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Will govt push electrify Reva sales?


Mahindra’s acquisition of Reva has done the trick for India’s first indigenous electric car and the stage now looks set for its rise

Chetan Maini, the man who gave India its first electric car a decade ago, is a lot happier these days. Within a year of the Mahindra group acquiring Reva Electric Car Company, his long-cherished dream seems to be coming true, with the government announcing a slew of measures to give impetus to electric cars.

First, in December 2010, the Ministry of New and Renewable Energy (MNRE) announced 20 per cent subsidy on electric cars. Second, Finance Minister Pranab Mukherjee announced setting up of a national mission on hybrid and electric vehicles in his Budget for 2011-12.

Maini, chief of technology & strategy, Mahindra Reva Electric Vehicles Pvt Ltd, who loves to research and develop eco-friendly transport solutions, struggled through last decade, but could not convince the government that it extend concessions for his electric car — an environment-friendly transport solution.

The government initiatives came only after Mahindra took over the company in May 2010.Mahindra's Reva Model

However, Maini has a different take on this. He believes it was sheer coincidence. “Earlier, there was no ecosystem for the government to wake up to the hard reality that electric cars were good for the environment. We, at Reva, had pioneered the concept in the country. The time is now ripe for the government to offer incentives, as a large number of automakers is entering the electric car market.”

Apart from Mahindra Reva, General Motors, Tata Motors, Hyundai and Nissan are readying their electric car models for the Indian market. According to PricewaterhouseCoopers (PwC), the combined global sales of electric vehicles of all companies would stand at about 500,000 in 2013. Chrysler Group LLC, Mitsubishi Motors Corp, Ford Motor Co, BMW AG, Toyota Motor Corp and Daimler AG also plan to be in the fray in this segment by then.

Maini is a little more ambitious than PwC. He feels the Indian market alone would have around one million electric vehicles by 2020. Mahindra Reva, being the first mover in the electric vehicle (EV) space, wants to grab a sizeable portion of this market.

It took him seven years of hard work and intensive research to launch India’s first electric car on May 11, 2001, (the Reva is 95 per cent indigenous) and almost a decade to make it the world’s largest-selling model. However, the sales, in terms of numbers, were dismal. Maini could sell only around 4,000 cars and did not break even.

The company, called Mahindra Reva Electric Vehicles Pvt Ltd after Mahindra took over (Mahindra holds 55.1 per cent in the company, while 30 per cent is held by the Maini family), has embarked on a major expansion plan. Its sales network has now increased from just two outlets — one each in Bangalore and Delhi — to 25 till March 2011. It plans to have 75 outlets by the end of December.

Packed with many new features, Reva NXR is a next-generation car. More efficient and powerful than the existing model, it will be powered by lithium-ion batteries and will be capable of delivering a range of up to 200 km per charge.

Initially, Maini invested more than $50 million (around Rs 225 crore) to manufacture Reva, but saw limited returns due to high cost of manufacturing. So he could not give the car a touch of mass appeal. Several factors worked against him. India, for one, does not have enough charging stations. Besides, his company did not have enough money to keep pushing the product on its environment-friendly features alone. After acquisition, Mahindra has not disclosed the car’s sales figures.

Maini, however, feels that lack of uniform tax structure for electric cars among different states could affect the growth of the industry. He wants the national mission to integrate the Central and state policies. “A holistic approach is required to promote electric cars in the country. The government, public and auto majors need to be involved in the promotion of this technological advancement, which would help save thousands of crores on fuel imports,” he says.

“The Budget has proposed 5 per cent excise duty on EVs. As a result, our cars would actually be Rs 3,000 costlier. If the EV market has to pick up, road tax and VAT should be reduced and all the states should have a uniform tax structure,” says Maini. At present, EVs are exempted from paying road tax only in Delhi, Rajasthan and Andhra Pradesh.

Delhi Chief Minister Sheila Dikshit has announced a 29.5 per cent cumulative discount on the car to encourage its purchase. The Reva is promoted and offered to people as a “pocket-friendly drive to ensure a pollution-free environment”. The state environment department has already bought two top-end variants of Reva, one of which is being used by Dikshit herself.

The national mission is likely to change the way people look at EVs. “For the first time, the country has realised the importance of going green. It will help reduce the country’s dependence on fossil fuels, mitigating the issue of climate change,” Maini says.

He strongly feels that the national mission should aim to bring in a holistic change in the industry. “By 2020, EVs should constitute at least 20 per cent of the total vehicle population and the national policy should be framed in a way that promotes use of these vehicles,” he says. Citing China’s example, he says the EV population there has increased from just about 40,000 in 1999 to 100 million in 2011.

After the announcement of 20 per cent subsidy on EVs in December last year, Mahindra Reva lowered the prices of its models. Schemes like these will promote the use of electric car, he says.

After Mahindra’s acquisition of Reva, Maini now has more time to invest in research & development — like he always wanted. He does not have to be part of the company’s day-to-day management and sales, which is now looked after by R Chandramouli. Now, Maini is set to introduce into Reva NXR one of his latest innovations, ‘REVive’, which addresses the problem of battery shortage.

REVive, a technology unique to Reva, will act like an invisible reserve fuel tank and address ‘range anxiety’. This is the first time a technology is being launched to quell EV users’ range anxiety. This would help meet the lifestyle needs of today’s on-the-go consumer. If a customer runs out of charge, he telephones or sends an SMS to the Reva 24x7 Customer Support Centre and a remote charge enables him within a few minutes to continue driving.

Maini is also working on electrifying more products, like light commercial vehicle Mahindra Gio, for inner city transportation.