So it looks like the world's cheapest car (the Tata Nano) could soon be the world's cheapest electric car as well.
The price of the Nano is just above $2,500 and Tata's chairman Ratan Tata says he expects demand to exceed supply. Tata's plant in the city of Singur in the state of West Bengal will eventually have the capacity to make 350,000 Nanos a year.
Tata Motors plans to make a second generation of its four-passenger Nano with a diesel engine. But initially, it will have a gasoline engine capable of 50 miles to the gallon.
But the interesting news out of Mr. Tata's talk to shareholders at the annual general meeting last week was that the company is competing for an Eco car in Thailand and looking at other ways to make even more fuel-efficient versions of the Nano.
Tata is working with a French firm in developing an electric Nano. The electric car will use compressed air. Tata Motors also announced earlier this year it is in talks with Chrysler on developing electric vehicles.
According to the Economic Times of India, a diesel engine for the Nano is being developed by a German company and will use a fuel injection system. Sources told the newspaper that the 800 cc, turbo charged diesel engine will be a two-cylinder and capable of at least 30 per cent more mileage compared to 800 cc gasoline powered cars.
It's hoped that the cheap vehicle willenable more people in developing countries to be able to afford their own car. But at the same time, there are concerns about the congestion and pollution caused by more cars on the road. In India, there are seven motorcycles sold for every car, according to the World Bank.
An all-electric or efficient diesel option would certainly decrease from those concerns. However, with India being coal powered, and lagging on emissions standards, it's not clear how much greener these cars really will be.