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January 14, 2007

Reva re-charges with VC backing

Businessworld has an article on electric car maker Reva Electric Car Company (RECC) is planning to use its recent $20 million funding from Draper Fisher Jurvetson (DFJ) and Global Environment Fund (GEF) to introduce new models, beef up manufacturing and expand markets in India and overseas.
This year, RECC plans to roll out more than one model — it already has five prototypes ready. “DFJ and GEF have provided us with a global perspective and strategic vision,” says Maini. DFJ, with $3.5 billion in capital commitments worldwide, has invested in electric sports car manufacturer Tesla, energy storage device manufacturer Deeya Energy and photovoltaic solar cells maker Konarka Technologies. Timothy Draper, founder and managing director of DFJ, will join RECC’s board along with H. Jeffrey Leonard, president and CEO, GEF (which invests in clean technology and emerging markets).

What went wrong in the past five years? In 1997-98, when Reva was in the final stages of conceptualisation, its makers factored in the prevailing government subsidy of Rs 1 lakh for electric cars. But, by the time it was introduced in 2001, it had been withdrawn. The price of the two-seater (Rs 2.5 lakh) was almost the same as that of a Maruti 800, India’s cheapest four-wheeler. The target customer segment — working women, professionals, college goers and the retired — was not impressed, even though the cost per km was as low as 40 paise. It had a top speed of about 60 km per hour and a range (distance it can travel on a single charge) of 80 km. Its staggered launch in Bangalore, Hyderabad, Pune, Delhi, and Ahmedabad went unnoticed. Moreover, there were few charging points in these cities. Currently, Reva is available only in Bangalore (RECC is the distributor) and in Ahmedabad (through another dealer).

In Europe, RECC test-marketed its product in 2003 and a UK-based company, Going Green, marketed Reva as G-Wiz in 2004. To date, it has sold more than 800 cars in London — the highest sales recorded by any electric car manufacturer in any city. Its price is competitive at euro 11,000 as against euro 15,000 of its competitor NICE’s Mega City developed by Aixam-Mega group of France. It also offers a better range — 75-80 km — than Mega City (see ‘Global Tally’).
Arun Natarajan is the Founder of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.