In an interview, Reva’s founder and chief executive Chetan Maini spoke about near-term expectations, challenges facing the company and the cost reduction plan that has been put in place in the wake of the rupee’s depreciation.
Mahindra and Mahindra Ltd acquired a majority stake in REVA Electric Car Co. Ltd in May 2010 and renamed it Mahindra Reva. Edited excerpts:
How has the response been for e2o since you launched a year ago? How many units have you sold so far?
Sales have been less than 500, far lower than (our expectations). The auto industry was down the entire last year and that didn’t help us and the policy (government subsidy for electric car purchases) that was supposed to come out, didn’t come out.
So, I think these two have been challenges from our side in this area. Therefore, we also did not push a significant amount of mass media that we started on this area. I think now we’re going to push that a little bit more, we wanted to understand where consumers were and what we found was that the people who took test drives just loved the car.
What’s your near-term target on unit sales?
I think in the next couple of years, with Indian and global markets and new products coming out, we would like to be in 7,000-10,000 units-a-year region. I think we can get there with the government policy and our own product line and infrastructure coming out.
What new products are you launching in the near term?
So far our focus has been on European markets, so a European product will come out and we’ll probably offer that in India too and we’ll also look at some Mahindra platforms coming out. Within the next year, at least a couple of new areas for different markets or consumers, you will see something new.
It’s been nearly four years since you merged with Mahindra. How would you look back at this journey? What have been some of the learnings?
I think, there are two sides to it. Firstly, why do we do it? We had strong electric vehicle knowledge and brand. We wanted to build up more manufacturing expertise, we wanted to leverage supply chain. We wanted to leverage the distribution network.
I think all three we’ve been able to do but at different levels of success. In general, there has been a positive impact on all these areas. From our side, we were looking to create newer revenue streams and Mahindra was looking at electrifying its own platforms. So that’s happened; we’ve electrified three platforms during trial and hopefully, at least one should roll out by the end of this year.
What have your technology investment budgets been like?
I’d say it probably hasn’t been up to the level we’d like it to be because the world is moving very quickly. Having said that, we’re probably higher than anyone else in the country—not globally because globally the investments in these are huge.
In the country, our investments are definitely higher than anyone else. Today, we have 450 people in the country; we have 200 people in research and development that is almost 40% of our group. So there have been a lot of investments and it’s continuing.
How have you dealt with the rupee’s depreciation? Have you looked at cost reduction?
It’s been very challenging because as you can imagine, even though we make most of our electronics in India, chips and stuff come from overseas, batteries are imported. So the (cost of) raw materials that go into making it have gone up tremendously. We have embarked on a very high-level of cost reduction plan
and done that.
Also, the new variant we launched is an outcome of that. We were actually able to further lower the cost—we managed to bring it under the ₹ 5 lakh price point. So yes, it’s been challenging, but we’re hoping over time with exports, as an organization we can deal with it better to offset some of the cost structures.
It’s been a host of areas that we have looked at in terms of electronics, new level of electronic development, optimization of design, new user materials in the area and in the base version, we’ve given little smaller battery packs that give 80 km.
What we found is that a lot of customers said that they didn’t want the infotainment and the plush seats and the interiors, etc—they just wanted the basic car. What we’ve done is de-scope some of those areas. And that resulted in some cost reductions.
Just to cope up with rupee depreciation, I don’t think we’ve been able to overcome it at a cost level for consumers but we’ve been at least able to overcome some of the impact in this area.