India's automobile major Mahindra & Mahindra Ltd (M&M) will hive off its assets relating to the four-wheeler passenger electric vehicles to a new company in which the British International Investment (BII) will invest upto Rs 1,925 crore for 2.75 per cent to 4.76 per cent stake.

The four-wheeler electric vehicle business is valued at Rs 70,070 crore and will roll out electric sport utility vehicle (SUV) first.

The M&M said it would also invest Rs 1,925 crore in the to be incorporated electric vehicle company (EVCo) and the investment by both the parties will happen in two tranches based on milestones.

The first tranche will be Rs 1,200 crore each to be brought in not later than 30.6.2023 and the second tranche will be of Rs.725 crore each in FY24.

The company's Board on Thursday approved the hiving off and the investment by BII and M&M.

The sale/hiving off of the EV business is expected to be completed not later than 30.6.2023, the company said.

According to M&M, the BII will invest in Compulsorily Convertible Preference Shares of EVCo which would result in the latter having a stake in the range of 2.75 per cent to 4.76 per cent.

According to M&M, the company has invested about Rs 400 crore in the four-wheeler passenger EV business and its net worth is not tracked separately.

Last year, M&M did not generate any revenue from this business.

The consideration for sale/transfer/hiving off of the identified assets of the four wheel EV business will be settled by the EVCo on arms' length basis, M&M said.

The EVCo will be a wholly owned subsidiary of M&MA it does not belong to the promoter/ promoter group of the company.

However, the proposed EVCo will significantly leverage the manufacturing capabilities and product development of M&M as also the ecosystem of suppliers, dealers and its financiers.

The M&M also said the total capital infusion for the EVCo. is envisaged to be approximately Rs 8,000 crore/USD 1 billion between FY 24 and FY 27 for the planned product portfolio.

M&M and BII will work jointly to bring other like-minded investors in the EV Co. to match the funding requirement in a phased manner.

"The Mahindra Group aims to be Planet Positive by 2040. Mahindra has been a pioneer in the electric vehicles space, and we are confident we will be the leaders in the electric SUV market in the future," Dr Anish Shah, MD & CEO, M&M said.

"BII's anchor investment will be key to attracting additional sources of private capital into this exciting venture with the Mahindra Group," Nick O'Donohoe, CEO, BII said.

According to Rajesh Jejurikar, Executive Director - Auto & Farm Sectors, M&M, the group will share its vision on the electric sport utility vehicle (SUV) space, product, technology and platform strategy on August 15, 2022 in UK followed by a reveal of the electric XUV 400 in September 2022.

"We would expect between 20 per cent to 30 per cent of Mahindra SUVs being electric by 2027," he said.