1. Electric Car Reva
"It's 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 vehicles
that can be driven in narrow roads and parked in the tightest of parking
lots."
- Chetan Maini, Managing Director, Reva Electric Car Co., in 2001.
Introduction
In May 2001, Reva1, an electric car, was launched in Bangalore (Karnataka)
by the city-based Reva Electric Car Company (RECC). Reva was claimed to
be India's first zero-polluting, battery-driven car with a running cost of just
Rs 0.40 per km.2 One of the first electric cars in the world to go in for mass
production, Reva was slated to become the cheapest car in India. It was
priced at about Rs 0.2 million and the first ten cars were delivered to
customers in July 2001. Reva generated a lot of excitement in the Indian
automobile industry since it offered many significant advantages over
conventional cars. Its low running cost, gearless driving, dent proof body
material and other state-of-the-art technologies made it an alternative
package. Reva was soon being compared with India's largest selling car
Maruti 800.
Though available at almost the same price as Reva, Maruti's running cost
was almost four times higher than that of Reva. The car was also being
seen as the answer to reducing the increasing pollution levels due to
automobiles. Media reports claimed that Reva was all set to bring about a
revolution in the Indian passenger car industry.
Some analysts claimed that the electric car would create an entire new
market and attract small families in hordes. Hormazd Sorabjee, auto

2. analyst and editor, Autocar India, said, "If Reva's claim of keeping the
running costs at Rs 0.40 per km is achieved, the car will be attractive to
cost-conscious consumers who are ready to compromise on the limitations
of an electric car."
1] Reva means 'new beginning' in Sanskrit. It also stands for Revolutionary Electric Vehicle
Alternative.
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 diesel
engine. External
combustion engines burn their fuel outside the engine – for example, in a steam engine, oil or
coal 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 Indian
subsidiary of Bosch and the
German-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 the
automobile industry.
Amerigon was known for its successful commercialization of its technologies. It concentrated
on developing advanced
components for the automobile industry. The company had researched and invested
substantially in electric vehicle
technology and aimed at commercializing it throughout the world.
The Indian Passenger Car Industry
Till the late 1970s, the Indian passenger car industry offered limited choice
to the customers, with only two popular models in the form of Hindustan
Motors' (HM) Ambassador and Premier Automobiles' (PAL) Padmini. The
government not only controlled the price mechanism in the industry, but
the 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 Japanese
automobile major Suzuki Motor Corporation. MUL's small, fuel-efficient and
well-designed car, Maruti 800, soon became a huge success. Consumers,

3. whose choice had been restricted to the 'old-fashioned' Fiat and
Ambassador 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 industry's growth had an adverse impact on the environment,
in terms of increasing pollution levels across the country (Refer Table IV for
a note on the pollution caused by automobiles). With steadily depleting oil
reserves and increasing pollution, the emission regulations became
stringent and automobile makers were looking at alternatives to the
conventional engines. In the early 1990s, electric vehicles (EVs) started
gaining popularity. They had been neglected after the onset of Internal
Combustion Engines (ICE)3 in the early 1800s. Many EVs were launched in
the market by major players across the globe.
The Indian Passenger Car Industry Contd...
GM was the first major manufacturer to produce an electric passenger car
EV1. The first low-emission vehicles were the Hybrid Electric Vehicles

4. (HEV), which combined the ICE of a conventional automobile and the
battery and motor of an electric vehicle. The combination offered many
advantages including fuel efficiency and environmental benefits. These
vehicles were developed to overcome the disadvantages of an electric
vehicle.
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 Toyota's
Prius, Honda's 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 Note
The Maini Group (Refer Table V) was established in 1973 in Bangalore
(Karnataka) by Sudarshan. K. Maini (Sudarshan)4, who aimed to blend
western technology with Indian craftsmanship. The group followed the
'single zero principle'5 and its philosophy was 'Karma Parma Dharma' (Work
is Worship). The group's products ranged from precision components to in-
plant material handling equipment and, from granites to abrasives. The
group was also involved in international trading and offered ERP solutions.

5. Maini Group had technological agreements with Abressa (Spain), Clark-Blue
Giant (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 group
was known for its quality standards and its plants had ISO 9001 and QS
9000 certification. Chetan Maini (Chetan), son of Sudarshan, the chairman
of the Maini Group, was always fascinated with cars and designed his first
car during his school days. He made a remote-controlled, battery-operated
toy and bagged the first prize at the school's science exhibition. He
graduated from the University of Michigan, Ann Arbor, with a specialization
in solar-powered vehicles. After graduating, he worked at General Motors'
EV factory as an intern for six months. Chetan then joined the US-based
Amerigon Electric Vehicle Technologies Inc. (Amerigon)6, which was
involved 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

6. for the environment and turning Bangalore into a
pollution free city."
Further, the Maini Group manufactured electrically operated material
handling equipment. Sudarshan explained, "...the group's material
movements division, which manufactured electrically-operated material
handling equipment, offered us the obvious choice to venture into the
electric car industry rather than the conventional car market. It is a car that
is 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 the
problem of high pollution and congestion on roads. Assess the strengths
and weakness of Reva, from a buyer's perspective.
2. "Reva G-WIZ, has become the world's best selling electric car, by
offering an unbeatable combination of low cost and unbeatable transport."
Elucidate on how Reva, the technological marvel, became accepted the
world over.
Issues:
» How increasing pollution is making the consumers demand products
which are eco-friendly
» How governments around the globe are supporting companies that are
coming out with environment-friendly products
» How companies are finding a business opportunity in the changes in the
business environment