A prototype of the Mahindra REVA NXR Essay

Last week, the Indian government revealed more details about its plan to spend 230 billion rupees ($4.2 billion) to stimulate a domestic market for electric vehicles. Prime Minister Manmohan Singh said that government and manufacturers would split the pot equally in order to build a domestic industry of low-carbon transport. EV makers and aspiring drivers have reason to doubt the government, which has shown a lack of follow-through in its promises to subsidize electric cars and two-wheelers. In 2010, the government offered buyers a generous rebate on their purchases, but payments stopped a few months later, and the following year the plan was abandoned. India‘s electric auto industry is tiny even by the standards of the fledgling global EV market. The only company making cars is Mahindra REVA, whose two-seater REVAi has sold 2,500 vehicles domestically. Motorcycles and scooters are wildly popular in India, and electric offerings are more diverse, including such players as Yo Bykes, Hero Electric, Ampere and Lohia Auto. All of these manufacturers face a tough sell to the Indian motorist, who has shown reluctance to pay a premium to go electric. Also, frequent power outages have eroded consumer confidence in battery-powered vehicles. Despite these doubts, Mahindra REVA sees big potential for EVs. Early this year it expects to debut a sporty new model, the NXR, and manufacture it in a new factory in Bangalore slated to make 30,000 cars a year within three years. In an interview two weeks ago, Sohinder Gill, the head of the Indian Society of Manufacturers of Electric Vehicles and CEO of Hero Electric, said that he and other leaders in the industry are meeting with government officials to hammer out the details of the EV stimulus plan. In his speech last week, Singh said the subsidies would shave up to 1.5 percent off of India’s carbon dioxide emissions, eliminate the need for up to 2.5 million tons of fuel, and add 6 million to 7 million electric vehicles to the roads by 2020. The last goal may be hard to obtain, considering that the U.S. plan to produce electric vehicles, a far more modest 1 million vehicles by 2015, has been in place several years longer and is already lagging.