The year was 2005 and Tata Motors announced that it will manufacture a car — a budget-friendly car for the lower middle class, which otherwise would have never harboured dreams of buying one. The idea was novel and Tata seemingly had its heart in the right place. However, what happened afterwards is a case study that is taught in marketing and PR schools across the globe.
Keeping aside the controversy of the Singur plant, the fact that Tata Nano could never really become a phenomenon it was projected to be, boiled down to its marketing. In a country, where cars are a status symbol, Tata failed to adjust its marketing pitch and became the cataclysmic disaster it is known today.
A cheap or an affordable car? — the dichotomy of Tata Nano
The car was tiny, slow, not the safest in crashes, and early examples had an unfortunate tendency to catch on fire. But all of those shortcomings could have likely been overcome or ignored if not for one unexpected fatal flaw: It was too cheap for its good.
In 2009, the much-anticipated car was launched in two variants: a basic model priced at Rs.1,12,735 and the luxury version costing Rs.1,70,335. Indians, and the world, were in awe. In American dollars, the car cost a mere $2500. In 2010, the Tata’s were able to sell 9000 units of their unique car.
In a year, however, Nano had lost its steam, selling a meagre 500 units in 2011. It became clear that Indians were not willing to buy a ‘cheap’ car. For the consumers, there was a difference between affordable and cheap. Unfortunately, Nano fit the bill for the latter. The production eventually came to a halt in 2019, when the losses became overbearing for the multinational company.
Nano’s failure can be Tata’s code for success
However, what made Nano a trailblazing failure, can also be a tipping point for its success, if Tata is willing to take the risk. The future of the automobile sector is electric and Tata is going headfirst into the sector.
Reportedly, Tata Motors has its eyes firmly set on producing 50,000 EVs in the next fiscal year starting April. If it can deliver on the targets, the EV business could potentially generate revenue of Rs 5,000 crore for Tata Motors in FY23 itself.
According to an ET report, Tata has steadily increased the number of EVs sold in the pre-dominantly petrol, diesel in the Indian market. Tata Motors sold 350 EVs in FY19, which increased to 1,300 the following fiscal year and to 4,200 in FY21.
Its EV volume in the ongoing FY22 is expected to be 17,000-18,000 units. In the first nine months of FY22, Tata Motors sold around 10,000 EVs.
The Chinese company has emulated Nano
Nano with its compact and slim design can be the perfect, affordable EV car for the masses. Chinese carmaker Wuling Hong Guang which disrupted the electronic vehicle market in China by selling 119,255 units in 2020 has come up with another model. Incidentally, the car is named Wuling Nano and has a distinctively similar look and feel as that of Tata Nano.
It is said to be the smallest electric car to go into production.
Thus, if a Chinese company can be inspired by an Indian product, what is stopping Tata from taking the leap of faith. After all, the market and the consumers of the country have matured.
Tata can reach its ambitious target with Nano EV
A better design, an efficient engine, and even a little higher cost will not bother the consumers. Anything under Rs 5 lakh and Nano EV could be the game-changer.
To reach the 50,000-car sales target, Tata needs the middle class to buy its cars in bulk. Both Nexon and Tigor EV currently cater to the upper-middle class, with their pricing hovering between the Rs 12-17 lakh range. It’s steep for the particular demography of the consumers that can drive the sales.
Tata Nano has the DNA, which can help it in succeeding in the EV market. However, it all boils down to the top brass at Tata if they are willing to use this ace or invest in the expensive R&D process to develop a new car from scratch.