GM may scrap India EV tie-up as Mahindra buys partner

General Motors Co. may scrap a venture to develop an electric compact car in India after partner Reva Electric Car Co. was taken over by Mahindra & Mahindra Ltd.

Mahindra, India's largest sport-utility vehicle maker, yesterday said it had agreed to acquire a 55 percent stake in closely held Reva as growing environmental concerns spur demand for alternative-energy vehicles. GM tied up with Bangalore-based Reva last year to develop a battery-powered small car.

"It is not at all crucial for GM to have an electric car in India," said Deepesh Rathore, India managing director of IHS Global Insight Inc. "We are a power-deficient country and don't have power to light up our homes, so why use electric cars?"

By contrast, buying Reva may help Mahindra expand overseas, he said. Mahindra also bought out partner Renault SA in a carmaking venture last month in a bid to revive slumping sales.

'Other Options'

Mahindra will buy stock in Reva from the carmaker's founders and spend about $10 million on new shares, it said in a Bombay Stock Exchange statement. It didn't give an overall value for the transaction.

Reva's "endeavor is to maintain all relationships," Chetan Maini, its chief of technology and strategy, told reporters yesterday in Bangalore at an event to mark the takeover signing. GM had informed the company that it was "looking for other options," he said.