Rising petrol costs pave way for alternative fuel vehicles

With petrol prices heating up, Bangalore-based Mahindra Reva has reasons to be cool. The electric car major says it has started seeing an increase in enquires from customers post the petrol price hike. But it's not been an easy drive for the Reva either, reports CNBC-TV18's Sunanda Jayaseelan.

The past few months have not been a smooth ride for electric-car manufacturer Mahindra Reva with the government failing to extend subsidies.
The ministry of new and renewable energy had mandated a subsidy of 20% or Rs 1 lakh, whichever was lower, on the price of electric cars. This lapsed on March 31 before a new policy could be passed by the National Council of Electric Mobility.
This in turn forced Mahindra Reva to pass on costs to consumers which led to a consequent drop in demand. Even though the petrol price hike has led to an increase in sales, the company is hoping for more.
R Chandramouli, chief of operations at Mahindra Reva says, "There has been 60- 50% dip in sales volumes in the past two months alone. Though there was a slight recovery in June, it was not significant ."
To counter any uncertainty, Reva, which gets 50% of its total revenues from exports, says it will continue strengthening exports besides looking at new markets.
"We will look at new markets including Norway, Scandinavia. Europe will be a big market for us", says Chandramouli.
While it awaits clarity regarding the policy, Mahindra Reva has already started ramping up production capacity at its Bangalore plant from 100 cars per month currently to the targeted 15,000 cars per year by 2015. Also watch the accompanying video.