Here Comes the $2,500 Car

March 20, 2008
Radio is a “luxury.”

How do you halve the price of a passenger car? It takes more than savvy negotiations at the dealership. In 2004, Tata Motors took on the challenge of bringing a 100,000-rupee ($2,500) car to the Indian market. Tata’s closest competitor, the Maruti 800 retails for about $5,000. The result of Tata’s efforts, the Nano, was unveiled in January 2008 and will reach consumers in October.

Tata has squeezed low prices out of its suppliers with high-volume, single-source contracts. About 100 suppliers will build 90% of the Nano’s parts, three-quarters of which are single-sourced.

The initial production plan of 250,000 to 350,000 units/yr was tempting enough, but rumors have surfaced that this could quickly double. Tata’s CEO Ratan Tata has said he hopes to build additional factories elsewhere in India or sell Nano kits to entrepreneurs to hit a total production of 1 million units/yr.

“A bunch of entrepreneurs could establish an assembly operation and Tata Motors would train their people, oversee their quality assurance, and they would become satellite assembly operations for us. So we would create entrepreneurs across the country that would produce the car. We would produce the mass items and ship them as kits,” Tata told the Times of India.

The chosen suppliers are moving quickly to build new factories, colocated with the new Tata factory in Singur, West Bengal. The savings in transport costs and inter- state taxes, coupled with low labor costs, have sweetened the deal. Work is moving ahead despite local protests about the conversion of farmland to industrial use.

In many cases Tata has worked with suppliers to replace conventional manufacturing processes with faster, cheaper methods. Hydroformed tubes will replace solid bar-stock in the body frame and steering column. Body panels will be roll-formed instead of pressed.

Improving up-front quality to a defect target of 100 ppm was another focus. The Caparo Group, noted in the U.K. for its T1 hyper car, has a zero-defect strategy for building the Nano’s inner structural panels in Singur.

“The body technology is relatively conventional, but the manufacturing technology is the result of sophisticated analysis to ensure high-quality, low-cost production,” CEO Angad Paul says.

Other savings came from examining cars from the ground up and stripping out unnecessary features. German engine-electronics company Robert Bosch GmbH designed the single multipoint fuel injector for the Nano’s two-cylinder, single-overhead- cam engine. The unit is controlled by a stripped-down version of the company’s Motronic engine control unit.

“Low-price vehicles are not vehicles of inferior quality equipped with the most basic components. Instead, they are inexpensive technical solutions produced using state-of-the-art components. They are tailored exactly to customer and regional needs,” said Wolf-Henning Scheider, president of Robert Bosch’s Gasoline Systems Div. in a June 2007 speech.

The engine itself is stripped down to bare bones. Its two Federal- Mogul Goetze pistons are served by a single Amtek balancer shaft, making it the first engine of its type. The 623-cc engine produces only 33 hp, less than one-third of the power available in U.S.-market subcompacts. The car’s top speed is about 65 mph, but little driving in India is at highway speeds.

However, fuel efficiency — 47 mpg, according to Tata’s claims — is a stronger selling point in India’s emerging market than highspeed performance. That fuel efficiency provides a 188-mile range on a full 4-gallon tank of gasoline. Considering the tank sits directly under the passenger seat, the skimpy capacity could be viewed as a safety measure. The fueling point is under the car’s hood, which cuts out the extra steps and parts needed for a side fuel door.

Weight reduction was essential to get performance out of the tiny engine. A heavy driveshaft and attendant safety measures were eliminated by moving the reardrive engine aft. The structure was stiffened without adding weight by using tubular framing, designing internal parts like seat risers to lend structural support, and adding ribs to the roof panels. The rear panel and window are welded shut for further stiffness, with the tradeoff that drivers must fold down the rear seat from inside the car to access the engine.

Reducing weight in those areas scaled back the steering linkage and front suspension (MacPherson struts with lower A-arms), saving additional weight. The rear suspension features relatively beefy coil springs to cushion the effects of a 30:70 rear weight bias. The 2.5-in-wide tubeless tires, supplied by JK Tyre, are 12-in. diameter in the front and 13-in. diameter in the rear. All the wheels have been placed at the corners to improve handling.

Instead of ducting air from a front grille toward the rear engine, the air intake is behind the back doors. This leaves a little leg room and about 5.3 cu ft of cargo space up front, but further unbalances the weight distribution toward the rear.

Little changes have been made elsewhere to delete nonessential components. Actuators that keep headlights level when the car hits a bump were removed, famously saving $10/car. Disc brakes were replaced with drum units and power boosters were removed. Other notable omissions are a second windshield wiper, a passenger sun visor, a glove box, rear-seat belts, and a fourth lug nut on each wheel.

The instrument panel, designed and produced by Delphi India, contains only an odometer, fuel gage, analog speedometer, and turn-signal indicators. There is no tachometer. With extensive acoustic insulation outside Nano’s budget, the resonance of the sheet metal at around 5,000 rpm provides its own reminder to shift.

The front console is also missing the audio system ubiquitous in U.S. cars. A radio can be added as part of the luxury package. Other features U.S. drivers take for granted, like automatic transmission, power windows and locks, and air conditioning, are only available by upgrade. Power steering is not in the plans, but with a curb weight of about 1,300 lb it’s probably not needed.

Tata has admitted to a near-zero profit margin on this model. It hopes to regain ground on deluxe and luxury models. Buyers can also pay extra to customize their Nano with alloy wheels, fog lamps, sports scoops, decals, colored bumpers, and cloth seat covers.

Future models may be available with electric engines or with fuel systems that accommodate natural gas, biofuels, and flex fuels. A diesel engine is already in the works, as is a continuously variable transmission.

Further upgrades like back-seat safety belts, air bags, and beefier body panels would be required to meet European or U.S. safety regulations. Long-range plans for the Nano call for it to be rolled out to emerging markets in Asia, Africa, and South America in the next four years.

Caparo Group
Federal-Mogul Goetze India,
JK Tyre,
Robert Bosch GmbH,
Tata Motors

Tata saved money on the Nano with a simplified interior lacking a passenger sun visor, radio, tachometer, glove box, and other refinements.

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