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Background • Chetan had an interest in cars right from his childhood :- • Developed radio-operated car at the age of 12. • won a solar-powered car contest. After obtaining degrees from the University of Michigan and Stanford University, Chetan joined Amerigon, an American company • As a program manager at Amerigon, Chetan was Involved with a variety of development projects in manufacturing of electric cars.
Reva: Driving Technology Adoption through Strategic Innovation1 With the commercial launch of the Reva in June 2001, fulfilled a seven-year old dream to bring an electric car to the Indian market. But by March 2002, it was clear that while the car was technologically sound, he still faced a number of challenges. In order to counter the challenge , capital investments to a minimum , product design and manufacturing strategy, by outsourcing wherever possible where some of the statergies implemented.
CONT…. • Government had not come forth with subsidies as expected which prevents price effectively. • Also has to face long-term challenge of maintaining the technological leadership of his company.
cont • Indian cities with dense traffic, scarcity of parking space, pollution problems, and high fuel costs, Chetan believed that there could be a market for a small, environment-friendly. • Chetan’s family runs the Maini group, that consists primarily of a precision component manufacturing. • Maini Precision Products (MPP) exported components with a 2 micron tolerance to Bosch.
BUSINESS MODEL Assembly and outsourcing Tie ups Manufacturing strategy The investment cost reflect projected cost peak to volumes of 15000-16000 Efforts were made to redesign car All resulted in low project cost and an operating break-even Pay-back period of 3.5%
Raising finance was major hurdles • Battery management • AEVT system • Other strategies • Reva team made trade-off b\w cost and convenience • Company gave free installation of charging infrastructure
BUSINESS PROSPECTS • Niche marketing • Designed in a modular form • Upgrade with technologies change • Marketing strategy • The company hopes to be granted subsidies by the govt. • Innovative ways to promote its sale • Local exhibitions, events, journalists, major newspapers • Car has been showcased and demonstrated at major technology companies
CAR FEATURES • Energy efficiency • Low operating cost • Low maintenance cost, low centre of gravity • Reasonable range • Safety and reliability • Easy to drive • Non-polluting vehicle • Price-249000 • Small in size
Non-dentable body • Voltage regulator • Climate controlled seats as a substitute for AC • Snorkel arrangement
FUTURE CHALLANGES RECC CHALLENGE lies in its ability:- TO OPTIMISE VEHICLE PERFORMANCE. TO PRODUCE SMALL VOLUMES VERY ECONOMICALLY. CORE ELECTRIC VEHICLE TECHNOLOGY IS NOW ESTABLISHED IN THE MARKET IS A GREAT CHALLANGE
RAMPING UP PRODUCTION • RECC’s low investment makes the company dependent on external suppliers to increase volumes, So due to which bargaining power is more of suppliers. • RECC had tried to overcome the disadvantage of its small volumes by intense interaction with suppliers so to build strong relationship. • AND at the same time it is difficult to find small supplier in india who can maintain quality level and delivery commitment required.
. • RECC stated making adequate capacity utilization if RECC could loose sale if it is not able to meet customers demand.
. 2. Change in Competitive landscape: Hyundai(santro) ,Maruti(alto), Tata(nano) 3. R&D and technology management: REVA see ahead for new & emerging technologies. They committed to spend 7% on R&D. As they are spending more on R&D they have to retain their qualified R&D manpower and keep them motivated.
. 4. Govt. policies & subsidies: As their vehicle is eco-friendly govt. is providing sales tax and road tax exemption. but for imports they are not getting exemption on excise duty or custom duty. 5. Large Automobile companies: Asgaints like G.M ,FORD,TOYOTA &NISSAN all have electric vehicle development programme and if they saw substantial growth in this segment they can enter into market.