The Reva: Why Americans May Never See the Best New Car on the Road

The capillaries of India's cities are clogged with every imaginable form of cacophonous conveyance: hulking buses, braying bullock carts and motorbikes stacked with families of five all jostle for space on the roads.

The result is that most of India's commuters idle angrily in traffic for hours every day. The government is trying to play catch-up with a long string of mass transit projects, but most residents pine for the status, peace and luxury of a car all their own.

After almost a year of delays, the Indian automobile manufacturer Tata is finally set to answer that call by releasing the world's cheapest car next month. Priced at about $2,000, the Tata Nano is a five-seat, air-conditioned, gasoline-powered car. It is also a nightmare for environmentalists, who predict sky-high sales will further pollute India's already smog-filled air.

So why isn't India's other indigenous automotive invention taking the world by storm? The Reva is the world's most successful electric vehicle. Manufactured on the outskirts of the south Indian city of Bangalore, it is as popular there as it is on the streets of London. Cumulatively it has been driven a combined 55 million kilometers in 20 major cities around the world.

But despite patented technologies, government subsidies, a groundswell of interest in electric vehicles and innovative marketing practices, the Reva is unlikely to dent the global automobile market with as much force as the Nano.

That's because the environmentally friendly, near-silent plug-in Reva costs three times the Nano and holds only a limited appeal to cash- and credit-strapped first-time car buyers.

"It is very much a second car in the household," says Chetan Maini, the company's chief technology officer and deputy chairman, who has been tinkering with cars since he was a kid and once raced a solar-powered vehicle across Australia, finishing third.

Maini points out that five years ago, 22 percent of cars sold in India were a family's second vehicle; today that number is nearly 40 percent. "The highest growth is in [the] second car buyer [market]."

Maini received a master's degree in mechanical engineering at Stanford in the early 1990s, focusing on hybrid cars at a time when the field was relatively uncrowded. He relocated to Bangalore in 1999, when California's electric-car regulations fizzled out, launching the first vehicle in India in 2001 and exporting to Europe three years later.

Today, the company retains a strong Bay Area connection, with a key supplier of electronic components and a key venture capital backer (one of three in the U.S.) based there. The company also holds about 10 U.S. patents for the car's energy-management system.

"It was a collaborative effort," says Chetan. "We had suppliers based in California and India."

If the Reva were legal in the U.S., it would be significantly cheaper than the price analysts are expecting for the Volt -- the most anticipated electric vehicle in America -- when it hits showrooms in November 2010. Analysts estimate the Volt will be priced at around $40,000, but after federal and state subsidies and tax write-offs, the price could be closer to $30,000.

That might bring it into the range of affordability for many middle-class Americans, but it is still the price of 15 Tata Nanos.

The reason the Reva is not available yet in the U.S. is the same many European cars do not appear on America's roads: strict safety and testing regulations make the cost of entering the U.S. market prohibitively expensive.

"Our next-gen products might be able to fit that bill," says Maini, who says the company plans to introduce one new model every year.

In the United States, vehicles like golf carts and other small electric cars commonly found on college and corporate campuses and retirement communities are not subject to the same safety standards as conventional cars. These smaller, electric vehicles usually have a top speed of 25 mph and are barred from driving on roads where speed limits exceed 35 mph. By comparison, the Reva has a top speed approaching 65 mph.

These much smaller vehicles "don't have to meet the same safety standards, but the problem is there's no category between those and the conventional vehicles," says Daniel Sperling, director of the Institute of Transportation Studies and a professor of transportation engineering and environmental policy at the University of California, Davis.

"That category doesn't exist in the United States but does exist in Europe," says Marc Geller, of Plug in America, an electric-vehicle education and advocacy group. "The market is so small," says Geller. But he insists that despite the market's small size, "if someone comes out with a fairly expensive electric car, there is going to be greater demand than supply."

That kind of demand is what Reva is banking on, outside the U.S. for the meantime. Despite the current global economic slowdown, Reva is nearing completion of a state-of-the-art, environmentally friendly plant in Bangalore, with the capacity to eventually produce 30,000 cars a year, with the aim of exporting about half to the foreign market. Tata, by comparison, plans to churn out nearly 250,000 Nanos in its first year of production.

But Reva has a leg up in experience. Currently there are over 3,000 Reva cars in production, capturing the interest of early adopters around the world, from organic grocers in Spain to police in the Indian city of Chandigarh, as well as drivers in Rio de Janeiro, Brazil, and Dubai.

But the car is unlikely to be an instant panacea for the world's warming woes. As in India, the car is marketed in Europe to a mostly affluent, environmentally conscious, urban demographic, one that commutes to work and owns a home. The tiny car requires seven hours for a full charge and 2.5 hours for an 80 percent charge, which makes it difficult for buyers who live in apartment buildings and without access to a dedicated outlet.

With a range of about 40 miles on a full charge, the current version of the Reva, the Reva-i, must be plugged in at the end of each day, making it a logistical hurdle for anyone without a house and a garage.

"You need to have off-street parking," says Keith Johnston, the Reva's president of European operations. "It's been a real limitation until now." The company is launching its third-generation model in May, with an extended range of about 75 miles and faster charging times.

London provides numerous incentives for electric-car owners, from a reduced parking charge and no road tax, to waiving the congestion charge, which is about $11 per visit to central London.

So far 1,000 commuters, including a clutch of celebrities, have bought Reva vehicles in London (marketed there as the G-Wiz), making it as popular in the British capital as in the company's headquarters in Bangalore.

"In a G-Wiz, you can drive for the cost of a price of petrol for a month," says Johnston.

The rest of Europe has followed suit. In Norway, there is no import duty, no value-added tax and the vehicle can drive in bus lanes. France provides a 3,000 euro purchase subsidy. Many European cities are planning to increase the number of public outlets where electric vehicle owners can plug in and charge up.

Reva is trying not only to change the way people drive, but also shop for their cars. In London, the partner company, GowinGreen, arranges for a customer to test drive a Reva in any of 16 locations. If they like what they drive, the customer goes home, orders the car online and waits for home delivery.

For maintenance, a mechanic visits regularly, armed with little more than a laptop to diagnose the energy-management systems.

The company has so far tied up with separate distributors in each of the 10 countries in the European Union and plans to sign up 10 more by the end of the year. It is also building up distribution networks in Southeast Asia and South America.

The buying process is similarly unique in India, where Reva recently inked an agreement with the country's most ambitious, big-box-style electronics retails chain, Reliance Digital, which plans to open 150 stores by 2012. The stores, many around 20,000 square feet or more, will display the Reva, along with home theaters, audio systems, microwaves, laptops and software.

"This is a plug-and-pay product," says Ajay Baijal, the president of Reliance Retail's electronics division. "It's being sold as an electrical product, as a nonpolluting vehicle."

Despite being the cheapest automatic car on the Indian market, the newest version of the Reva, due out in May or June, with lithium-ion batteries and a solar panel on the roof, will cost around $14,500, or nearly seven to eight times the amount of the Nano.

The bulk of the price jump from the current generation Reva to the next is the battery pack. But Chetan Maini says the Reva is "battery agnostic," meaning that when more advanced, low-cost lithium-ion batteries become available, Reva can improve their product without redesigning the car.

But the price of the Reva also varies considerably depending on where it is sold. One of the cheapest places to buy the Reva is New Delhi, where various tax breaks and subsidies bring the car's price to around 300,000 rupees, or $6,000. That's one-third what Sean McGuire paid for it in western Ireland, where it costs about 15,000 euro, or about $20,000.

A football fan, McGuire regularly drives it to the nearby stadium where he plugs in to an available outlet. He has already put 11,000 kilometers on the vehicle in its first year and plans to order a windmill soon to power it with zero emissions. "They go from village to village in India on terrible roads, so I presumed it would be just what I would need in rural Ireland," says McGuire. "It's brilliant."