Electric Car Reva"Its 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 vehiclesthat can be driven in narrow roads and parked in the tightest of parkinglots."- Chetan Maini, Managing Director, Reva Electric Car Co., in 2001.IntroductionIn May 2001, Reva1, an electric car, was launched in Bangalore (Karnataka)by the city-based Reva Electric Car Company (RECC). Reva was claimed tobe Indias first zero-polluting, battery-driven car with a running cost of justRs 0.40 per km.2 One of the first electric cars in the world to go in for massproduction, Reva was slated to become the cheapest car in India. It waspriced at about Rs 0.2 million and the first ten cars were delivered tocustomers in July 2001. Reva generated a lot of excitement in the Indianautomobile industry since it offered many significant advantages overconventional cars. Its low running cost, gearless driving, dent proof bodymaterial and other state-of-the-art technologies made it an alternativepackage. Reva was soon being compared with Indias largest selling carMaruti 800.Though available at almost the same price as Reva, Marutis running costwas almost four times higher than that of Reva. The car was also beingseen as the answer to reducing the increasing pollution levels due toautomobiles. Media reports claimed that Reva was all set to bring about arevolution in the Indian passenger car industry.Some analysts claimed that the electric car would create an entire newmarket and attract small families in hordes. Hormazd Sorabjee, auto
analyst and editor, Autocar India, said, "If Revas claim of keeping therunning costs at Rs 0.40 per km is achieved, the car will be attractive tocost-conscious consumers who are ready to compromise on the limitationsof an electric car."1] Reva means new beginning in Sanskrit. It also stands for Revolutionary Electric VehicleAlternative.2] In September 2002, Rs 48 equalled 1 US $.3] An engine where fuel is burned internally to produce power, such as the gasoline or dieselengine. Externalcombustion engines burn their fuel outside the engine – for example, in a steam engine, oil orcoal is burned in a boiler,and the steam from the boiler is used to power the engine.4] Sudarshan K Maini was a technocrat at Motor Industries Company (MICO), the Indiansubsidiary of Bosch and theGerman-based engineering giant.5] Meaning zero defects, zero delay, zero excuses and zero compromises.6] Amerigon was a subsidiary of Amerigon Inc., a provider of aerospace technology to theautomobile industry.Amerigon was known for its successful commercialization of its technologies. It concentratedon developing advancedcomponents for the automobile industry. The company had researched and investedsubstantially in electric vehicletechnology and aimed at commercializing it throughout the world.The Indian Passenger Car IndustryTill the late 1970s, the Indian passenger car industry offered limited choiceto the customers, with only two popular models in the form of HindustanMotors (HM) Ambassador and Premier Automobiles (PAL) Padmini. Thegovernment not only controlled the price mechanism in the industry, butthe entry of foreign players was also strictly regulated. The situation,however, changed in 1981 with the setting up of Maruti Udyog Limited(MUL), a joint venture between the Indian government and the Japaneseautomobile major Suzuki Motor Corporation. MULs small, fuel-efficient andwell-designed car, Maruti 800, soon became a huge success. Consumers,
whose choice had been restricted to the old-fashioned Fiat andAmbassador cars, went in for the small car. By the late 1980s, MUL became the market leader, leaving PAL & HML way behind. After the Indian economy was opened up to foreign players in the early 1990s, many multinational auto manufacturers entered the country. The industry scenario changed when the foreign companies set up joint ventures or subsidiaries. The passenger car industry was segmented based on price as the small car (upto Rs 0.3 million), mid-size (Rs 0.3 - 0.5 million), luxury car (Rs 0.5 - 1 million) and super luxury car segments (above Rs 1 million) (Refer Table I & II for industry statistics). For the financial year ended March 2001, 590,647 units (Refer Table III) of cars were sold by the Indian passenger car industry.However, the industrys growth had an adverse impact on the environment,in terms of increasing pollution levels across the country (Refer Table IV fora note on the pollution caused by automobiles). With steadily depleting oilreserves and increasing pollution, the emission regulations becamestringent and automobile makers were looking at alternatives to theconventional engines. In the early 1990s, electric vehicles (EVs) startedgaining popularity. They had been neglected after the onset of InternalCombustion Engines (ICE)3 in the early 1800s. Many EVs were launched inthe market by major players across the globe.The Indian Passenger Car Industry Contd...GM was the first major manufacturer to produce an electric passenger carEV1. The first low-emission vehicles were the Hybrid Electric Vehicles
(HEV), which combined the ICE of a conventional automobile and thebattery and motor of an electric vehicle. The combination offered manyadvantages including fuel efficiency and environmental benefits. Thesevehicles were developed to overcome the disadvantages of an electricvehicle. The electric vehicles could be used only for short trips, as its battery had to be recharged after a few kilometers. Some of the first HEVs include Toyotas Prius, Hondas Insight and Civic. In 1991, the GoI framed the first legislation on air pollution. By mid-1990s, the emission level for automobiles was tightened. The industry started using the latest technology and produced increasingly cleaner cars. It produced Low Emission Vehicles (LEV) in 1996 and Ultra LEV (ULEV) by 2000. By 2000, the new vehicles in the industry had emission levels, which were about 80% less compared to the 1989 levels. The emission level came down from 360 tons per day to 70 tons per day. A four-wheeler complying with the Euro II norms emitted 2-3 times less carbon monoxide and 3-4 times less hydrocarbons and nitrogen oxides.Background NoteThe Maini Group (Refer Table V) was established in 1973 in Bangalore(Karnataka) by Sudarshan. K. Maini (Sudarshan)4, who aimed to blendwestern technology with Indian craftsmanship. The group followed thesingle zero principle5 and its philosophy was Karma Parma Dharma (Workis Worship). The groups products ranged from precision components to in-plant material handling equipment and, from granites to abrasives. Thegroup was also involved in international trading and offered ERP solutions.
Maini Group had technological agreements with Abressa (Spain), Clark-BlueGiant (US), Hensel (Germany), HIAB (Sweden) and STILL (UK).Background Note Contd...Some of the major clients of the group included General Motors, Bosch, BT,MIC, OMR and other Indian companies in the automobiles, consumer goods,engineering, and food processing and pharmaceuticals industries. The groupwas known for its quality standards and its plants had ISO 9001 and QS9000 certification. Chetan Maini (Chetan), son of Sudarshan, the chairmanof the Maini Group, was always fascinated with cars and designed his firstcar during his school days. He made a remote-controlled, battery-operatedtoy and bagged the first prize at the schools science exhibition. Hegraduated from the University of Michigan, Ann Arbor, with a specializationin solar-powered vehicles. After graduating, he worked at General MotorsEV factory as an intern for six months. Chetan then joined the US-basedAmerigon Electric Vehicle Technologies Inc. (Amerigon)6, which wasinvolved in building EVs. At Amerigon, he built about six types of Solar and HEVs. He was also the leader of the team that won the GM Sun Race of Solar Vehicles in 1990 and the team also bagged the 3rd position in the World Solar Challenges in Australia. In the early 1990s, Chetan planned to build his own EV and established RECC with the help of Sudarshan. Chetan said, "Cars are my passion, and the Reva is my dream that will soon become a reality." Sudarshan had dreamt of launching a small car in Bangalore and making the city pollution free. However, he planned to build an electric car after his son Chetan, joined Amerigon as a project manager for an EV project. Explaining the primary objective of RECC, he said, "It is the passion
for the environment and turning Bangalore into a pollution free city."Further, the Maini Group manufactured electrically operated materialhandling equipment. Sudarshan explained, "...the groups materialmovements division, which manufactured electrically-operated materialhandling equipment, offered us the obvious choice to venture into theelectric car industry rather than the conventional car market. It is a car thatis made for India to suit Indian conditions using material available in India."Questions for Discussion:1. Transportation experts felt that Reva would be a perfect solution to theproblem of high pollution and congestion on roads. Assess the strengthsand weakness of Reva, from a buyers perspective.2. "Reva G-WIZ, has become the worlds best selling electric car, byoffering an unbeatable combination of low cost and unbeatable transport."Elucidate on how Reva, the technological marvel, became accepted theworld over.Issues:» How increasing pollution is making the consumers demand productswhich are eco-friendly» How governments around the globe are supporting companies that arecoming out with environment-friendly products» How companies are finding a business opportunity in the changes in thebusiness environment