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Reva: A Successful Failure?

Rahul Chandran
Thursday, January 30, 2003
Rahul Chandran
INDIA'S FIRST ELECTRIC CAR, REVA, IS ON AN expansion mode: a luxury version of the car, the product of a joint venture between Bangalore-based Maini Group and California-based Amerigon Electric Vehicle Technologies Inc., will soon feature on Chennai roads. If people buy them, that is.

Since its launch in Bangalore a year ago, Reva Electric Car Company (RECC), a joint venture, has run into trouble. The car, which was to cost Rs.162,000 ($3,404-4,255) originally, debuted at Rs 200,000 plus. What went wrong?

Quite a lot, according to Chetan Maini, managing director of RECC. “When we first approached the government with our plans, they promised us a subsidy of Rs 100,000 ($2127) per car. Also, import duties on some of the components were 8 percent. But, once the R&D was complete, and we were ready to launch Reva in June 2001, no subsidy was forthcoming. Moreover, import duties had doubled to 16 percent.”

Compare this with subsidies given to Electric Vehicle (EV) manufacturers in other countries and Maini's grouse is justified. The U.S. government offers tax credits of up to $42,500 for all purchasers of EV depending upon the size the vehicle. Additionally, the government of California has mandated that 2 percent of all vehicles in the state fall under the EV category, a figure expected to grow to 10 percent by 2003. Similarly, Switzerland too hands out a support of $11,000 per EV purchased, with a budget of $14 million for the program.

“Except for the hype about reducing air pollution, the Indian government has done little to help companies like ours,” fumes Maini. Reva's unspectacular run in the domestic market (250 cars sold last year) has not deterred RECC from aiming at the export market segment. The car is undergoing certification for entry into the European markets, with a few cars already on display at London and other cities.

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