The recently inaugurated manufacturing facility of Mahindra Reva in Bangalore is as green, if not greener, than the cars it produces. The futuristic-looking plant marks a new chapter for the Mahindra Group and its vision and growth.
“We firmly believe that the automobile industry is at an inflection point that will re-shape the way we own and use mobility solutions,” says Anand Mahindra, chairman and managing director, Mahindra & Mahindra (M&M).
Mahindra Reva has invested Rs 100 crore in building the all-new 'green' plant and the component supply network. It works on a ‘100 percent outsourced’ plan, and software/components designed and developed by it are also sourced from contract manufacturers.
The electric car built in the brand-new plant is important, but what is more important for Mahindra Reva is to build the awareness and acceptance of electric vehicles (EVs) as a mainstream solution for sustainable mobility. “What we are starting is a philosophy,” says ChetanMaini, founder and chief technology officer, Mahindra Reva.
Bottom-up approach
The “philosophy”, in terms of product is set to start with the small car NXR next month. The NXR is expected to offer a driving range of at least 100 kilometres. It will be followed by at least one sibling every year. “The plant is designed to be quite flexible,” says Maini. Starting with the plain and practical NXR, the company’s strategy is to appeal to those consumers too who look for performance, which the entry level NXR or its immediate variants may not offer. May not be the kind of premium electric car Tesla S Type’s 0-100kph in six seconds, but “significant” jumps in performance levels in Mahindra Reva’s cars are due.
Maini says, “Yes, we will have products that will be 50 percent more of that probably. That will be maybe in a year’s time.” “We will have a bottom-up approach, unlike Tesla which I think has a top-down approach. We find it easier on technology to move up,” says Maini.
Building the market
The initial phase of Mahindra Reva will be challenging as it prepares to create awareness for its technologies and products. With the plant inaugurated, Mahindra Reva will start a host of awareness building activities, primarily in the digital space. “It will talk about the technology, talk about future mobility and more. Towards launch, you will see a larger presence in advertising than what we have done in the past. You will see a larger budget allocation that allows us to do more justice to communication which in the past have been a challenge,” says Maini.
The company plans to roll out 6,000 cars from the new plant in the first year. A small figure in the context of the current conventional car market, but the figure is 25 percent more than what the erstwhile Reva Electric Car Company sold in 11 years. Of the 4,500 REVAis that have been sold globally so far, just 1,000 have found buyers in India.
Mahindra Reva clearly wants to grow much faster as it plans to hit peak annual production capacity of 30,000 units in the new plant by 2015-16. If it achieves the target, Mahindra Reva may consider building a new plant in another part of India.
Cost could easily be the biggest challenge in building the electric car market. At Rs 4.35 lakh (on-road, Bangalore) for the entry variant without air-conditioner and Rs 5.30 lakh for the top-end variant, the current REVAi is not cheap. Government intervention, in the form of subsidy is almost crucial to bring customers to showrooms. The only significant subsidy of 20 percent of the ex-factory price or Rs 1 lakh for all four-wheeler electric vehicle (EV) buyers from November 2010 to March 31, 2012 was withdrawn on March 31, 2012.
Innovative ways to charge and get charged
At a time when various parts of the country have a power deficit, some argue that it will be more than difficult for EVs to find buyers and hence an EV may not be a good business idea. That could also be the reason why some OEMs are shying away from the EV market, even though they possess the technology. Maini has a solution.
“Today, we have power deficit in peaks (hours). But lot of places have power surplus in the middle of the night,” says Maini. He adds, “In the next 5-7 years, a smart grid concept is coming. You can buy power at a cheaper rate when there’s less consumption and then sell energy at a higher cost to back the grid from the cars charged by solar panels.”
Mahindra Reva, incidentally, will also provide solar charging equipment to customers at a cost. Maini is optimistic that it will be a more favourable scenario for EV owners once power is deregulated. A wider band of power distribution could also help grids to be better balanced then.
On a global drive
Going by Mahindra Reva’s share of sales from export markets, and the acceptance of electric vehicles overseas, the company’s cars are likely to sell more overseas than in India. Of the 4,500-odd REVAis sold so far, around 3,500 cars have been sold overseas. The Scandinavian markets, and China and Australia in the Asia-Pacific region, are key targets.
With customers in 24 countries, Mahindra Reva is expected to push M&M’s global drive. “In Norway, 12-18 months ago, the electric vehicles’ share (in the car market) was.01 percent. It’s around 2.7 percent in the last quarter. And it’s between two manufacturers. The highest-selling car small car is an electric car. That’s a big shift. I think there are some countries that will click. Policies will trigger that,” says Maini.