Electric Car Reva
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ON THE ROAD TO REALITY
Reva Electric Car Company (RECC) was established in 1994
through a joint venture between the Maini Group and Amerigon. Amerigon had a
32% stake in RECC's Rs 58 million equity and Maini Precision Products and
Maini Materials Movement held the remaining 68%. Amerigon helped RECC in
building the chassis of Reva. The car was manufactured at RECC's plants at
Bommasandra in Bangalore. The car's key technologies included its steel
frame, the energy management system and a motor controller. The motor
controller was developed through a technical collaboration with Curtis, one
of the world's leading manufacturers of motor controller for electric
vehicles.
In 1996, RECC built the first prototype for Reva and received the mandatory
certification. The prototype was also put through the 250,000 km ‘shaker
test7'at the Automobile Research Association of India (ARAI), Pune. It was
also tested at ARAI for homologation8 and was certified for road-worthiness.
The prototypes were also tested in the US. They were also tested on the
Indian roads in conditions of heat, humidity, and monsoons.
However, Reva was not launched immediately.
Chetan explained, “We had no
definite plans to launch then. It's just that we've been making
absolutely sure that when the product is in the market, it doesn't
have any problems.” In addition, RECC wanted to ensure that at least
75% of the car's components were available in India. The car had
1,100 components out of which 99% were manufactured in India. In
terms of value, the components manufactured in India accounted for
about 75%.
The company aimed to achieve an indigenisation of 100% by the end of
2002. Further research was done to make the car more comfortable and
efficient. AT Kearney Consultants9 had conducted a market survey,
based on which it recommended some changes to the car. The
recommendations included extension of the wheelbase to create more
internal space and improvements in riding comfort. |
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In 2001, the commercial version of Reva was launched in
Bangalore. Reva was a two-door hatchback10 , which could accommodate 2 adults
and 2 small children. RECC did not adopt any marketing or promotional
strategies as the company felt that the cars should be sold without the help
of advertisements. Sudarshan said, “We mostly depend on public relations and
use minimal advertising.” The car was targeted at two-wheeler owners
planning to buy a 4-wheeler. It was also positioned as an ideal second car
for housewives, professionals and students. RECC also planned to sell the
cars to tourist operators to be used as taxis. Sudarshan said, “At Rs 0.40
per km, it is the cheapest car to drive around.” RECC also promoted itself
as an environment-friendly company.
It promoted many environment-linked
events on World Environment Day. The car also had the slogan: “I don't
pollute when I commute.”
Initially, RECC had only one company-owned showroom in Bangalore and planned
to open more showrooms in some of the major cities across India. The company
planned to launch the car in a phased manner, nationally. Depending on the
demand, the company appointed dealers nationwide. In late 2001, RECC
launched Reva in Goa. By January 2002, RECC appointed about 7-10 dealers in
North India. In April 2002, Reva was launched in Delhi and Surat.
To promote the sales of Reva, RECC requested the state governments to exempt
Reva owners from road tax and sales tax. This was granted by the Karnataka
and Rajasthan governments. In September 2001, RECC entered into an agreement
with ICICI11 to provide loans to people planning to buy Reva. As per the
agreement, customers could get loans covering about 75-85% of the cost of
the car. In February 2002, Reva was planning to extend its agreement with
ICICI for leasing the cars at a nominal cost. According to the agreement,
Reva would take care of all repairs, and any customer could own the car on a
pre-determined monthly amount. After three years, the customer could either
retain the car or return it to the company.
The insurance premium on Reva was also low and RECC offered to replace the
car in case of repairs or accidents. Sudarshan said, “We will ask no
questions. They will get to drive a new car till the earlier one is repaired
and the insurance claims are settled.” The company also offered to make
customized cars to suit individual requirements.
In February 2002, RECC introduced a new scheme under which it agreed to buy
Reva back if a customer was not satisfied with its performance. The customer
could get back the money invested excluding about Rs 43,000, which accounted
for taxes and insurance. Sudarshan said, “It is a new concept and the scheme
is for a limited period. We want to promote electric cars as much as
possible. What is heartening is that not a single customer has brought back
his car to us.” By April 2002, RECC had sold about 180 cars in Bangalore and
Goa.
THE FUTURE OF REVA
QUESTIONS FOR DISCUSSION[7] During the shaker test,
a car is mounted on four posts. Each of the posts is independently moved to
simulate various road conditions over a cycle of 4,00,000 km.
[8] Homologation is the certification of a product or specification to
indicate that it meets regulatory standards.
[9] A US-based consultancy offering services
in the areas of operations, manufacturing and strategy.
[10] A hatch is a rear luggage access door with a fixed glass window. It is
hinged at the top and hangs vertically or at an angle. In a ‘hatchback'car,
the luggage area is integrated into the passenger compartment. Instead of a
boot and a horizontal stretch at the back, the roof slopes down at an angle
of 45 degrees, with a small door or ‘hatch'at the back of the car.
[11] Industrial Credit and Investments Corporation of India (ICICI) was a
leading financial institution, which transformed itself into India's first
universal bank following its merger with ICICI Bank.
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