The Maini Group-led Reva Electric Car Company, which is backed by venture funds Global Environment Fund (GEF) and Draper Fisher Jurvetson (DFJ), is nearing a strategic sale to an international automotive investor.

Promoters, the Maini Group which also runs auto component businesses and California-based AEV LLC, and investors in Reva are in advanced stages of making an exit from the electric car company, which is yet to breakeven, at valuation of around $100 million, sources familiar with the development told VCCircle. The identity of the acquirer could not be ascertained.

GEF and DFJ together hold a large minority stake, estimated at around 47%, after having invested $10 million each. One source said, the financial investors would be walking away with handsome profits even as the transaction is awaiting regulatory approval. 

Earlier, media reports had speculated on Mahindra & Mahindra showing interest for a majority stake in Reva. But, sources said, the suitor for India's first electric car was probably an overseas investor, but they declined to reveal more details at this time.

In an e-mail response to a VCCircle query seeking a comment on the development, Chetan Maini, deputy chairman of Reva Electric, said: “As any growing company in the midst of a very exciting business landscape, we are constantly evaluating opportunities that will allow us to scale, innovate and provide the best offerings to our customers. We will however, not speculate on market rumors.”

Elaborating further, he said, “the last twelve months have been extremely exciting for Reva, as the Company introduced a new collaborative business model with GM for both distribution and technology transfer, and unveiled the NXR which hits the road later this year.  We are seeing traction within the ecosystem making us believe that the time has arrived for electric vehicles.”

Reva, which has sold over 3,000 cars mostly in Bangalore and London, is in the midst of a transformation from a pure car-maker to a business platform that will soon be dominated by revenues from licensed manufacturing, licensed technology and mobility solutions. In fact, the firm has, in recent months, said, it was looking out for growth capital to spearhead many of these new developments.

A valuation closer to $100 million would be vindicating the promoter and investor faith in the company, which was seen as a risky play despite the huge potential for electric vehicles globally.

Reva, which costs around Rs 3.6 lakh in Bangalore and under Rs 3 lakh in Delhi, faces the typical challenges that EVs do, high costs and easy and steady battery charging solutions.

Although transport sector globally has been the chief contributor to environmental pollution, the adoption of greener options by consumers has not been very proactive in terms of sales numbers. Take, for instance, this study by Deloitte Consulting, as reported by Reuters recently, which says that high cost and limited performance will keep the number of electric cars at only 2-5% of the US market a decade from now. “The auto purchase decision in the United States is very much a brand purchase. People tend to affiliate with automotive brands," said Robert Hill of Deloitte, in the report.

The firm, which was targeting a breakeven in the current fiscal, had, in a landmark deal, signed up with General Motors to electrify the entire Spark range of vehicles for the Indian market. “Licensed technology is a big (revenue) stream. We start with the Spark platform. We will be creating kit and technology to put into other platforms that GM makes in other parts of the world. We see it panning out as a substantial business over time,” Chetan Maini, deputy chairman, Reva Electric, had told VCCircle in November 2009.

Besides, Reva was also in advanced stages of talks with US-based Bannon Auto to manufacture Reva locally as part of its licensed manufacturing business. “We have explored talks with several players in the world. Five years hence, between licensed technology and licensed manufacturing, we will generate nearly 50% of our business,” Maini had said, earlier. Reva also recently entered into an agreement with Northern Lights Energy (NLE), an Icelandic investment company, to market its products in Iceland. As part of the agreement, NLE will have an exclusive distribution right for the newly launched model of Reva car – NXR.

The company is currently in the midst of putting together its new plant, which should be operational by the end of the current fiscal, with a capacity of 30,000 vehicles at an investment of Rs 30 crore. It is also preparing to launch NXR, the family car platform, sometime this year.

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