The funny thing about the Automotive X Prize competition to develop a 100 mpg vehicle has been that no major automakers have bothered to enter. Until now.

Giant Indian automaker Tata, which has become famous for the designing the $2,500 Nano microcar, has thrown its hat in the ring.

The company plans two entries, one in each competition class, Alternative and Mainstream. In the Alternative class, Tata is expected to enter an electric microcar in the Alternative class, which requires a minimum range of 100 miles, and 2-passenger capacity. In the Mainstream class, which requires a 200-mile range and 4-passenger capacity, Tata is designing a hybrid.

Perhaps it’s not surprising that there are no major U.S. automakers participating in the competition. Years ago, Amory Lovins, founder of the Rocky Mountain Institute who was promoting a hybrid car made with lightweight carbon fiber, said innovation in mass producing efficient cars was unlikely to come from traditional automakers. They have too much invested in manufacturing plants designed to work with steel and metal, he said.

Instead, he forecast that most innovation in fuel-efficient cars would come from small companies of the type starting up frequently in the Silicon Valley.

So far, this competition seems to bear out that prediction. Although now we might now add overseas-maker Tata as stepping up.

Produced in India, Tata’s cars are not subject to the same safety standards cars must pass here. So the company has experience making smaller, lighter cars that may get better fuel economy.

In the X Prize competition, entries will be expected to include all modern safety features and to prove in a computer simulation that they can perform well in crash tests.

The contest is expected to begin on the streets of New York City in September 2009.

—Eric Evarts

Check out our previous coverage of the Automotive X Prize:
Automovie X Prize find sponsor
Automotive X Prize entries still up for grabs
Auto X Prize announces the teams competing to build 100-mpg car
Auto X Prize to reward 100-mpg car

Discuss the Auto X Prize in the Consumer Reports forum.