Global development agency International Finance Corporation (IFC) announced on Wednesday that it would invest Rs 600 crore in a new last mile mobility (LMM) company, a wholly-owned subsidiary of Mahindra & Mahindra, to be newly formed (NewCo).

IFC’s first investment in an electric vehicle maker in the country, and the world’s first in an electric three-wheeler, will be in the form of a mandatory convertible vehicle valued at up to Rs 6,020 crore. The Rs 600 crore investment will give IFC an ownership stake of 9.97% and 13.64% in the new company.

NewCo will house the last mile mobility sector, including three-wheelers (Alfa, Treo, Zor) and four-wheeler SCVs (Jeeto).

“With the mass electrification of last-mile mobility operations, we will further our commitment to a positive planet by 2040. This also presents a huge growth opportunity for micro and women entrepreneurs,” said Anish Shah, MD and CEO of Mahindra & Mahindra said.

India has pledged to reduce its emissions by 45% by 2030 while aiming to achieve 80% penetration of two- and three-wheeled electric vehicles, 70% for commercial vehicles and 30% for private vehicles simultaneously.

Rajesh Jejurikar, Executive Director and CEO (Automotive and Agriculture Sector), Mahindra & Mahindra, a market leader in the sector, said: “We have an opportunity to increase the penetration of electric vehicles in the sector and provide a more sustainable and profitable choice of microentrepreneurs”.

IFC is a member of the World Bank Group and operates in more than 100 countries. In FY22, IFC committed a record $32.8 billion to develop countries’ private companies and financial institutions.