Reva Electric Car Company (RECC) was established in 1994 through a joint venture between the Maini Group and Amerigon. Amerigon helped RECC in building the chassis of Reva. The car uses electricity and was manufactured at RECC’s plants at Bommasandra in Bangalore. The car’s key technologies included its steel frame, the energy management system and a motor controller. The motor controller was developed through a technical collaboration with Curtis, one of the world’s leading manufacturers of motor controller for electric vehicles. In 1996, RECC built the first prototype for Reva and received the mandatory certification. However, Reva was not launched immediately. RECC wanted to ensure that at least 75% of the car’s components were available in India. The car had 1,100 components out of which 99% were manufactured in India. In terms of value, the components manufactured in India accounted for about 75%. The company aimed to achieve an indigenisation of 100% by the end of 2002. In 2001, the commercial version of Reva was launched in Bangalore. Reva was a two-door hatchback1, which could accommodate 2 adults and 2 small children. RECC did not adopt any marketing or promotional strategies as the company felt that the cars should be sold without the help of advertisements. One higher level executive said, “We mostly depend on public relations and use minimal advertising.” The car was targeted at two-wheeler owners planning to buy a 4-wheeler. It was also positioned as an ideal second car for housewives, professionals and students. RECC also planned to sell the cars to tourist operators to be used as taxis. The executive said, “At Rs 0.40 per km, it is the cheapest car to drive around.” RECC also promoted itself as an environment-friendly company. It promoted many environment-linked events on World Environment Day. The car also had the slogan: “I don’t pollute when I commute.” Initially, RECC had only one company-owned showroom in Bangalore and planned to open more showrooms in some of the major cities across India. The company planned to launch the car in a phased manner, nationally. Depending on the demand, the company appointed dealers nationwide. In late 2001, RECC launched Reva in Goa. By January 2002, RECC appointed about 7-10 dealers in North India. In April 2002, Reva was launched in Delhi and Surat. To promote the sales of Reva, RECC requested the state governments to exempt Reva owners from road tax and sales tax. This was granted by the Karnataka and Rajasthan governments. In September 2001, RECC entered into an agreement with ICICI to provide loans to people planning to buy Reva. As per the agreement, customers could get loans covering about 75-85% of the cost of the car. In February 2002, Reva was planning to extend its agreement with ICICI for leasing the cars at a nominal cost. According to the agreement, Reva would take care of all repairs, and any customer could own the car on a pre-determined monthly amount. After three years, the customer could either retain the car or return it to the company. The insurance premium on Reva was also low and RECC offered to replace the car in case of repairs or accidents. In February 2002, RECC introduced a new scheme under which it agreed to buy Reva back if a customer was not satisfied with its performance. The customer could get back the money invested excluding about Rs 43,000, which accounted for taxes and insurance. Sudarshan said, “It is a new concept and the scheme is for a limited period. We want to promote electric cars as much as possible. What is heartening is that not a single customer has brought back his car to us.” By April 2002, RECC had sold about 180 cars in Bangalore and Goa.

1. RECC appears to have positioned Reva in the niche segment of two-wheeler owners graduating to a 4-wheeler. Do you agree with the company’s approach? What are the options and alternative strategies open to RECC to deal with the challenges? 2. RECC did not adopt any marketing or promotional strategies as the company felt that the cars should be sold without the help of advertisements. How is the company planning to sell its cars?