and scope 3 emissions per vehicle sold by 30 percent by 2033 compared to 2018 levels. The company can increase accountability for achieving these targets by setting intermediate targets to achieve, for example, by 2025.
M&M only scored 29 percent on the most significant module, sold product performance. M&M’s vehicle in-use emissions intensity decreased by 7.18 percent between 2014 and 2019, however, the company’s well below 2-degree decarbonisation pathway required a more rapid decrease of 17 percent. Moreover, M&M’s low-carbon vehicles sales have not increased rapidly enough. The share of sales from four-wheeled low-carbon vehicles was only 0.26 percent in 2019, though 5.7 percent was required for its decarbonisation pathway. Without rapid action to increase low-carbon vehicle sales, the company’s vehicle in-use emissions intensity resulting from new vehicles sales over the next five years is expected to exceed its available carbon budget.
In 2019, M&M invested US$403 million in research and development (R&D). According to the company’s 2020 CDP response, an estimated 30 percent – US$121 million – was invested in R&D for hybrid, biofuel, hydrogen and electric vehicles. The company could increase its range of low-carbon vehicle models and their sales by investing more of its R&D budget in technologies that can help mitigate climate change, such as electric vehicles, charging points and hydrogen fuel cell vehicles. By disclosing more detailed information regarding its low-carbon R&D investments and including the amount invested in non-mature technologies, M&M would send a strong signal to its stakeholders indicating that it is prepared for the low-carbon transition.
M&M only sold 966 four-wheeled low-carbon vehicles in 2019, which was reflected in its low sold product performance score. However, M&M also sold 13,636 electric three-wheeled vehicles as well as currently owns 100 percent of Peugeot Motorcycles which plans to sell a new electric model every year. In the future, M&M could potentially offer more affordable low-carbon alternatives to four-wheeled vehicles. The company is also becoming involved in the mobility-as-a-service business model through its acquisition of ride hailing service Meru. M&M should develop plans to expand these new business models, which may offer new low-carbon revenues.
M&M is awarded a trend score of -. If the company were reassessed in the near term, its score would most likely decrease. Its share of sales from four-wheeled electric vehicles has not increased at the rate required for the company’s decarbonisation pathway, and this gap is likely to increase in the future. Emissions from its vehicles sold over the next five years are also expected to exceed the company’s short-term carbon budget. M&M has strong climate governance and emissions reduction targets but should establish clear plans to invest in low-carbon vehicles as well as increase their sales if the company wishes to achieve its stated goals. M&M’s recently signed memorandum of understanding with electric vehicle technology company REE Automotive to explore development and manufacturing for global markets may help the company to scale its electric vehicle production.
M&M has set two targets for its automotive business through the Science-Based Target Initiative. It aims to reduce its manufacturing emissions by 47 percent per car produced and scope 3 emissions (including vehicle in-use emissions) by 30 percent between 2018 and 2033. The company has also pledged to double its energy productivity by 2030 compared to 2008, becoming the first company to join the EP100 initiative.
M&M has plans to source renewable electricity and increase energy efficiency to reduce its manufacturing emissions. The company is using an internal carbon price of US$10 per tonne to guide its low-carbon investments. It expects electric vehicles to account for 30 percent of sales in 2030 but has not disclosed capital allocation plans to finance its shift to electric vehicles.
M&M’s electric vehicle sales have been limited. In 2019, the company sold 966 four-wheeled electric vehicles representing only 0.26 percent of total sales. However, its three-wheeled electric vehicle sales have been stronger with 13,636 sold in 2019, and the company has invested in a new electric vehicle production platform. M&M has also been upgrading its petrol and diesel vehicles to comply with the more stringent BS VI emissions regulation in India.
M&M had limited success in reducing emissions between 2014 and 2019. Its manufacturing emissions from automotive production fell from 115,015 tonnes of carbon dioxide equivalent in 2014 to 97,086 tonnes in 2019, but its decarbonisation pathway will require an even steeper decrease in the future. Limited data was available concerning the company’s vehicle in-use emissions for the India sales region for some of the years assessed. However, calculations indicate that they fell from 178 grams of CO₂e per kilometre to 157 grams between 2014 and 2019, though this was still not as rapid as required by the company’s decarbonisation pathway.
M&M has strong emissions targets and has put in place some measures to help achieve these. However, the company’s current performance, particularly with regard to its modest number of low-carbon vehicle sales, suggest that it is unlikely to meet these targets without significantly scaling up its electric vehicle production and sales.