WORLD LEADER IN ELECTRIC CARS PRODUCES QUIETLY IN

UNCLAS SECTION 01 OF 02 CHENNAI 000003 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ENRG EINV SENV ETRD PGOV IN SUBJECT: WORLD LEADER IN ELECTRIC CARS PRODUCES QUIETLY IN BANGALORE ¶1. (U) Summary: The Reva Electric Car Company, producing vehicles just outside of Bangalore, lays claim to being the world's leading manufacturer of electric cars, with its products driven more than 85 million kilometers since production began in 2001. A family-owned business, Reva has experienced rapid expansion recently and expects to grow even more in coming years. The company, which already has strong ties to the United States, is contemplating a licensing agreement with a U.S. firm planning to open a plant near Syracuse, New York. Such an arrangement would mark a new departure in U.S.-India economic relations, with the transfer of Indian technology leading to creation of jobs in the United States. End Summary. A visit with Reva -------------- ¶2. (U) We visited the Reva Electric Car Company's Bangalore facility on December 2 and met with Vice Chairman Chetan Maini, who runs the company on a day-to-day basis. With 3000 of its vehicles already on the roads in several countries, he explained that customers have driven Reva's cars more than 85 million kilometers to date, making it the world's leading manufacturer of electric cars. Maini explained that the company has strong connections to the United States, noting that even the name was suggested by former U.S. Ambassador to India Frank Wisner. Maini studied at the University of Michigan and Stanford University and said that an initiative under President Clinton to find civilian applications for space technology was instrumental to the development of the company. In addition, loan reflows generated from a USAID grant provided to the GOI supported Reva. (The USAID/India office has been a proud and satisfied owner of a Reva vehicle since October 2003, using it mainly as a mail-delivery vehicle in New Delhi.) Reva's founding and initial production -------------- ¶3. (U) Reva was founded in 1994 as a joint venture between AEV LLC, a small technology company in California, and the Bangalore-based Maini Group, a family-owned industrial holding company with interests in precision machine components, granite, and specialized electric machines for materials handling in manufacturing plants. Its first electric car rolled off the assembly line in 2001, and it has sold approximately 3000 vehicles since then. According to the company's literature, its main target markets are urban commuters (particularly in Europe) and relatively small islands, where the vehicle's range-between-charges of approximately 80 kilometers poses no problem for consumers. Maini said that London and Bangalore are the two metro areas with the largest number of Reva vehicles on the road. London alone, he said, has some 1000 Reva vehicles, encouraged by positive regulatory treatment from the British government. Recent developments and strategy -------------- ¶4. (U) The company began marketing in 2008 its second model, Reva-i, followed in 2009 with an upgraded version that uses lithium batteries. Maini said that the 2009 Frankfurt auto show was a major breakthrough for the company, and that it drew "a lot of attention" when it rolled out prototypes of its newest models, the NXR and NXG, which will be ready for production in 2010 and 2011. Press reports indicate that the price for the NXR will range between USD 9000 and USD 18,000 depending on the market and version, and up to USD 33,000 for the NXG. Maini emphasized that these models show significant improvements in design, range (up to 200 km between charges),speed, and size. ¶5. (SBU) Maini said that Reva reached in September a partnership deal with General Motors India to produce key components -- including the engine and battery system -- for an all-electric version of the Chevrolet Spark for the Indian market. This deal, he told us, furthered Reva's technological reputation and commercial credibility. He gave us a tour of the construction site where Reva is building an environmentally-friendly plant in Bangalore that can produce up to 30,000 cars a year. The shell of the plant and roof are complete, but no machinery has yet been installed. ¶6. (U) Maini told us that the company endeavors to strike the right balance between affordability and state-of-the-art technology, making Reva sensitive to market conditions and conscious of cost controls. Reva's products are currently marketed in 24 countries, and the company has attracted investments from major U.S. financial firms, including Global Environment Fund and Draper Fisher Jurvetson. CHENNAI 00000003 002 OF 002 Coming to America? -------------- ¶7. (SBU) Maini said that Reva is negotiating a deal with Long Island-based Bannon Automotive to license some of Reva's technology for a factory to be established near Syracuse, New York. Maini was vague in his answers to our questions about how close the two companies are to finalizing the deal, while acknowledging that a U.S. factory would be critical for Reva to penetrate the U.S. market. He noted that Reva's cars would need to overcome several technical challenges to have a viable future in the United States, emphasizing that current Reva models were conceived with the European urban lifestyle, mentality, and safety standards in mind. He indicated that the company is currently working toward getting its new models through the process of meeting U.S. regulations, which he said would take about nine months. ¶8. (SBU) Media reports indicate that Bannon has already secured the financial backing of New York State for the project near Syracuse with the involvement of Senator Charles Schumer and Governor David Paterson. The company is reportedly currently seeking federal assistance from the Department of Energy and the Department of Agriculture. A Syracuse-based newspaper reported that Bannon Automotive announced in late October its plans to choose a production site within two to three months, but we have not seen reports since then confirming the location of a specific site. Comment -------------- ¶9. (U) An Indian company's technology transfer leading to job creation in the U.S. would be an intriguing departure from the usual trend in bilateral commercial relations. Foreign direct investments and licensing agreements have been a key part of India's growth strategy since economic liberalization in the 1990s, and many U.S. companies have been attracted to India for its large potential market and relatively cheap and skilled labor. Reva's potential partnership with Bannon runs counter to this pattern, hinting at the possibility of Indian-developed technology as a potential source of manufacturing job creation in the United States. The partnership arrangements with Bannon and GM are interesting opportunities for the company at a time when electric vehicles appear ready to take off, marking Reva as a company to watch in the years to come. End comment. SIMKIN