Mahindra REVA

Demand Estimation and Forecasting

Edwin Thomas (10P016) _____________

Harsh Maru (10P018) _____________

Kuntal Das (10P025) _____________

Manu Kulkarni (10P028) _____________

Section 1: Introduction

(No of words: 2048)

Contents

I.Mahindra Reva – A Brief Introduction.......................................................................4

II.Purpose and Objectives...........................................................................................4

III.Justification and Significance of the project:...........................................................6

IV.Outline/Flow of the project:....................................................................................7

V.SWOT Analysis:........................................................................................................8

VI.Summary of the section 1:...................................................................................10

VII.References:.........................................................................................................10

I. Mahindra Reva – A Brief Introduction

Mahindra Reva is the latest member of the Mahindra group. The group acquired

majority stake in the Reva Electric Car Company (RECC) in May 2010 and renamed it

as Mahindra Reva Electric Vehicle Company (Mahindra Reva). Established in 1994 in

Bangalore as a joint venture between the Maini Group of Bangalore and AEV LLC of

California, US, RECC is the only existing player in the electric car segment of the

automobile market. Company's first product came out in June 2001 after seven years of

R&D known as Reva Car. Dr Pawan Goenka is the Chairman of the newly constituted

board and Mr Chetan Maini, who is the co-founder of RECC, will be in Mahindra REVA

as Chief of Technology & Strategy and will continue to be on the board.

Reva has several awards and recognition to its kitty. They include 'Thomas Alva Edison

Award for Innovation' by Young Entrepreneurs Organization YEO and the Edison

presentation Foundation in Mexico, 'Ms Swami Nathan Award' by Rotary club of Madras

East, 'Golden Peacock Award' by Institute of Directors, New Delhi, 'SESI Business

Leadership Award' by Solar Energy Society of India and 'Most Ethical Car Award' in UK

Reva I, the world’s best selling electric vehicle has been sold in India since 2001 and in

UK since 2003. More than 3500 units of the car have been sold globally. The new

models Reva-NXR and to be released Reva-NXG are expected to give the company a

better edge in terms of technology. The completion of the new plant in Bangalore with a

capacity of 30,000 cars is another advantage for Mahindra to scale up to the future

challenges.

II. Purpose and Objectives

In a market which is increasingly getting sensitive towards the environmental issues, the

future of electric cars is bright. With the advance in battery technology which will help to

increase the run-time of the cars, the low running costs also provide opportunities for

the companies. The dwindling fossil reserves also caution the market.

Mahindra group had been involving in other concepts of electric vehicles (EV) in the

past also. The group’s previous concept of Bijlee never really took off. But the new

found partner in Reva has given Mahindras a new opportunity to redesign Bijlee, its

previous EV model and also the new models of Reva’s own EV. The RECC which has

been involved in developing EV technology for the past 16 years, gives Mahindra the

technological leverage that it needs. At the same time the way the sales was going for

the RECC was not encouraging. There is a definite rethinking as well as restructuring of

marketing that would be needed for the company to be a successful venture for

Mahindra group.

It would be interesting to study how the RECC has been performing in the past years

and how the technological advantage that Reva provides will help Mahindra counter the

global competitors who are planning to enter India with their own electric vehicles. The

General Motors which is planning to come out with the electric model of spark- Volt, had

an agreement for co-operation with Maini group. But as expected, after the Mahindra

deal GM backed out from the agreement. Now there will be new entrants as well as

advanced technologies that will come in to play. The purpose of the study is to analyze

the marketing strategy followed by the RECC and trying to study how the future of the

company could be shaped.

RECC has been facing the crunch for funds as the sales figures were not picking up.

since the start of production in 2001, it has barely been able to sell more than 200 units

per year. The reluctance of the Indian car users is the main reason. Coupled with the

poor distribution and service network, Maini group was having issues. With the joining of

Mahindra, the new Mahindra Reva can get fresh capital for developing technologies.

This also provides the distribution network which was a big challenge for the Maini

group.

The challenges faced by M&M are many. The EV technology is still in the evolving

stage and reaching maturity is still very far. There are also problems with battery

technology. A major factor that controls the price of the car is the battery price. There

are existing problems in India in the battery technology areas also. These problems

faced by Reva needs to be addressed by the M&M.

The major objectives of the study are listed below:

1. The demand estimation and forecasting for Reva

2. Reasons for cold response in domestic market

3. Challenges in terms of technology

4. Challenges from rival companies

5. Global market scenario and future

III. Justification and Significance of the project:

Urban pollution has become one of the biggest concerns in present India. By 2020,

India's population in cities is expected to grow five-fold to a staggering 200 million while

pollution is expected to grow by seven times. With this tremendous growth has emerged

a very critical issue of keeping air and noise pollution in urban areas under control. A

major portion of this urban pollution is due to emission from the increasing no. of

vehicles. But because of the rise in economic activity and population , tremendous

demand in the transport sector will continue especially in urban dIndia.So Electric

Vehicles are the long-term solution to India's urban pollution and planning problem.

Electric Vehicles have been the most sustainable invention recognised for applying

technology to a strong business model and commercial potential. So it is really

important to discuss the future of electric vehicles in India.

While talking about electric vehicles our main point of focus will be India’s first electric

car Reva which is recently taken over by Mahindra Group and now it is known as

Mahindra Reva. Reva is manufactured using a process that uses less energy and

produces fewer carbon emissions than conventional car companies.So Reva is

definitely a solution for conservation of fossil fuels and decreasing the environmental

pollution. But if we look back to the progress of Reva till now in the Indian market then

we would get a rather shabby picture. Till now Reva has not been able to make a

considerable impact on the Indian consumers. It will be really an interesting study how

Mahindra and Reva bring together their complementary strengths. With Mahindra’s

engineering expertise, global distribution network, sourcing clout and financing support,

Reva’s vehicles have the potential to significantly gain in market penetration. On the

other hand Mahindra is also expected to benefit from Reva’s EV technology for its own

products and the association with Reva may help Mahindra further expand its green

footprint both in India & overseas. So future of Mahindra Reva will in turn have a

significant impact on the future of Indian Automobile Industry.

IV. Outline/Flow of the project:

We will follow the below mentioned outline for this project-

• First we will carry out a SWOT analysis of the product. This will help us to get an

insight into the reasons for which Reva hasn’t been a success in domestic

market and what marketing strategies Mahindra should adopt to make it a

success.

• Then we will carry out a literature review of the topic. We will discuss in details

about the journey of Reva till now and about the path ahead. For this discussion

we will take help of the data obtained from secondary research. This will include

journals, past researches and other related materials.

• After that we will indulge into a primary research with the help of a questionnaire

to get an understanding about the expectations of consumers from the next

generation of automobiles. This will help us to get a clearer picture about where

Reva and on the whole electric vehicles are standing at this point of time as the

next generation of automobiles.

• When we will be done with collection of information from primary and secondary

research, we will have a detailed discussion on the methodology we followed to

obtain all these information.

• Next we will get into an analytical mode and will draw conclusions from the

information we collected. It will include recommendations also.We will also

discuss about the implications and limitations of this project.

• This project is not the end of the path. So we will be identifying the scopes of

future research regarding this topic.

V. SWOT Analysis:

Strengths:

• REVA has incorporated in 1994 and Chetan Maini, its chief of Technology and

Strategy, has been working with EV ecosystem from the last two decades

• It is completely environment friendly and will act as the long term solution for

India’s urban pollution problem.

• The absence of competition in the electric vehicle segment is a big plus point for

Reva.

• Due to its small size it is very convenient to drive in the city

• Due to its small size it poses less parking problems

• Being an economic car, and being eco friendly, it has got government subsidies

on excise duty(8%).

• Reva is one of the most sustainable inventions recognised for applying

technology to a strong business model and commercial potential

• The way petrol and diesel costs are rising, Reva will definitely be much more

economical in terms of commuting costs compared to the petrol or diesel ca

• It has been easily successful in its exports, being the number one electric car

company in UK.

• It requires a low maintenance

Weaknesses:

• Reva has got a cold response from domestic market

• It has faced challenges in battery technology

• New competitors like Tata Nano electric are entering the fray and that will affect

the market share of Reva

• It has a speed limitation of only 80kmph which is very less for highways. and low

range of driving around 80 kms makes it impossible for travelling between two

cities or long distances as such.

• It provides underpowered performance

• It has a very small distance per charge. So requires repetitive charging during a

long journey.

• Small distance per charge coupled with unavailability of charging points happens

to be a huge drawback of this car.

Opportunities:

• Depleting fossil fuels and shift towards greener technology. Worldwide the shift is

towards more efficient technologies in terms of emissions. So a Electric Vehicle

like Reva will be a bet for the future.

• Traffic and Parking problems in cities. As the cities are growing, the availability of

space as well as traffic congestion is increasing. A small car that could easily

cover 65-80 kms will be a boon for the city dwellers

• The market is still untapped in India. The EV segment has a lot of growth

opportunities. So Mahindra can bank on the experience of the RECC to tap this

segment. Mahindra having acquired REVA on 26th May this year, giving the

financial shot in the arm that REVA required.

• Mahindra’s engineering expertise, global distribution network and financial

support will help Reva to have more market penetration.

Threats:

• Reva will face a huge competition from global players with more advanced

technology Like GM, other competitors are also planning to bring out the EV

models of their popular cars.

• The growing market for hybrid vehicles is also a big concerns for the future of

Reva because hybrid vehicles are much more stylish and provides more no. of

facilities than Reva does.

• There will be tax issues with governments with different tax slabs for different

states.

• Safety requirements mandated by governments, especially the European

standards that will add to the cost and will make the price of the vehicle high. So

it will be really tough for it to compete with the other small cars available in the

market.

VI. Summary of the section 1:

In this introductory section of the project we have identified Mahindra Reva as

our product of interest and its demand estimation and forecasting as the theme of

the project.We have given a brief history of Reva and The Mahindra group. We

have predefined the objectives of our project and carried out a SWOT analysis

for Reva. In the next two sections, we will discuss in detail the future of Mahindra

Reva.

VII. References:

1. http://www.fox.com

2. http://en.wikipedia.org/

3. http://www.revaglobal.com