Mahindra buys 55.2 percent stake in Reva, GM to cut ties with Reva

Reva, producer one of the electric cars and most economical car of India, has been acquired by M&M. Mahindra and Mahindra which is a well known brand for tractors and utility vehicles, have acquired 55.2% of the controlling stake of Reva. They have acquired the stake through a combination of Equity Purchase and Fresh capital infusion.

Mahindra and Mahindra have also been trying to enter into the car segment sector. Its Scorpio, Bollero and recently the Logan have done well. Now, they have brought a majority stake in the electric car company, Reva. M&M will pay Rs.45 crore out of which 15 crore will be for buying equity and and Rs.30 crore will be for fresh capital. The capital will be invested for production in the new plant in Bangalore.

According to the new set-up, M&M will hold 55.2% stake, Maini family will hold 31% and AEV will hold 11%, 3-4% with employees. The two companies Global Environment Fund (GEF) and Draper Fisher Jurvetson (DFJ) which held 47% stake will now exit from the company.And the new company will be named as Mahindra Reva Electric Vehicle Company Limited.

With this acquisition, M&M hopes to increase production by 5 times from the current 6,000 units p.a. to 30,000 units p.a. Moreover, it is planning to get at least 25% market share globally and 2.5% in India. Currently, most of the sales are made outside India. The car, Reva has sold about 3,500 units out of which are sold outside India. They are planning to launch Reva NXR and NXg this year.

Meanwhile, after the acquisition was announced, GM is planning to scrap ties with Reva. GM was planning to roll Spark Ev, an electric version of the Spark, in collaboration with Reva. The car was supposed to be launched this year. GM India vice-president P Balendran has expressed that they may not continue with the Spark E program with Reva after the development and may pursue their own electric vehicle program. On the other hand, M&M president Pawan Goenka expressed that GM can their own decision and they have no problem with GM continuing with the partnership with Reva.

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