The future of cars for the next billion people

Tata Nano

While electric cars are the subject of much media attention, the future of cars for the next billion people to enter the middle class on the planet could be bare-bones, low-cost cars like Tata’s $2,500 Nano. During my trip to Delhi this week with the Geeks on a Plane tech travel group, I saw a couple of Tata Nanos driving around the streets.

The car has been a symbol of India’s economic rise and rapidly growing middle class, and Tata is a massive conglomerate in India that makes everything from cars to telecommunications to real estate. The car originally was called the “One-Lakh car,” (one lakh equals 100,000 rupees, or about $2,100) when it was launched in March of 2009, though the price of the so-called “People’s car” has risen in recent years.

At the 2012 Delhi Auto Expo in January, Tata plans to show off the Nano Diesel, according to media reports, and the diesel version will cost more than the gas-powered version. The 2012 Nano comes in a whole bunch of colors like Mojito Green and Papaya Orange.

Tata Nano

What the rise of the people’s car would mean

Despite the Nano’s tiny size and fuel efficiency compared to most cars on the roads, low-cost cars like these will make owning a fossil fuel-burning car much more accessible than ever before. Personal car ownership could soar in developing countries like India and China with these types of cars and that unfortunately means greenhouse gas emissions from this global fleet will rise as well.

If the diesel version of the Nano takes off, there’s the possibility it could burn biodiesel. The gas-powered version could burn ethanol with the addition of the flex fuel feature.

However, the Tata Nano itself has struggled. As of the beginning of this year, Tata had only sold 71,000 Nanos, which was only 40 percent of the projected sales target, according to Forbes. Potential customers, many of which are motorcycle and scooter owners in India, just haven’t switched over to a four-wheeler that is a couple of times more expensive than the two-wheelers they drive around town. And potential car owners who want a higher-end car see the Nano as the very base in personal vehicles. Tata has been attempting a major marketing campaign to revive the brand.

Electric cars are a more difficult sell

When we were walking around Old Delhi this week, I also spotted one of the Reva electric cars. Reva, which recently sold 55 percent of its shares to Mahindra Group last year, says it has 4,000 electric cars on the roads, and that’s after it was founded in 1994.

Reva

Compared to the bare-bones price of the Nano, the higher price of the battery-powered car is the reason there are fewer on the roads. Reva’s various versions can cost between $7,000 to $13,000 and higher. Reva has been building a new factory in Bangalore expected to be completed by the end of 2011 with a capacity to produce 30,000 units per year.

Reva