Reva plans battery leasing to push car sales

Come 2010 and Bangalore-based Reva Electric Car Company (RECC) will try various initiatives to increase sales of its electric cars in the domestic market, so far at only around 200 units a year.

One strategy involves charging customers only for the electric car, minus the battery pack which propels it. “The project is called ‘battery leasing’. By doing this, we will be able to reduce the cost of an electric car by about Rs 60,000. We are in talks with banks for the battery leasing project,” says Chetan Maini, deputy chairman & chief technology officer. Battery leasing would bring down the cost of the lead acid fuelled car to around Rs 2.40 lakh (ex-Delhi showroom), and of an advanced lithium battery car to around Rs 3 lakh.

Battery leasing is the first leg in Maini’s four-pronged approach to increase sales of electric cars in the domestic market. The next step is to expand Reva’s dealerships, which have clustered in Bangalore and Delhi. Last month, RECC signed a technological joint venture with General Motors India to supply its plug-in electric car technology for GM’s entry car, Spark. The electric Spark will debut in 2010. “This joint venture also gives us an opportunity to sell the Reva brand of cars in the 175 sales outlets of General Motors,” says R Chandramouli, president (sales & marketing) of RECC. In the first phase, Reva electric cars would be available at GM’s 30 dealerships.

The third leg to increase sales of electric cars in the country revolves on persuading state governments to reduce the various taxes levied on these. Currently, the excise duty on electric vehicles is nil. But manufactures say the components used in an electric vehicle are taxed at 8 per cent, while those that are imported are taxed between 7.5 and 10 per cent. “This duty is passed on to the customer, since there is no way a component manufacturer can take credit on the taxes he has already paid while manufacturing the spare parts,” says Chandramouli. He says by bringing the excise duty on components to nil, the cost of an electric car could be reduced by around 6 per cent.

Delhi city is the most generous in offering subsidies for electric vehicle buyers. First, it offers a subsidy of 15 per cent on the price of the vehicle, then an exemption of the 12.5 per cent value added tax (VAT), and it has also removed the road tax on these vehicles. Prices of electric vehicles are cheaper by 18 per cent in Delhi when compared to prices in the other states. Chandramouli says tax exemption on electric vehicles should be uniform across the country, which will further boost usage.

The fourth leg revolves around the new models, Reva NXR and NXG, which the company unveiled recently at the 63rd Frankfurt Auto Show. Executives say these models which will go into production post-2009, the NXR in 2010 and NXG in 2011, have already got good customer response. Further, at the Commonwealth Games 2010, Chandramouli says the NXR will be showcased.

With these initiatives, RECC hopes to increase the number of electric cars it sells in the domestic market to around 1,500 units yearly from the 200 units it sells now. It hopes to export a similar number. It has recently increased production capacity from 6,000 to 30,000 units a year. “Production at the new facility will begin in the first quarter of 2010,” says Maini, who began selling electric cars in the country in 2001.