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Lack of government subsidy puts brakes on e2o sales, says Mahindra & Mahindra

Friday, 15 November 2013 - 10:52am IST | Place: Mumbai | Agency: dna

Mahindra & Mahindra (M&M)–the sole manufacturer of the only electric car, Reva e2o–said the company will explore global markets as domestic sales have failed to pick up after the government subsidy got expired in March 2012.

“We will focus outside India where there is good support for electric vehicles (EVs). In fact we have been wooed by many countries to launch our products there or make our products there,” said Pawan Goenka, executive director and president–farm equipment and automotive sectors for M&M.

The company is currently working on a variant suitable for the European markets with potential countries being the UK and Norway. The product is expected to be ready by the first quarter of next fiscal. It is already selling e2o in Nepal in a limited way and will soon launch it in Sri Lanka.

Back home, despite the absence of government subsidy, M&M in March launched e2o, the car that was developed by Reva in the hope sales would eventually pick up. M&M had expected to sell 400-500 units per month and also created a capacity of manufacturing 30,000 units annually at Reva’s plant near Bangalore. Reva was acquired by M&M in 2010.

However, sales failed to pick up due to higher pricing and inadequate infrastructure like charging points, customer incentives, funding research and development (R&D) etc. The company has managed to sell only 400 units so far since its launch this year.

Talking to reporters on Thursday the management said the disappointing sales despite evoking encouraging customer response was due to higher pricing following the subsidy withdrawal.
“Because of the pricing situation, the product is not performing anywhere near to what we would have thought,” said Goenka,.

The government initially provided subsidy on the purchase of electric vehicles (EVs) which was short-lived leading to proportionate spike in prices that in turn hit EVs sales, including two-wheelers.

Interestingly Anand Mahindra, chairman of M&M at the inaugural launch of e2o this March had said, futures sales would not depend on government aid “but it would have been nice if there was some help from the government.”

As an extension to the EV policy, the government announced an ambitious plan for EVs last year setting a target of selling 6 million vehicles by 2020. The central government last year approved Rs 23,000 crore plans for the electric and hybrid vehicle production over the next eight years.

However, the plans remained on the drawing board with no signs of being implemented in the near future. “We cannot say when the subsidy would come in. I hope we see some support soon from government for the green technology,” said Goenka.

Meanwhile the company is working on different vehicles in order to expand its EV portfolio. M&M plans to hold back new initiatives in absence conducive government policies. “We certainly would be delighted to launch more EVs. We have e2o right now and we are working on variants of e2o which will be launched in the next 12 months. Verito (sedan) electric that would be ready for launch in the May-June period. If subsidy is not there, we will not launch Verito electric,” said Goenka.

Goenka said the electric version of light commercial vehicle, Gio and Maxximo would be ready for launch before this fiscal end. Rs Rs With no subsidy, we will have only e2o for sales,” Goenka added.

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