In this morning’s post I mentioned low cost cars coming from India. Today Business Week reported that Ratan Tata’s new $2,500 car, called the Nano, is being met with “extreme enthusiasm” and is going to put India on the map in the auto world. CrunchGear indicates that Tata plans to introduce the Nano to other low income areas like Africa and South America in the next four years.
Maybe they should bundle the $100 laptop from OLPC foundation with the vehicle, so the kids can have something to do in the back seat? (I know it’s more like $199 in quantities of 10,000 right now, but I’m sure prices will drop over time.)
Imagine how fun it would be for kids to play multi-users games over the XO mesh network in the back seat of the Nano while racing down India’s highways. Someone could build some great software for that.
Seriously, could Tata be the Henry Ford of the 21st Century? Will the Nano, the world’s least expensive car, sell more units than any other car in this century. India is poised to become the world’s most populous nation after all.
“The Model T was a great commercial success, and by the time Henry made his 10 millionth car, 9 out of 10 of all cars in the entire world were Fords. In fact, it was so successful that Ford did not purchase any advertising between 1917 and 1923; in total, more than 15 million Model Ts were manufactured, more than any other model of automobile for almost a century.” (Wikipedia)
The model T Ford cost $850 in 1909 and prices dropped over time as the assembly line lower manufacturing costs. (According to Wikipedia, “The assembly line was introduced to Ford by William C. Klann upon his return from visiting a slaughterhouse at Chicago’s Union Stock Yards and viewing what was referred to the “disassembly line” where animals were butchered as they moved along a conveyor. The efficiency of one person removing the same piece over and over caught his attention.”)
By 1915, Model T Ford’s cost only $440, and Ford was paying his workers $5.00 per day. He hoped that any of his factory workers could afford a car. “In 1914, an assembly line worker could buy a Model T with four months’ pay.” (Wikipedia)
Ford sold 15 million Model Ts from 1907 to 1927. The U.S. Population reached 123 million by 1930, so Ford sold to about 8% of the U.S. population. (I don’t know how many were sold outside of the U.S.)
India’s population will hit 1.3 billion by 2020. And the Nano costs less than the Model T did by the 1920s, adjusted for inflation. Wikipedia says: “By the 1920s, the price had fallen to $300 (about $3,400 in 2006 inflation-adjusted dollars) because of increasing efficiencies of assembly line technique and volume.”
If Tata can sell to 8% of the Indian population over the next 20 years, it would sell about 104 million units. Those numbers are staggering.
According to the Guardian, the Indian middle class will grow from 50 million now to 583 million by 2025, so anything is possible. But Tata projects selling up to a million Nanos per year. The initial manufacturing capacity is only 250,000 units per year from a factory near Calcutta.
After low cost laptops and cars, what industry do you think will be revolutionized next by a legitimate low-cost manufacturer that is building products for the poor in developing nations?