Mumbai / Bangalore: India’s leading utility vehicle maker, Mahindra & Mahindra , agreed to buy a 55% stake in pioneering electric car maker Reva, aiming to be a significant player in the global electric vehicle industry.
The deal gives Mahindra a foothold in the small but increasingly crowded electric vehicle industry, which is attracting global players such as Toyota and General Motors as they search for cleaner alternatives to petrol.
“Mahindra wants to consolidate its position as a company which wants to manufacture everything on wheels,” said Arun Kejriwal, director of KRIS Research. “This acquisition would go a long way in helping achieve this.”
Mahindra is taking the majority stake in Reva Electric Car Company by buying a part of the founder’s stake, and investing an additional Rs45 crore ($9.5 million) in fresh equity.
It did not disclose details of how much it was paying for the entire holding.
“We plan to be a significant player in the global electric vehicles segment,” Mahindra’s chief operating officer, Rajesh Jejurikar, told reporters in Bangalore.
Reva, founded by technocrat Chetan Maini in 1994, is a joint venture with California’s AEV LLC and was one of the first companies to launch electric vehicles on a commercial basis in 2001.
Maini, a mechanical engineer who tinkers with remote control models of helicopters and planes in his free time, will continue as chief technology officer.
The Bangalore-based firm had struck a deal with the Indian unit of General Motors last year to make electric cars in the country.
Maini said it was not clear if General Motors would continue with the agreement after this deal and was now looking at alternative options in India.
Highlighting the growth of the sector, GMIndia has lined up an electric version of the Chevrolet Spark to be launched later this year, while Hyundai Motors has already begun selling an electric version of its i10 hatchback.
Bright And Boxy
The boxy, bright-coloured two-seater Revas are priced at Rs300,000-Rs360,000 ($6,329-$7,595) in India, and mostly run in Bangalore and London.
It can be fully charged in seven hours by plugging into a regular 15 amp socket at home.
But the company has sold little more than 3,000 units, branded as G-Wiz in Britain, as its high price and a lack of recharging infrastructure and subsidies in its home market deter buyers.
The transaction will push Mahindra, which is scheduled to launch pick-up trucks in the United States towards the end of this year, a step closer to being a complete automotive vehicles manufacturer.
The announcement helped push up Mahindra’s shares 4.2% before the stock trimmed gains to 2.4% by 2.50 p.m., while the main index was up 2%.
Shares in Mahindra, valued at $6.4 billion, have fallen about 2% this year, less than half the near 7% drop in the benchmark index.
Last year, Mahindra had launched a range of scooters and made a foray into commercial vehicles with the 1-tonne Maxximo.
Mahindra aims to use its wide distribution network to sell the Reva across India soon, said Mahindra President Pawan Goenka, who will be the chairman of the newly christened Mahindra Reva Electric Vehicle Company.
The government gave a fillip to the electric vehicle industry in this year’s budget by removing customs duties on imports of critical components.