Mahindra to Buy Controlling Stake in Reva to Access Carmaker's EV Technology
By Scott Doggett May 26, 2010
Mahindra & Mahindra Ltd., India's biggest sport-utility vehicle maker, has agreed to buy a controlling stake in Reva Electric Car Co. to obtain access to the smaller automaker's electric-drive technology.
Mahindra will acquire a 55 percent stake comprising stock bought from closely held Reva's founders and about $10 million of new shares, it said in a Bombay Stock Exchange statement today. It didn't give an overall value for the transaction.
The deal will give Mahindra access to technology that has enticed General Motors to work with Bangalore-based Reva on developing an electric hatchback. Mahindra last month took over Renault SA's stake in a joint venture that makes the Logan sedan, as it seeks to build a passenger-car business to tap growing demand in India.
"Mahindra wants to be ready when the demand for electric vehicles picks up in future," Umesh Karne, a Mumbai-based analyst at BRICS Securities Ltd., told Bloomberg news service. "This investment in Reva is a long-term strategy."
Reva is offering all-electric automobiles in 24 countries and has sold more than 3,500 vehicles worldwide, according to the statement. The company is building a plant in the southern Indian state of Karnataka to make as many as 30,000 vehicles a year.
"The EV market is poised to grow significantly, and we concluded that in order to seize the opportunity, we needed the resources and experience of a major automotive manufacturer," Chetan Maini, Reva's chief of technology and strategy, said in the statement.
Automakers are set to introduce 42 electric models worldwide by 2012, according to an October study by PricewaterhouseCoopers LLP.
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