The Indian government’s high profile tender for 10,000 electric cars, which was won by Tata Motors, has come under a cloud with the rival Mahindra & Mahindra (M&M) raising doubts regarding the price quoted by the former.

The tender was invited by Energy Efficiency Services Ltd (EESL), a federal government entity, to gradually phase out its fleet of petrol and diesel cars, estimated to be around 500,000, with electric vehicles. Tata Motors got selected through an international competitive bidding and the short listed included M&M and Nissan Motors.

Tata Motors had quoted a price of Rs 1.02 million (US$ 15,342) for its electric Tigor sedan, while M&M offered to sell its e-Verito sedan at approximately Rs 1.20 million (US$ 18,395).

At a conference call on Thursday, M&M Managing Director Pawan Goenka said, “This pricing is difficult for us to comprehend given the fact that we have been in the business for more than five years and have good knowledge about the industry.”

M&M is India’s pioneer in the electric car segment and it currently has the widest range of electric vehicle offerings in the country. Tata Motors is yet to commercially launch the electric version of its Tigor sedan.

Tata Motors will sell 250 of the order for 400 units in the first phase. EESL, however, gave M&M an opportunity to match the price of the electric Tigor, following which the firm would supply 150 units in first phase that ends on November 30. Goenka, however, said they would not make any profit on the order.

“We were offered 50% of the tender (500 units) in the first phase but we opted for 30% as our product is about Rs 230,000 (US$ 3,526) more expensive,” Goenka said.

He, however, said M&M would not make a loss.

EESL has not disclosed how the second phase of 9,500 electric cars would be split between the two companies. However, M&M has said it was not sure of bidding for the second phase.