Homegrown auto major Mahindra & Mahindra has slashed the price of its electric small car 'e2o' by Rs. 92,000 following the launch of a central government scheme offering incentives on electric and hybrid vehicles.
The e2o, manufactured by the company's arm, Mahindra Reva Electric Vehicles will see a reduction in price by 16 per cent from its earlier price of Rs 5.71 lakh (on road Delhi) along with a fixed energy fee of Rs. 2,999 per month for five years or 50,000 km.
The car will now be available at Rs. 4.79 lakh (on road Delhi), while the fixed energy fee remains the same.
"We have reduced the prices of e2o by 16 per cent across the markets where it is being sold currently. The reduction makes the car more affordable and attractive to own," Mahindra & Mahindra President & Chief Executive (Automotive) Pravin Shah told PTI.
The price cut is a direct result of the government's recent announcement of the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme, he added.
Under the FAME scheme, the government offers incentives on electric and hybrid vehicles of up to Rs. 29,000 for bikes and Rs. 1.38 lakh for cars.
FAME is a part of the National Electric Mobility Mission Plan. The scheme envisages Rs. 795 crore support in the first two fiscals starting with the current year.
The phase-1 of the scheme will be implemented over a two year period in 2015-16 and 2016-17 with an approved outlay of Rs. 795 crore, out of which Rs. 500 crore will be spent on demand incentives.
Mahindra currently sells the vehicle in various cities like Delhi, Bangalore and Pune and Nepal. It sold less than 600 vehicles last year.
When asked if the reduction in price would help the company sell more units this year, Shah said there was no expectation of a change dramatically.
"The launch of the scheme is great fillip for us but we don't expect a radical increase in sales. Going ahead, we are looking closely at cities like Hyderabad, Ahmedabad and Bhopal," he added.
When asked about the company's plans on exporting e2o, Shah said: "We were doing pretty well in Nepal. Further we are going to launch it in the UK market before the end of the current financial year."
Founded in 1994 as the Reva Electric Car Company, the company was a joint venture between the Maini Group of Bangalore and AEV LLC of USA.
In May 2010, Mahindra Group acquired a majority stake in the company, which was then renamed to Mahindra Reva Electric Vehicles Pvt Ltd.