Wednesday, May 26, 2010

Mahindra & Mahindra bought stakes in Reva Electric Car Company

Mahindra & Mahindra, the largest SUV maker of India, is looking forward to expand its business in the electronic vehicles segment. On May 26, 2010, Pawan Goenka, President of the automotive department, came to Bangalore and announced that his company purchased stakes in Reva Electric Car Company.

Under the agreement, M&M bought 55.2% stake in the company. M&M bought existing equity from the promoters and invested another Rs. 450 million making it a strong player in the global electric vehicle market. After the completion of the deal, the company will be renamed Mahindra-Reva.

Reva Electric Car Company (RECC) is a Bangalore based company. Formed in 1994, the company was a joint venture between the Maini Group and AEV LLC of California and backed by two US venture fund investors- Global Environment Fund and Draper Fisher Jurveston. It is speculated that the company is valued at around $100 million.

Despite being the first entrant, RECC did not see much success in India for the high price and unconventional looks of its model. More over, there is currently no infrastructure in India to support electric cars and the changing technology is another big problem.

Till date, RECC sold 3,000 units mainly in Bangalore, London and in Delhi. The Maini Group is now looking forward to raise funds to expand Reva’s business.

The company is looking forward to popularize its Reva NXR (NeXt Reva) and Reva NXG (NeXt Generation). It is going to build a new vehicle assembly plant in Bangalore that would churn out 30,000 units per year at an investment of Rs. 300 million.

In India, sales of electric vehicles will reach 80,000 units by 2020 which is almost zero at the moment. This is why GM got interested to get into collaboration with RECC.

In September last year, GM announced that Reva would supply drivetrain kits for its Spark electric car. Nothing had been finalized yet and GM officials did not comment on the matter. Stake in Reva would help M&M to improve its Bijlee three wheeler segment.

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