Electric Car Reva

Details

Themes: Mergers Acquisition and Takeovers
Period : 2001
Organization : Reva Electric Car Company
Pub Date : 2002
Countries : India
Industry : Automobile & Automotive

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Case Code : BSTR030
Case Length : 9 Pages
Price: Rs. 300;

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"It's like running a car at the cost of a two-wheeler."

- Sudarshan Maini, Chairman, Reva Electric Car Co., in August 2000.

"The largest part of the Indian car market is for small, affordable vehicles that can be driven in narrow roads and parked in the tightest of parking lots."

- Chetan Maini, Managing Director, Reva Electric Car Co., in 2001.

Electric Car Reva: Introduction

In May 2001, Reva¹, an electric car, was launched in Bangalore (Karnataka) by the city-based Reva Electric Car Company (RECC). Reva was claimed to be India's first zero-polluting, battery-driven car with a running cost of just Rs 0.40 per km.² One of the first electric cars in the world to go in for mass production, Reva was slated to become the cheapest car in India.

It was priced at about Rs 0.2 million and the first ten cars were delivered to customers in July 2001. Reva generated a lot of excitement in the Indian automobile industry since it offered many significant advantages over conventional cars.

Its low running cost, gearless driving, dent proof body material and other state-of-the-art technologies made it an alternative package. Reva was soon being compared with India's largest selling car Maruti 800. Though available at almost the same price as Reva, Maruti's running cost was almost four times higher than that of Reva.

The car was also being seen as the answer to reducing the increasing pollution levels due to automobiles. Media reports claimed that Reva was all set to bring about a revolution in the Indian passenger car industry. Some analysts claimed that the electric car would create an entire new market and attract small families in hordes. Hormazd Sorabjee, auto analyst and editor, Autocar India, said, "If Reva's claim of keeping the running costs at Rs 0.40 per km is achieved, the car will be attractive to cost-conscious consumers who are ready to compromise on the limitations of an electric car."

The Indian Passenger Car Industry

Till the late 1970s, the Indian passenger car industry offered limited choice to the customers, with only two popular models in the form of Hindustan Motors' (HM) Ambassador and Premier Automobiles' (PAL) Padmini. The government not only controlled the price mechanism in the industry, but the entry of foreign players was also strictly regulated.

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1] Reva means 'new beginning' in Sanskrit. It also stands for Revolutionary Electric Vehicle Alternative.
2] In September 2002, Rs 48 equalled 1 US $.