Tata Motors plans eco-car for 2012 in Thailand

India's Tata Motors (NYSE:TTM) said today that a project to develop mini eco-cars in Thailand is underway, with the company planning to invest 5 billion baht ($147 million) to launch the cars by 2012.

Tata is competing with six other automakers—Toyota Motor, Mitsubishi Motors, Nissan Motor, Honda Motor and Suzuki Motor—for government incentives to build facilities capable of producing 100,000 vehicles a year. The government has mandated that the engine capacity not exceed 1,300 cubic centimeters (1.3 liters).

But Tata is facing stiff competition. Last week, Mitsubishi unveiled its mini, electric eco-car, the i-MiEV, expected to go on sale in the Japanese market in late July (see Mitsubishi brings next-gen EV mini to market). Toyota and Nissan plan to launch competitive versions in July.

Tata is finalizing plans on the engine capacity and design but told Reuters today that the vehicle will be different from the Nano, which the company sent to showrooms in March billed as the world's smallest, cheapest car (see Tata launches 60 mpg Nano after 5 months' delay). The Nano sells for Rs 1 lakh ($1,985) with a fuel economy of 22 kilometers per liter (52 miles per gallon) city and 26 km/L (61 mpg) highway.

Shares of Tata Motors were up marginally to close at $10.50 today.

Tata has taken more than 200,000 bookings for the Nano in India, and the company plans to sell an upgraded version in Europe and the U.S. in 2011. Tata plans to manufacture the Nano in Thailand to serve the Association of Southeast Asian Nations, or ASEAN, markets.

Tata also intends to sell an electric version of the Indica hatchback in Norway this year and India in 2010 (see India's Tata Motors reveals electric car prototype). The company is also experimenting with compressed-air powered vehicles (see India's Tata funds air-power car).

Tata has sold more than 500 light pickup trucks since it entered the Thai market last year through a 1.5 billion baht ($44 million) joint venture with Thonburi Automotive Assembly Plant, according to Reuters.

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