MIAMI—At first blush, Mahindra & Mahindra Ltd. and the FIA’s Formula E racing series are strange bedfellows.

Mahindra is India’s biggest sport-utility seller and best known in the U.S. for its small tractors. It also has a big IT business in the U.S., a startup scooter company, and a stable of other businesses.

Formula E race cars are among the most progressive machines on any racetrack in the world. In a series that began late last year, drivers from 10 teams—including powerhouses like Audi AG , Renault SA and Andretti Autosport—race high-performance electric cars for an hour at a 140 mph top speed; they need to finish without running out of battery power.

Mahindra is one of the first auto makers to have invested millions into participating in the series. The move is less about racking up victories, and more about preparing to take a big step in a higher-stakes game. In the race to create a more viable global electric-car market, Mahindra wants to be the low-cost answer to Tesla Motors Inc.

Mahindra’s $10,000 e2o is the only pure battery-operated car built in India, a nation with big electric-vehicle ambitions that has been slow to initiate incentives to accelerate demand. This summer, Mahindra will launch the city car in London, with hopes that the subcompact is a launchpad to mature markets that have been hard to crack with Indian vehicles carrying conventional powertrains.