Tata Pixel concept
Tata Pixel concept (representational image)PR handout

It's no secret that Tata Motors has been working on new project code-named Pelican which is expected to turn the copiously reworked next-gen Nano. The purported model was caught testing recently hinting at rapid progress in the product development. However, emerging reports indicate that recent developments in Tata group may prompt the company to pull the plug on the project.

In August, Tata Motors management under Cyrus Mistry agreed to slow down investment in the development of a new Nano. Instead the firm decided to focus on a two-seat sports car and newer models such as Hexa, Kite5 and Nexon. Though Mistry has been replaced by Ratan Tata, it is unlikely to reverse Cyrus Mistry's decision to hold back future investment in the Nano, reports ET Auto.

The spyshot showed the Pelican in the same silhouette of the current Nano, barring headlight clusters, and redesigned bumpers. The test mule featured 13-inch wheels, redesigned bonnet and a repositioned fuel filler cap. It was based on the updated X302 platform of current Nano.

On the inside, Pelican's dashboard was spotted with instrument cluster located right behind the steering wheels. In the current Nano, instrument cluster is positioned at the centre of dashboard. The Pelican was also expected to get many features from the Tiago that include the dashboard layout. The small car was also rumored with Harman Kardon infotainment system instead of CD/MP3 system. All this could have helped next-gen Nano to come out of the 'cheap car' tag.

Tata Motors developed 3-cylinder 1-litre petrol engine for the new Nano that was scheduled to be launched in 2016-2017. According to reports,Tata Motors was also working on a two-cylinder 800cc diesel engine for the Nano. Though the project has been put on hold due to lack of visibility on profitability, this engine may be added in the future vehicles of the company.