There is no deal with Bannon Auto, says Mahindra Reva

Mahindra Reva Electric Vehicle has chalked out a new roadmap for its e-cars after acquiring 55% stake in Bangalore-based Reva Electric Car Company (RECC). But it doesn’t look like it’s going to be smooth ride for it with one of RECC’s manufacturing and marketing partners in the US going to the court to enforce an agreement entered before the Mahindra buyout.

Unperturbed, the first mover in the e-vehicle space is looking to drive into the fast lane in the domestic market with enhanced distribution prowess.

R Chandramouli, chief operating officer of Mahindra Reva spoke with DNA on the company plans and other issues. Excerpts from the interview:

How has this year been for Reva?
The year has been great for us. We have expanded our base from Bangalore and Delhi to cities like Kochi, Jaipur and Hyderabad. We are focusing on expanding our distribution, thanks to Mahindra. For Mahindra, the move will widen their customer base.
 

What is the future for electric cars?
With petrol and diesel prices going up every second month, I see a bright future for electronic vehicles.

But hasn’t the start been slow for the company? You have managed to sell only 3,500 cars globally till date.
Yes, it has been. But Reva runs on a new technology and it takes time for people to accept anything new. Right now, the focus is on expanding our distribution network. Let the people feel the car. I am confident sooner or later sales will pick up.

What makes you so confident?
There are three things that work in our favour. First is the petrol price which shoots up every now and then. Second is the fact that our car is automatic which makes driving easy and tension-free. The third and the most important factor is it’s (e-car) pollution-free. I place this above everything else. It has been found that customers who go for our cars place environment ahead of petrol price and other factors.

But petrol prices do play an important role?
Yes, it does. But people do not mind paying a high petrol price. However, what they do mind is the frequent hikes in rates. If the rates are constant for some period, they really don’t mind a little hike once in a while.

Who are your target customers?
We pitch Reva as the second car for a family. People are generally very excited about their first car. They want to take for long rides. This will not be possible in case of Reva, which is excellent for ride within the city.

But wouldn’t positioning it as the second car be a disadvantage?
What is the point of positioning it as the first car when we won’t be able to satisfy the needs of customers? There are many infrastructural problems associated, which needs to be sorted out first. Till we have charging points at highways, we are happy to position it as the second car. Also, a survey has shown that more than 30% cars sold in India go to households already having a car.

In terms of cost, how much do you think the customer is able to save with an e-car?
An average person spends up to Rs4,500-5,000 per month for around 1,200km for a conventional petrol car. You can drive a Reva for a year for the cost of a tank of petrol. By using an electric vehicle, on a yearly basis you can save around Rs50,000 on fuel expenses alone. Over a five-year period you could save around Rs2 lakh (including replacement of a battery). Reva is low on maintenance since there are no oil filters, air filters, spark plugs, radiators and other things conventional cars have. Now with 20% government subsidy, a person is able to save even more.

What other initiatives should the government take to make the car more popular?
Government can definitely take more measures. In London, the government provides a dedicated parking lot for people with electronic vehicles. We can follow the same model here as well as parking is a big menace. 

Even here some state governments have come up with sops. For instance, Delhi provides 12.5% waiver in sales tax as well as 15% subsidy.

What are your plans for the US market and what has happened to your deal with Bannon Automotive?
We don’t really have a presence in the US. Also, there has been no deal with Bannon. We have just learned of this (Bannon) lawsuit. We have not received any formal communication from Bannon or its lawyers. Once we receive it and are able to review the matter, we will respond appropriately.