Electric Car Reva
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Details
Themes: Mergers Acquisition and Takeovers
Period : 2001
Organization : Reva Electric Car Company
Pub Date : 2002
Countries : India
Industry : Automobile & Automotive
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Case Code : BSTR030
Case Length : 9 Pages
Price: Rs. 300;
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On The Road to Reality Contd...
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. Sudarshan said, "We will ask no questions. They will get to drive a new car till the earlier one is repaired and the insurance claims are settled." The company also offered to make customized cars to suit individual requirements.
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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. The Future of RevaIn late 2001, RECC reported that Reva was well accepted in the four cities it was launched and that the company was working on new versions for the domestic as well as international markets. Ashok Dharwadkar, chief financial officer in a technology company, who was the third Indian owner of Reva, said, "The performance of the car is good and the company offers good service. There are still a few nagging problems like high noise level and fall in efficiency while driving uphill." |
In January 2002, RECC launched Reva Deluxe at the Auto Expo 2002 in New Delhi. The Deluxe model had a new look with upgraded interiors, defroster with heater, a stereo system, and climate control seats (CCS)12. Chetan said, "The development of the new model is a result of the feedback of our very satisfied customers in Bangalore, where over 150 cars are now running.
The introduction of climate control seats is in line with Reva philosophy of using cutting edge technology, patented by Amerigon, leaders in advance automotive technology." RECC has planned to launch the car in other cities like Jaipur and Hyderabad by the end of 2002. RECC is currently working on a new version to be launched in the UK market. The company has also entered into alliances to export the cars to Nepal.
It was also negotiating the export of the car to the UK, Japan, Mauritius, Israel, Norway and Sri Lanka. Exports to these countries were expected to start by the end of 2002. Sudarshan said, "We will be sending some cars to Nepal soon and have signed MoUs with Italy, Norway, Japan and an agreement with Israel and what we will be able to offer will be much cheaper than the EVs available outside the country. For instance, our product will cost around $9,000, while an EV in other countries come at around $20,000 or more."
However, some analysts are skeptical about Reva's success in the long run. They feel that it would be difficult for RECC to promote the car, as the petrol-driven Maruti 800, the largest selling car in India, was available for about the same price as Reva. In addition, Maruti had a higher seating capacity (Refer Table VI). Moreover, Reva could go only up to 80 km and had to be charged before that limit. As there were no mobile recharging facilities in India, the car had to be charged at home or at the working place.
12] Depending on the climate, the seats are heated or cooled. The technology was based on the Solid State Heat Pump from the aerospace technology. It affected the back and bottom of the passenger, most vital for comfort.