Tata Nano: The Ford Model-T

99 years after the Ford Model T, the Tata Nano has been announced in India for 100,000 rupees, or about $2500. And you know what? It looks amazingly good. I was completely expecting a Yugo ugly box, but you could drop this 10 foot long car into an urban street in Europe (the most competitive subcompact market on the planet) and it would fit right in. It looks amazingly refined and interesting - heck, it looks better than budget models selling for many times the price from most mainstream manufacturers.

And they have a website that is fairly Web 2.0, with customer feedback, a conversational letter from the chairman, and colored gradient boxes to complete the look.

It also raises some interesting possibilities for domino effects — more on that in a moment.

The car has a 2-cylinder engine and reportedly gets 54mpg. It only creates 33hp, and tops out at 65mph. Of course, if a lot of them are sold then street congestion will be so bad that 65mph won’t be a serious limit and 54mpg is unlikely in stop-and-go traffic. Ecological concerns are of obviously a major issue if hundreds of millions of new buyers suddenly take to the car. Supposedly it produces less emissions than the mopeds that poor Indians currently ride (the next cheapest car is twice as much), since it uses a 4-stroke not 2-stroke engine. Nevertheless, it probably has worse mpg, requires far more energy and resources to fabricate the Nano than mopeds, and takes up more space on the road so density is decreased (so less efficient).

But the Nano has some strong upsides of comfort and safety also:

Mr. Ratan N. Tata [Chairman of the Tata Group] said, “I observed families riding on two-wheelers - the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. Tata Motors’ engineers and designers gave their all for about four years to realise this goal. Today, we indeed have a People’s Car, which is affordable and yet built to meet safety requirements and emission norms, to be fuel efficient and low on emissions. We are happy to present the People’s Car to India and we hope it brings the joy, pride and utility of owning a car to many families who need personal mobility.”
By adopting the term “the people’s car” Tata is explicitly referring to the VW Bettle, a similarly inexpensive car that was designed to help bring affordable mobility to the German population, and which went on to become a cultural icon worldwide representing freedom and independence (despite its Nazi roots).

And while the Beetle is an obvious reference, the Ford Model-T is a more accurate forecaster of the future the Nano may bring. Just as trains and inexpensive cars like the Model-T led to transformation of population centers, massive shifts in attitudes toward city and rural areas, flexibility of employment and education, broadening of social perspectives through travel, and shifts in family dynamics and roles, the Nano may bring the same to India.

From a business perspective, Tata has had to do some radical things to achieve the $2500 price. They have worked closely with component suppliers and brought them close to the assembly plant to reduce costs (like Dell does).

The design team practiced a concurrent engineering model with many iterative physical prototypes, working in a skunk works fashion away from the “hidebound” practices of the larger Tata organization, and collaborated early on with component vendors to sort through problems.

Like the manufacturing line of the Model-T which had far reaching implications for the American manufacturing industry (and economy), if other Indian companies can harness the lessons of Tata’s Nano, we will see a transformation of the entire country in the next decade even beyond what is already coming.