Huge boost on electric cars

Huge boost on electric cars

  June 17, 2010    Pradeep Padma

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The electric car segment received a huge boost on Wednesday with utility major Mahindra and Mahindra (M&M) buying out a controlling stake of 55.2% in the electric car maker Reva. The company also promised to make an equity infusion of Rs 45 crore and has renamed the company Mahindra Reva Electric Vehicle Co following the joint venture.

Though company officials from both sides refused to divulge investment details, analysts pegged the stake sale anywhere between Rs 275 crore and Rs 325 crore. However, the question lingers about the future of electric cars in a country like India where car penetration is still below 10 in a population of 1,000.

A senior official of apex auto body Society of Indian Automobile Manufacturers Association (SIAM) said at present, there is very little scope for electric cars in India. “Customers first look for value for money. As electric batteries are very expensive, costs of the vehicle also shoot up,” he said, adding that infrastructure issues also are big deterrent for electric cars.

Abdul Majeed, auto leader at global consulting firm PricewaterhouseCoopers India said what electric car companies really need is infrastructure to keep up with the dream. He said, “Just like we have petrol/diesel pumps across the country, charging stations also have to come up for electric vehicles.” Though Majeed expects little growth in electric cars immediately, he believes these could become more popular in the next four years. “The current generation is a lot more sensitised about the environment than previous ones. In the years ahead, the electric form of vehicles will become a lot more popular. We are already seeing the trend globally,” Majeed said.

President and managing director of General Motors India, Karl Slym, said that initially the popularity of electric cars might be on the lower side. But with government assistance and more general awareness, volumes would start increasing.

However, the country's two largest producers of passenger cars have ruled out any immediate plans of entering this segment. Chairman of Maruti Suzuki, RC Bhargava, said that at present, the electric cars did not seem viable simply because of space constraints. “Almost 90% of the Indians park their cars on the roadside, where will they charge the cars?”

Bhargava also added that in the present scenario with already a severe power shortage electric vehicles could face some troubles. “If the bulk of the electricity comes from coal, I don't think it is too environment...