Breaking: Mahindra Kills Deal to Build Reva Electric Cars in US

A short while ago, Syracuse.com published then retracted a story providing details of US-based company, Bannon Automotive LLC, filing a lawsuit on Monday against Mahindra Reva Electric Vehicle Co. and it's parent company, Mahindra & Mahindra Ltd (M&M).

Bannon Automotive (of Long Island, NY) has been working directly with Reva, the state of New York, and Onondaga County since late 2009 to establish a vehicle assembly plant in the Syracuse, New York area.  The facility was to build US-market Reva electric cars from India-made parts kits, but it appears that those plans are on now hold indefinitely.

Reasons for the collapse of the Bannon/Reva deal read like a page straight out of Mahindra's dealings with their US truck importer and partner, Global Vehicles USA (GV).  In June, GV filed a lawsuit against M&M claiming that they were purposely delaying EPA certification efforts to prepare a compact diesel pickup truck for launch in the US market.  The lawsuit also asserted that Mahindra was effectively attempting to force an end to the exclusive import and distribution contract both companies had originally negotiated in 2006.  It has been widely speculated that Mahindra decided that they were no longer interested in using a US partner to distribute the pickups, and were attempting to negotiate directly with dealerships established by GV.

Bannon Automotive's lawsuit accuses Mahindra of breaking agreements to give Bannon an exclusive license to assemble and sell Reva cars in the United States.

From the Syracuse.com article:

"This material change in the representations made by Reva and Mahindra signaled the death of Bannon Automotive", Bannon said in the lawsuit filed in Nassau County, where Bannon is based.

"Unfortunately, Mahindra/Reva did not deliver as promised," Bannon Chief Fiscal Officer Jordan Levy told the Post-Standard (Syracuse.com) by email Wednesday.  "Accordingly, Bannon and its investors have been compelled to take legal action.  Bannon will continue try and follow through with the project as planned.  We remain committed to bringing an affordable, US manufactured electric vehicle to the American marketplace."

The lawsuit seeks to force Reva to give Bannon a license to make the Reva vehicle for the US market and to bar Reva from granting a license to anyone other than Bannon to manufacture and market Reva cars in the United States.

Apparently Mahindra has been using the same playbook to coordinate their strategies with Bannon and GV.  Bannon goes on to state that Mahindra had repeatedly delayed signing a definitive licensing agreement after their majority stake takeover of Reva in May.  Bannon claims that Mahindra told them via email in August that they would not have a vehicle ready for them to sell in the US.  Bannon claims that the August email was the last communication they have received from Mahindra.

Mahindra Planet will continue to follow the story.  Please go to Syracuse.com for more.
Updated 7:15AM 23-Dec-2010: The Syracuse.com link is now live again: Electric Car Project for Onondaga County Collapses

Source: http://www.syracuse.com/