After lawsuit, Reva looks at resolving differences with US firm

Mahindra Reva Electric Vehicle Pvt Ltd (MREV), the world’s largest electric car manufacturer, will look at measures to resolve differences with its joint venture partner, Bannon Automotive.

New York–based Bannon Automotive had filed a case against MREV on December 20 for allegedly violating an agreement to share technology for developing and selling Reva models in the US and the Caribbean Islands.

Chief of operations, MREV, R Chandramouli said, “Mahindra Reva has just learned of the lawsuit. We have not received any formal communication from Bannon or its lawyers. Once we receive it and are able to review the matter, we will respond appropriately.”

According to an arrangement firmed up last year between Chetan Maini, founder of Reva, and William F Harley III, owner and controller of Bannon Holdings that owns Bannon Automotive, Reva was to provide intellectual property and engineering designs to build all current and future models, including the Reva ‘I’, Reva NXR and the NXG. It was also agreed that Reva would have an initial 52.5 per cent equity stake in the venture and Bannon the remaining 47.5 per cent.

Mahindra and Mahindra (M&M) picked up a 55.2 per cent stake in Reva this May for an undisclosed amount. Bannon Automotive has sued Mahindra Reva for $25 million for not adhering to the licensing agreement. The company has claimed in its lawsuit that MREV is framing plans to manufacture and market electric cars on their own in the US or is considering licensing a third party to do so.

Bannon Automotive held MREV had not co-operated in providing tools for setting up a factory and in extending technology and prototypes for manufacturing the two-seater NXG and four-seater NXR for the US market.

Bannon has sought a permanent injunction against MREV which, if granted, would bar the company from manufacturing and selling electric cars in the country.

This is Mahindra’s second lawsuit in the US, with the company already being involved in a legal tussle with Global Vehicles USA Inc (GV). In a lawsuit filed in June this year, GV had accused M&M of inordinately delaying the launch of its pick-up trucks in the country. M&M had attributed the delay to regulatory issues.

GV was appointed the sole distributor for M&M pick-up trucks in the US market in 2006. Mahindra was scheduled to launch the trucks by the end of 2009 but missed two deadlines due to regulatory issues including emission norms and road worthiness rules. The pickup were scheduled for launch by the end of 2010 but it is not clear whether the company would be able to achieve its target.