Wednesday, February 10, 2010

Reva, Italian PE Cimino may make cars at Fiat Sicily unit



Reva Electric Car Company has initiated talks with an Italian private equity firm to produce cars through the franchise manufacturing model, wherein it will join hands with a local partner to build its cars in the overseas market.

The electric car company currently produces its cars at its Bangalore plant and exports them to Europe, Americas and Asia Pacific regions.

R Chandramouli, president, sales and marketingof Reva Electric Car Company, said the company is in talks with Italian private equity firm Cimino & Associates Private Equity to start making cars at a Fiat plant in Sicily.

“Right now, we are only exploring the possibility of franchised manufacturing of Reva cars in Italy with them (Cimino & Associates Private Equity). We are looking at this kind of model (franchise manufacturing) in other parts (of the world) also,” he said.

Chandramouli did not reveal any further details but said if its plans with Cimino takes offthen it would open up a huge market for Reva in Americas, Europe and APAC.

“Of the 3,400 cars that we sold this year, 50% was in Europe. Once we begin franchised production, we will be able to reach new markets quickly with local support,” he said.

According reports, the Cimino, which has raised about €50 million from investors including the Sicilian regional government and French bank Natixis, is looking at starting production of electric cars at Fiat’s Termini Imerese plant near Palermo after the Italian auto major shifts production elsewhere in 2011.

Even though Chandramouli did not give out any financial information on the project, Simone Cimino, chairman of Cimino & Associates Private Equity has said the minimum investment needed to make the electric car proposal viable was €65 million.

He said: “production of 30,000 vehicles a year would allow the venture to break-even.” Cimino has reportedly said the electric car would be priced at about €16,000-€17,000 per unit.

Senior analyst Vaishali Jajoo of Angel Broking says the franchise manufacturing model would make Reva more competitive on the foreign shores as it would significantly cut down transportation cost.

“The battery charge model is gaining popularity in the western nations because of fuel cost efficiencies. Setting manufacturing base (in these markets) would save transportation costs (for Reva),” she said.

source: dnaindia