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Mahindra and Mahindra has raised $145 million from Temasek for its electric vehicle unit at a valuation of up to 805.8 billion rupees ($9.8 billion), the latest fundraising by the Indian automaker as it looks to ramp up EV sales.

Temasek will take up to a 3% stake in the company which last year raised up to $250 million from British International Investments (BII) at a valuation of as much as $9.1 billion.

The automaker is aggressively trying to lift the share of its electric SUVs in a market that is dominated by larger rival Tata Motors, as the government pushes to grow EV sales to 30% by 2030 from less than 2% today.

Mahindra said it expects electric models to make up between 20% and 30% of its total SUV sales by March 2027.

"Temasek's investment is a step forward, as we execute our strategy towards future leadership in electric SUVs," Mahindra CEO Anish Shah said in a press release.

India's EV market is small but growing, attracting interest from global players including Tesla.

The world's biggest EV maker is in talks with the government to invest in a potential factory that would build low-cost EVs, targeting a price of around $24,000. Analysts say this could pose stiff competition for local automakers.

Rival Tata Motors in 2021 raised $1 billion from TPG's Rise Climate Fund at a valuation of about $9.1 billion.

Mahindra had been in talks with global investors, including green funds and private equity players, for nearly a year to raise between $250 million and $500 million to accelerate its EV plans, Reuters has reported.

Mahindra shares fell as much as 2.5% after the deal and were last trading down 1.2%.