India's 'cheapest car' comes at a
cost By Praful Bidwai
NEW DELHI - Nothing has generated as much
hyperbole in the global automobile industry in
recent years as the unveiling last week of an
ultra-cheap bare-bones car made by the Tatas,
India's steel and engineering giant.
Priced at US$2,500, the Nano is arguably
the world's cheapest four-wheeled passenger
vehicle. However, the "dream car" may turn out to
be an ecological nightmare and a not-so-safe
driving machine, without airbags to protect riders
or anti-lock braking systems. It could prove a
menace to India's already congested
roads and a source of
enormous pollution and of health damage, besides
becoming a drain on public resources.
Above all, it will set back the
all-important fight against global warming, in
which the Indian government is at best a reluctant
partner, refusing to accept any time-bound
commitment to reduce its greenhouse emissions, now
growing three times faster than the world average.
All the same, according to management
experts, the car has created a new paradigm of
"frugal engineering" and will trigger breathtaking
innovations in manufacturing technology in the
global automobile industry based on severe
Yet, despite stripping the
Nano down to its most rudimentary dimensions to
produce what a United States media presenter
termed as "a golf cart crossed with a jelly bean",
Tata Motors is unlikely to be able to fulfill its
$2,500 price promise for long.
the figure is an introductory offer excluding
taxes and local duties; on the road, the car will
actually cost between $3,310 to $3,819,'' says
Dinesh Mohan, a transportation expert and
professor of biomedical engineering at the Indian
Institute of Technology, Delhi. "And that's the
initial cost of the bare-bones model. Other
versions, including an air-conditioned model, will
Tata Motors chairman Ratan
Tata has already hinted that the introductory
price may not last long. "We may not be able to
hold the price emotionally. We have to understand
that steel and tire prices are rising," he said,
while launching the car.
He recalled that
in 1983, the Maruti 800 car made in India by
Suzuki was offered at $1,145, and the price almost
doubled within a year.
ultra-low price tag covers subsidies offered by
the Marxist government of West Bengal, where the
car will be manufactured. According to former
state finance minister Ashok Mitra, the subsidies
($210 million) work out to one-fourth of the car
project's initial capital cost.
state government has leased 403 hectares of land
to the Tatas virtually free, with no down-payment.
It's also advancing them a $50 million loan at 1%
interest and further granting an exemption from
the value-added tax for 10 years, amounting to
Hype about "the world's
cheapest car" apart, the Nano is deeply flawed
because of inadequate safety features and emission
standards, say environmentalists and experts.
"This car is likely to have low longevity
and high maintenance costs," commented Mohan. "It
already fails the current Western emission and
safety standards, and will soon fail Indian
standards too as India adopts the 'Euro-IV'
emission norms applicable in many European Union
The ruthless way the Tatas
have pared down the Nano's costs has meant cutting
many corners to stay focused on frugality and
For instance, the Nano's
designers reportedly used a hollow shaft instead
of a solid beam to connect the steering-wheel to
the axle, and plastics and adhesives in place of
many studs and bolts. The car's low-performance
wheel bearings may wear out rapidly beyond 70
kilometers per hour.
It has only one
windshield wiper instead of two. It uses
belt-driven continuous variable transmission,
which slows down acceleration. To save merely $10,
the suspension was redesigned to eliminate devices
called actuators, which adjust the angle of the
car's lights to the way it's loaded.
measures are likely to have an impact on the car's
safety, sturdiness and durability and longevity,"
adds Mohan. "Some of it will only become apparent
once the car has been on the road for a few years.
It's premature today to certify that the Nano is
safe and reliable."
Tata's claim that the
Nano has passed the crash test and meets the
national emission standards called Bharat-II and
-III has not been verified by an independent and
competent agency. Besides, Tata himself admits
that the Nano, as of now, falls short of the
"India should have
adopted these norms long ago, but delayed doing so
under the automobile lobby's pressure," says
Anumita Roychowdhury of the Center for Science and
Environment an internationally known green lobby
in New Delhi.
Euro-IV norms will come into
force in India's major cities in April 2010 and
are considerably stricter than Bharat-II or III,
which are 10 to five years behind Europe. For
instance, under Euro-IV, sulfur emissions must be
reduced 35-fold in relation to Bharat-II.
"Similarly, key safety standards are long
overdue in India which has unacceptably high road
accident and casualty rates," says Roychowdhury.
"They are on their way. These include full-body
crash tests - which determine how cars will
crumple in collisions, minimizing the impact on
passengers - airbags and anti-lock braking
systems. Implementing them will raise the Nano's
claimed costs by 40 to 50%."
good enough to have safety systems; cars must be
frequently and rigorously inspected after they
have experienced actual roads conditions, which
often affect the systems that control emissions.
This rarely happens in India," Mohan said.
Michael Walsh, a pollution consultant and
former US Environmental Protection Agency
regulator, has been quoted as saying that a car as
cheap as the Nano is likely to lack the complex
technology needed to maintain its initial level of
emissions, and it could soon produce four to five
times its initial pollution levels. "It strikes me
as impossible that such a vehicle will be a very
clean vehicle" over its lifetime, he told The New
The Tata car will set a trend
under which industry will take advantage of
India's existing poor emission standards and rush
to produce new vehicles before better standards
are in place.
Scooter manufacturer Bajaj
Auto has already announced that it will make a
$3,000 car in collaboration with Renault.
Volkswagen, Nissan and General Motors are also
considering plans to make stripped-down cars
priced between the Nano and the Maruti 800.
The addition of these vehicles will
further slow down traffic in Indian cities - where
speed has considerably decreased and in some case
halved in recent years.
It will greatly
add to pollution, which has reached critical
levels in 57% of Indian cities and is generating a
health risk, with disorders ranging from
respiratory illnesses to hypertension.
India and China are emerging as leaders in
low-cost car manufacture and consumption. In
India, forecasts a consultant firm, an additional
30 million households will be ready to buy a small
car by 2010 - 20 times the present market size.
By 2013, India's car market will be
annually growing at 14.5%, and China's at just
over 8%. By 2020, some forecasts say, more than
150 million Indians and 140 million Chinese will
If this really happens, it will
become nearly impossible to achieve major
reductions in global greenhouse gas emissions.
China and India account for 70% of the global
increase in energy demand over the past two years.
If the Nano trend continues, the small
window of opportunity to control spiraling energy
use and greenhouse emissions will slam shut. If
India is serious about reversing climate change,
it must rethink its automobile policy.