Tata launches 60 mpg Nano after 5 months' delay

The world's smallest, cheapest car hit showrooms today in India, maintaining its price target despite violent protests that more than doubled the cost for a dedicated factory.

But despite the inevitable road congestion the Nano will add in India, the rollout of the Nano presents an example of an automaker slashing costs while improving efficiencies, meanwhile overcoming obstacles unheard of for the big manufacturers in Detroit.

There's question as to whether the four-seater is a good thing for the environment. After all, automaker Tata Motors (NYSE:TTM) set the price tag at Rs 1 lakh ($1,985)—about 30 percent less than other entry-level cars in India. That reduction is expected to give 14 million Indian families their first access to affordable cars.

However, the Nano was designed with a fuel economy of 21.97 kilometers per liter (51.7 miles per gallon) city and 25.97 km/L (61.1 mpg) highway. An upgraded version slated for Europe in 2011 is expected to cost less than $5,000 and reach at least 67 mpg. And Tata has plans for an electric hatchback in Norway this year.

Tata is making highly efficient cars very cheaply—and doing so while facing enormous unforeseen costs.

Land disputes between citizens of West Bengal and the government forced Tata to abandon a $338 million factory when it was 90 percent complete in October. Then, Tata started from scratch on the other side of the country, planning a $453 million factory for the car.

That factory isn't ready, and days ago Tata was told it had to follow strict environmental guidelines that, among other things, mean the plant can produce no wastewater. 

Add that to the price increase of up to 20 percent for the car's materials, and it's impressive that Tata was still able to meet the price it announced in January 2008.

See the Tata Nano here>> 

The Nano launch underscores India's status as a front runner in the race to develop highly efficient and electric vehicles.

Just last month, Bangalore, India-based REVA Electric Car said it plans to double production of its electric mini-car by building a new factory in Bangalore with the capacity to produce 30,000 vehicles each year priced Rs 300,000 to Rs 389,000 ($6,100 to $8,000).

See photos of the REVA here »