‘Reva will soon adopt a licensing model’

Bangalore-based Reva Electric Car Company (RECC), which is on course to drive in two new cars, is also revamping its business model. For the first time since inception in 1994, India’s only electric-car maker plans to adopt a shared global manufacturing model. It is identifying licensee partners who will distribute the cars under the Reva brand name. DNA caught up with Chetan Kumaar Maini, deputy chairman and CTO, RECC, for a chat on the company’s new business model and the strategies going ahead. Excerpts:

With your new models expected to hit the roads by 2011, what is the capacity augmentation?
We will commission a new assembly plant close to our current 6,000-unit annual capacity plant in Bommasandra. The new 18,212 square metre facility will have an annual capacity of 30,000 units and be operational by year-end. We invested Rs 30 crore for this new plant. Also, as we are planning to scale up, we are tweaking our business models.

Can you elaborate on this new business model?
In the next one year, we will reach out to 12 additional overseas markets from the current 24 and move to over 25 new cities in India from just Bangalore and
Delhi. As we expand, we believe it’s imperative that manufacturing is shared globally with partners. We are identifying licensee partners who will procure our cars in completely knocked down (CKD) condition or as completely built units (CBU) and sell it under the Reva brand.

Also, currently we depend  entirely on the Internet for sales. With licensee partners, we could get better access to different markets. Due to our early starter advantage, we are also looking to license our technologies like drivetrain management to other OEMs who are new in the business.

Which are your biggest markets? Which are the new countries RECC is targeting?
Half of the 3,000 cars we have sold till date were exports. This is dominated by the UK and Norway. We expect the share of exports to increase to 60% in the next few years.  The new markets we are targeting would primarily be in Europe, where governments are encouraging the use of electric vehicles.

A few months back, we had no plans to enter the US, but it’s a difficult market to break into. However, now, with President Obama’s $2.4 billion grant to drive in 1 million electric cars by 2015, the US looks very attractive. Even domestic  buyers are beginning to accept our cars and hence, we are moving to more cities. Our old models with lead acid batteries will continue to sell in India and we have no plans to phase them out.

Can you give us an idea of the current status of the electric vehicle markets?
Electric cars today constitute around 0.5% of entire global car sales. Currently, there are only a handful of companies like Tesla and ourselves manufacturing these cars. However, with the stress on going green and sops from several governments — particularly in Europe and the US — the market will see a quantum leap going ahead. The UK government, for instance, offers a tax credit of up to £5,000 for electric-car buyers. A host of biggies, including Nissan, BMW, Renault, Mitsubishi and General Motors will soon enter the segment.

Are you looking for funding?
We expect to break even operationally in the next 6-9 months. Our current expansions will be met through the funding we received from venture capital investors Draper Fisher Jurvetson and Global Environment Fund. We are seeking funds for our next phase of growth, but I cannot elaborate on the amount we will raise.