Mahindra and Mahindra, on Monday, launched its all-electric four-seater passenger car, the e2o, with price starting at Rs.5.96 lakh.

The car is developed by Mahindra Reva Electric Vehicles (formerly Reva Electric Car Company), and will replace its predecessor Reva, India’s first electric car.

“The launch of the Mahindra e2o marks an important milestone for the Mahindra Group…this is not just about selling a car, it is about telling people to change their lifestyle. We are working at creating an ecosystem that includes mobility solutions along with other environment-friendly innovations,” Mahindra Group Chairman Anand Mahindra told reporters here.

The group also plans to extend the electric mobility technology to its two-wheelers.

On sales target for the e2o, President (Automotive and Farm Equipment Sectors) Pawan Goenka said, “Sales of 400-500 vehicles a month will be a good number for us. We expect Delhi to be the biggest market and should account for about 150-200 units.”

e2o is the first car from Mahindra stable post the acquisition of Reva Electric Car nearly three years ago. It would be produced at the company’s plant in Bangalore with a capacity of 30,000 units annually.

“The total investment that we have put in for e2o, including the plant in Bangalore, is about Rs.100 crore,” Mr. Goenka said.

The car is powered by new generation lithium-ion batteries, and a three phase induction electric motor. It has driving range of 100 km per charge, which takes five hours for one full charging. The fully automatic car can be charged from any 15A power socket, and is aimed for city driving.

Other features of the car include a remote emergency charge activated through a mobile application, GPS navigation system, keyless entry and regenerative braking feature, which puts energy back into the car’s batteries and charges them every time it is slowed down or brakes are applied.

“In Delhi, we get 15 per cent subsidy on the base price, VAT (which is 12.5 per cent) refund and road tax is also halved to 2 per cent,” Chief Executive (Automotive Division and Member of the Group Executive Board) Pravin Shah explained.

The e2o will be launched in phases across the country. In the first phase, it has been launched in eight cities. Prices will vary depending on the subsidy state governments will give to the electric car.

The company also plans to export the new electric car to Europe in six to nine months.

Asked if the group would extend the electric vehicle technology to two-wheelers, Mr. Mahindra said: “Yes. We do plan to take this technology to two-wheelers. We have some exciting plans.” He, however, did not share details.

On commercial viability of the project, he said, “ Clearly, we are doing this because we think there is a monetary reward…”

The company said the price of the car could be reduced further if the government re-introduced its subsidy scheme for electric cars.

Mr. Goenka said: “We would have been happier if there were subsidies in the budget. However, one should not make subsidy a pre-condition for the success of this vehicle.”

The Ministry of New and Renewable Energy had, in 2010, launched a scheme under which incentives of up to 20 per cent on the ex-factory prices of the vehicles were offered subject to a maximum limit. The scheme had expired on March 31, 2012.