Last Wednesday, India’s Tata Motors delivered its revolutionary Nano car to journalists for a test drive, in Pune, India. According to Reuters journalist Nick Kurczewski, “the tiny Indian-built four-door manages to combine thrift, functionality and, shockingly, even a measure of driving enjoyment.” All this, for $2,000, or less than the cost of a stereo system on a Cadillac. 

But how? What is the formula for an innovation revolution?

First, vision. Tata Chairman Ratan N. Tata dreamed of a car affordable by Indian families, with a $2,000 price tag.  Second, a great team of engineers began to work, to make it happen. And third — subtraction. Take away unnecessary features that do not contribute value, but only add to cost.

The Nano has tiny dimensions. It is two feet shorter than a Mini Cooper. Its body and chassis are steel, while the bumpers are plastic. The round little car looks conventional, a bit like a turtle. Its aluminum engine has 32 horsepower, 624 cc’s, and two cylinders and is rear mounted. It goes from zero to 80 km. per hour in 16.4 seconds — not a Lamborghini, but not bad either. The Nano has a turning radius of 13 feet (4 meters) and can turn 360 degrees in its own shadow. You can fit four people into it, and even five in a pinch. The Nano weighs only 600 kgs. (about 1,300 pounds). 

Exactly a century ago, Henry Ford began building Model T’s. After making 15 million of them, the price fell to (in 1927 dollars) $500. I wonder if Tata is aware that the market launch of the Nano came 100 years after Henry Ford launched the Second Industrial Revolution. I wonder if the short-sighted credit raters at Standard & Poor — the same folks who, with Moody’s, brought you the subprime mortgage crisis — who downgraded Tata to B+ (below investment grade) know what pistons or distributors or engines are. I wonder if the overpaid folks who run Ford, GM and Chrysler are just a tad envious of the visionary Mr. Tata.