Will Ambani’s promise be like Tata’s?

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A car for ₹1 lakh. That was the promise that Ratan Tata made. One family, one car, ₹1 lakh. 1-1-1.

In 2003, when Tata first declared the ambitious project, the excitement triggered was genuine. The cheapest car in India at the time, the Maruti 800, cost twice as much.

The announcement set off much speculation about the radical rethinking such a car entailed, design innovations it promised, and engineering feats in store. It wasn’t a quadricycle for sure, Tata Motors had clarified. Would it be an electric car? Anticipation mounted about other transformations the vehicle might bring. India’s car market might expand by as much as 65%, Crisil famously predicted.

We all know how that story turned out. When the Nano finally arrived in 2009 accompanied by Ratan Tata’s famous statement, ‘a promise is a promise’, the cheapest variants started at ₹1.3 lakh with taxes.

The reasons ran deep. Innovations and clever design pushed the price down to a degree but not enough to close in on the promise. Low cost of land (the acquisition helped by the government) and tax holidays — 25-year exemption from VAT — pushed the price down some more. The last mile in cost reduction was expected to be covered by economies of scale. That did not happen.

Instead of buying the cheapest car in the market, families decided to save a bit more, or pay EMIs for longer periods, and get the 800. Or buy a used 800. Instances of Nanos catching fire didn’t help.

In its best year, 2011-12, Tata Motors sold no more than 74,527 Nanos, well below the plant’s production capacity of 2.5 lakh cars a year. With scale not kicking in, prices stayed higher than expected.

In 2019, the company sold only one Nano. Exactly 10 years after the first car rolled out, the promise of 1-1-1 was quietly extinguished. 

And now, as I write for Signal, a new journalism startup by my friend Dinesh Narayanan, another Indian businessman has made another audacious promise. Green Hydrogen at $1 for 1 kilo in 1 Decade. Do read.

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