NEW DELHI - India's Tata Motors on Thursday unveiled its much anticipated US$2,500 car, an ultracheap price tag that suddenly brings car ownership into the reach of tens of millions of people.
While the price has created a buzz, critics say the vehicle, called the Tata Nano, will lead to possibly millions more cars hitting already clogged Indian roads, adding to mounting air and noise pollution problems. Others have said Tata will have to sacrifice quality and safety standards to meet the target price.
Company Chairman Ratan Tata has said the car will be the least polluting car in India and meet necessary safety standards.
Chief U.N. climate scientist Rajendra Pachauri, who shared last year's Nobel Peace Prize, said last month that he was "having nightmares" about the prospect of the low-cost car.
Introducing the car at an auto show in New Delhi, Tata said the Nano would pass domestic and European emission standards and would average about 20 kilometres per litre.
"Dr. Pachauri need not have nightmares," said Tata, the chairman. "For us it's a milestone and I hope we can make a contribution to the country."
To introduce the Nano, Tata drove onto stage in a white model of the car with the lights flashing, his head nearly touching the car's roof.
The diminutive Nano is a compact four-door with a snub nose and a sloping roof. The car can sit four people, or five if they squeeze.
The Nano is spare, with many features shaved off: there's no radio, no air conditioning, no passenger-side mirror, and only one windshield wiper.
Tata said the company will introduce deluxe models at higher prices that have more features.
Dealers will sell the basic model for US$2,500, but customers will pay slightly more than that due to taxes and other charges.
The company has said they expect the car to revolutionize the auto industry, and analysts believe the Nano may force other manufacturers to lower their own pricing. French auto maker Renault SA and its Japanese partner, Nissan Motor Co., are trying to determine if they can sell a compact car for less than $3,000.
For now, the car will be sold only in India, but Tata has said it eventually hopes to export it. The Nana could become the basis for other similar super-cheap models in developing markets around the world.
As rising middle class incomes drive demand for cars in India, automakers expect the ranks of car owners in the country to expand dramatically in coming years.
But for some, a huge influx of cars is a terrifying prospect of traffic jams at midnight, hours-long commutes and increasing pollution.
"If you're talking about urban environment, it will cause serious problems," said Jamie Leather, a transport specialist with the Asian Development Bank. "It's a major concern."
In 2005, Indian vehicles released 219 million tons of carbon dioxide, the leading greenhouse gas blamed for global warming.
By 2035, that number is projected to increase to 1,467 million tons, due largely to the expanding middle-class and the expected rise of low-cost cars, according to the Asian Development Bank.
"The cheaper and cheaper vehicles become, the quicker those pollution levels will increase," Leather said.