M & M to acquire Reva; GM's deal may be withdrawn

The diversified Mahindra group appears to be buying out Bangalore-headquartered Reva Electric Car Company (RECC), a deal that would give it a lead in electric drivetrain technology but could put a question mark over GM's plans to electrify its mini car Spark.

Reva, promoted by the Maini family and a clutch of venture funds, is believed to be headed for a change in ownership at a time when the company is moving swiftly on new expansion plans, including a new plant and new electric models. While both sides remained tight-lipped with many senior executives keeping their phones switched off, Mahindra's entry into Reva appears more or less a formality now.


Sources said an announcement to this effect is expected on Wednesday as senior officials of the Mahindra group, including Pawan Goenka, president of the automotive department, have arrived in Bangalore for a scheduled "important strategic announcement" .

RECC — one of the pioneers in electric vehicle technology — was formed as a joint venture between the Maini Group and AEV LLC of California around 1994, and is backed by two US venture fund investors — Global Environment Fund and Draper Fisher Jurvetson. While no independent confirmation is available, the company is believed to have been valued at around $100 million.

Despite being an early starter in electric vehicles, RECC has not been able to make a cut with Reva, the car's high price and unconventional looks being major reasons. Also, lack of infrastructure to support electric vehicles (charging points for vehicles) and the fast-changing dynamics in the electric technology have been other dampeners.

Sources said the Maini family has been raising debt to fund Reva's expansion

plans as sales are not high. Only around 3,000 units have been sold over the last few years, mainly in Bangalore, London and some in Delhi. But the company plans to expand majorly with new models like Reva NXR (NeXt Reva) and Reva NXG (NeXt Generation ) and also plans to build a new vehicle assembly plant in Bangalore with an annual capacity of 30,000 units at an investment of Rs 30 crore.

But Mahindra's entry will also put a question over Reva's deal with GM announced in September last year for electrifying the Spark mini car. Test models have already been created and Reva is supposed to supply the electric drivetrain kits for the Spark. Senior officials from GM India said they were not aware of the latest developments and were not in a position to offer any immediate comment.