Delhi vs. Detroit: India's Cheaper, Greener Cars

Will Delhi surpass Detroit? Probably not. But while GM and Chrysler scramble to stay afloat, India's automakers are kicking into high gear. Last week, Mumbai's Tata Motors began taking orders for its much-anticipated—and much-hyped—Nano. At $2,000, the five-seat, air-conditioned, gasoline-powered vehicle gets about 67mpg and is being billed as the world cheapest car. With its low price and high mileage, analysts expect the car to be a global bestseller. And while Detroit retools to create electric vehicles and hybrids, India already produces the world's bestselling electric vehicle, the Reva. (Article continued below...)

The Reva has garnered far less publicity than the Nano, but the Bangalore company of the same name says that the 3,000 vehicles it's sold since 2001 have racked up more than 34 million miles in developing nations across Asia and South America. The odd-looking, eight-foot-long, two-door hatchbacks are also gaining ground in Europe, where they're a favorite ride among green-minded celebs like Kristin Scott Thomas and Jade Jagger. The base model Reva sells in India for about $6,000 after tax breaks and subsidies, but a newer version (the Reva L-ion) is due out by June that will be equipped with more efficient lithium-ion batteries and a solar panel affixed to the roof. The price: $14,500. With taxes, delivery surcharges and other costs likely to boost that price outside of India, the Reva will still be far more affordable than the $40,000 base price of Detroit's new contender, the Chevrolet Volt, which is expected to go on sale at the end of next year.

To be clear, Reva is unlikely to ever threaten existing or emerging automotive powerhouses like Toyota or Tata or even the teetering GM. But Reva is a surprising bright spot in an otherwise lackluster automotive industry. The company sold about 500 cars last year, but is on track to triple that number this year. Despite the current global economic slowdown, Reva is near completion on a state-of-the-art plant in Bangalore that could produce 30,000 cars a year. In contrast, Tata plans to churn out nearly 250,000 Nanos in its first year of production. But unlike the Volt, Prius or even the Nano, the Reva is primarily designed as an urban runabout, not a long-distance vehicle. The current version of the car, the REVAi, has a top speed of about 50mph and a range of just 50 miles on a full battery, which can take up to 8 hours to re-charge. The L-ion model will have a 75 mile range and take 6 hours to charge.

That may seem impractical to many American drivers, but the specs are apparently reasonable to those in Europe. Sold as the G-Wiz in Britain, the car is a hit in London, which provides numerous incentives for electric car owners, ranging from a reduced parking fees and exempt road taxes, to waivers of the city's 'congestion charge,' a $11 fee for driving in downtown parts of the city. A company called GoinGreen arranges G-Wiz test drives at 16 locations. Consumers can order the cars online and have them delivered to their homes. A mechanic armed with little more than a laptop visits regularly to diagnose the energy management systems. To date, 1,000 commuters have bought the rebranded Revas.

"In a G-Wiz you can drive for a year for the cost of a tank of petrol," says Keith Johnston, Reva's president of European operations. The company is making inroads in other parts of Europe, too, finding favor with both drivers and governments. In Norway, drivers can buy Revas with no import duty and no value-added tax and the cars are allowed to drive in bus lanes. France provides a 3,000-euro (U.S. $3,800) 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 has built relationships with separate distributors in each of 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. But breaking into the U.S. car market could prove more difficult. Strict safety and testing regulations make the cost of entering the country prohibitively expensive. That's odd considering the Indian-made Reva has so many American connections. The company holds 10 U.S. patents for the car, mostly in the area of energy management systems.

"We have suppliers based in California and India," says Draper Fisher Jurvetson, a San Francisco venture capitalist, whose firm is one of three in the U.S. that have jointly plowed $20 million into Reva. "It was a collaborative effort." So don't count Reva out yet, says Chetan Maini, the company's founder and chief technology officer, who graduated from Stanford University and worked on electric cars in California, before relocating to Bangalore in 1999. Maini's decision to move came after the California Air Resources Board reversed a 1990 mandate that 10 percent of new cars sold in the state be nonpolluting. Maini won't reveal when he expects to sell cars in the U.S., but Reva plans to introduce one new model every year. One of them could hit American roads sooner rather than later.

Meanwhile, the Reva continues to secure its European foothold. In the western Ireland city of Galway Sean McGuire has driven his Reva some 6,600 miles since he bought it a year ago. A soccer fan, he regularly drives to a nearby stadium where he plugs it in to any available outlet. Any concerns about the Indian car's reliability and drivability? "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," said McGuire. "It's brilliant."