Mahindra Reva not giving up on hopes for Indian electric car market (gulp)

Despite selling less than 5,000 models over a decade, India’s little electric car company that could, Reva, is now doubling down on its hopes that a market for electric cars in India will emerge. According to the New York Times, Reva — which is now partially-owned by Indian giant Mahindra — plans to launch an electric hatchback that seats four called the E20, and is also building out a charging network.

Reva E20 Mahindra Reva plans to assemble the E20 and build the charging technology in its new 32,000 square foot factory in Bangalore. That factory is supposed to be able to build 30,000 cars per year. Unlike the company’s poor selling, and micro-sized REVAi, the E20 will be roomier, has a 62 mile range, and has a plastic, light-weight body.

Part of the reason Mahindra Reva is now launching this new car is that the Indian government has announced it will offer support for electric cars. Last year the Indian government announced a $ 4.13 billion plan to boost the production of electric and hybrid vehicles, with an eye-widening goal to have 6 Reva E20 million green vehicles on its roads by 2020. Reuters reported back then that 4 to 5 million of these vehicles are expected to be electric and hybrid two-wheelers (scooters, commuter cars, electric bikes).

Reva founder Chetan Maini tells the New York Times that the company is expecting the government to provide a rebate of at least 150,000 rupees ($ 2,790) to each E20 buyer. The E20 is supposed to be at least 10 to 20 percent more expensive than a comparable sized gas-powered car.

There’s a lot of reasons to be skeptical of the electric car market in India. Low cost two-wheelers dominate the roads, and customers that are willing to spend a premium on vehicles want higher end luxury cars that are a symbol of status. That’s why the low cost Tata Nano never took off.

Still, the massive population and its rapid economic growth, combined with government support, could some day be a game changer for electric cars. The question is, will it be Reva and the E20 that will change the game?