Practical Chip Design

Some time ago we noted the announcement of the Tata Motors Nano, a car designed to sell in the India market for under $2,000. At that time we also commented that if the Nano succeeded in creating a new category of cars in the global market it could change the nature of automotive electronics and considerably dim many marketeers' visions of a the car of a thousand microcontrollers. Much has changed since then.

One thing is that the Nano was officially launched on 23 March, with, as promised, a starting price of Rs100,000: just under $2,000 US at current exchange rates. But along with the launch came some interesting comments from Ratan Tata, the head of the Tata Group, according to an article in the Financial Times. Tata said that there are already plans to sell a version of the Nano in the European market in 2011. More interestingly for our purposes, he also said that the Group is now designing a version of the Nano for export to the United States, perhaps also as early as 2011. Reportedly the Nano as it stands already meets EU emissions and most EU safety requirements, and can be adapted to meet US regulations as well.

So the possibility of the little car becoming a global product is now very close to a reality. Whether it will be successful in the US is another question. But it is not hard to construct a plausible scenario in which the Nano-US could repeat the conquest of this supposedly hostile market that the Volkswagen achieved almost half a century ago.

At that time too, experts tried to explain that US customers only wanted large cars, that small, low-powered vehicles would not be acceptable on US highways, that the US market had no interest in fuel efficiency, that an inexpensive car would never be reliable enough for the long distances people drove in the US, and so on. Turned out, especially after the 1973 Arab Oil Embargo, that these statements weren't necessarily predictive.

It's easy to argue that we are in a similar situation today. The US auto industry has blundered itself into an even more disabling situation than it was in at the end of 1973. This time it is essentially insolvent, and without customers. And the economic situation might very well still be favorable to a very-low-priced new car in the US by 2012. Unless countries with major cash reserves really can be talked into buying $2,000 billion in US Treasury securities, it's hard to envision a quick exit from the current global recession. And unless even the more centrist petroleum geologists are wrong, we are in a temporary downward blip in oil prices—not something that could even count as a remission.

Combine lower household income, high risk of unemployment, high debt-service payments, high gasoline prices, and an uncertain future into one scenario, and ask yourself what you would consider when it became necessary to replace your existing commuter car. Certainly relying on mass transit won't be an option, as state and local governments are already throwing mass transit under the bus (as it were) to balance their budgets. Even if Tata has to double the entry price of the Nano for the US market, it would still, at under $4,000, be cheaper than a reliable used car.