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ICICI Lombard Expert Blog

Future Plans of Mahindra Reva goes Void due to Government Policy

May 08 2012

The electric car Reva from Mahindra has experienced a sharp drop of about 50 per cent in its sales volume soon after the enhanced subsidy scheme applied by the Government. Essentially the arrangement presented by the Ministry of New and Renewable Energy is not active any more. In fact, it has lapsed six months prior to the rollout of a new and improved plan from the National Council of Electric Mobility.

Essentially as per disclaimers, sponsorship was supposed to brand the electric car Reva as an inexpensive vehicle in around 2 major ways. The first is via amounting to 20 per cent of the ex-factory cost or via 100,000 INR, any of which stands less, making the Reva a lot more affordable on the market by about 75,000 and ranging to 93,000 INR.

Mr. Pawan Goenka, President of Automotive & Farm Equipment Sectors, Mahindra & Mahindra Ltd. believes that the withdrawal of this funding has been a hold-up for the reason that the company was expecting it to last. According to an ex-showroom in Bangalore, soon after the subsidy lapse Reva cars are available anywhere between 4 and ` 4.87 lakhs at present.

For Mahindra and Mahindra, the future appeared to be quite promising. However, now the future is nothing but bright due to the abrupt plan. It has created a kind of vacuum that impends the future policies. It was in May 2010 that Mahindra acquired Reva with an investment of 100 crore INR for the project. Thereafter, it has increased its holding from 55.2 per cent to 64.26 per cent.

Though the old funding was definitely in support of consumers, the new one to be launched by the National Council of Electric Mobility will be announced only in the second quarter of this financial year for supplementary promotional activities of electric vehicle sales. Reva also posted significant growth in sales of about 35 per cent in the fiscal year 2012 via selling about 470 units within a year.

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