Bangalore-based Reva Electric Car Company, two-wheeler maker Bajaj Auto [Get Quote] and Tata Motors [Get Quote] are finalising plans to launch electric vehicles in Europe and the US to take advantage of subsidies these countries are offering as part of their environmental agendas.

Tata Motors will launch the electric version of the Indica Vista in Norway this year and RECC, which has been exporting its electric cars to Europe since 2004, is in talks to set up a factory in the US. Meanwhile, Pune-based Bajaj Auto has tied up with European two-wheeler maker KTM (of which it owns 31 per cent) to launch a range of electric vehicles.

RECC, which is a joint venture between the Maini Group and US-based AEV, has so far exported around 1,500 electric cars to Norway, Germany, Switzerland and the UK. "About five months ago, we would not have considered the US market. Now with President Obama's pledge to have one million electric vehicles on American roads by 2015, there's a huge opportunity out there," said Chetan Maini, deputy chairman & CTO, RECC.

"It's too early to say whether we will enter the US by ourselves or through a joint venture," he added, admitting that his current portfolio of electric cars needed to be adapted to meet stiff US safety standards.

US incentives involve tax breaks to manufacturers, subsidies of about $7,500 to consumers that buy these cars and financial support for research and development on such vehicles. Maini said tax breaks were given both by the  federal and state governments.

The federal government has also committed $22 billion federal aid for R&D initiatives in alternative fuels for next-generation zero-emission cars.

The opportunities for players like Reva are huge, since the size of the US market is estimated at 200,000 units a year currently.

In the UK, buyers of electric or hybrid vehicles could get a tax rebate of �5,000. In Europe, the rebate was 5,000 euros said Clive Hickman, managing director of the UK arm of Tata Motors' European Technical Centre.

To encourage electric car use, the UK government also levies a congestion tax of around �8 for large cars entering business districts but exempts electric cars. Electric cars are also exempt from parking charges and local authorities provide recharge plug points.

Meanwhile, Tata Motors bought Norwegian electric vehicle manufacturer Miljo Gi last year. This company has tied up with Canada's Electovaya, which will license its lithium ion battery technology. These batteries extend the driving range for one charge from about 80 km earlier to over 200 km, making it easier to take the car to longer distances. These batteries also take an hour to charge against eight hours earlier.

Tata Motors sources said the company was also looking at manufacturing the Indica frames in India and shipping these to Europe to save costs and price the car cheaper. The price advantage, in fact, is a key attraction for Indian manufacturers. Currently the Reva G Wiz retails in the UK at 40 to 50 per cent of the price of a similar car made in that country. Indian manufacturers have a cost advantage even if the car is partly assembled in the US or Europe.