Europe’s top vehicle manufacturer Volkswagen Group is scouting for a partner in India
Volkswagen Group, Europe’s largest carmaker, is currently looking for a partner in India. At the same time, it aims to enhance its market presence through its wholly-owned local subsidiary, Skoda Auto Volkswagen India Pvt Ltd (SAVIPL), which is led by the Czech carmaker.
- VW Group open to diluting stake in Skoda Auto Volkswagen India
- PEAK EV project to localise EV platform, powertrain
Sources indicate that Volkswagen is interested in collaborating with another automaker in India and is willing to reduce its stake in Skoda Auto Volkswagen, subject to strong synergies in platform sharing and parts sourcing. According to a source familiar with the matter, key executives from Germany are open to discussing potential alliances with suitable business groups in the country. This collaboration aims to share the substantial investment required for transitioning from internal combustion engine (ICE) to electric vehicle (EV) platforms in the future.
Skoda Auto Volkswagen India’s EV Strategy
On one hand, the company is focusing on developing a vehicle portfolio based on the MQB A0 IN platform for both Skoda and Volkswagen. On the other hand, the Group has made it clear that they will be investing in a locally manufactured electric vehicle for India and global markets in the second half of this decade.
In January, our sister publication Autocar Professional exclusively reported that Skoda Auto Volkswagen India has already begun working on a project codenamed PEAK EV to introduce a series of electric SUVs based on the MEB21G low-cost EV architecture. The platform currently in development will require a minimum investment of 1 billion euros, as it will have the capability to produce four distinct SUVs – two for Skoda and two for Volkswagen – by the end of the decade.
Considering the substantial investment required to diversify into the EV space, the Group is exploring a potential alliance with a partner who can not only share future investments and risks but also leverage the global capabilities of its EV technology. “The concept is to share both technology and the risks associated with transitioning to zero-emission vehicles, especially considering the potentially slow adoption in India. Therefore, the stake sale appears to be a practical move, provided it results in a mutually beneficial outcome,” mentioned another knowledgeable source.
In response to inquiries about a potential alliance or stake sale, Piyush Arora, MD and CEO of Skoda Auto Volkswagen India, stated in an email, “The Volkswagen Group is one of the most successful vehicle manufacturers globally. Skoda Auto, within the Volkswagen Group, oversees the significant Indian market. While we continually explore new business opportunities worldwide, please note that we typically refrain from commenting on speculative news.”
Over the years, the Volkswagen Group has had discussions with Tata Motors about sharing vehicle architecture. It has also collaborated with MG Motor India’s parent company, SAIC, to share vehicle architecture and production capacity in the country. Recently, it was in talks with Mahindra & Mahindra to explore the possibility of sharing the MEB21 compact EV architecture.
EV penetration in India
The shift towards the EV segment is inevitable, but the pace of transition in India is expected to be slower due to factors such as low per capita income, high acquisition prices, and inadequate charging infrastructure.
Tata Motors has been the primary driver of EV penetration in the country, holding a market share of over 75-80 percent. While mass-market brands such as Mahindra & Mahindra, Maruti Suzuki, and the Hyundai Motor Group have not yet entered the mainstream market, industry experts predict that EV penetration is unlikely to exceed 15-20 percent of the overall market.
In an interview with Autocar Professional last year, Volkswagen brand’s global CEO Thomas Schafer mentioned that the company is exploring various options to introduce locally manufactured EVs in India. However, the brand had not yet finalized the most suitable alternative.
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