VW cuts Electric Vehicle Development costs in India in search of partner
Volkswagen AG is drastically cutting its budget for developing electric vehicles in India — from $1 billion to about $700 million — in search of a local partner with whom to share costs and revive its meager 2% market share after almost two decades, Bloomberg reports.
Skoda Auto Volkswagen India is in talks with several potential partners, including an Indian contract manufacturer and JSW Group, after previous negotiations with Mahindra collapsed. Securing a partnership is a prerequisite for obtaining further domestic financing, as the group is becoming increasingly cautious in allocating investments between the markets of India, China and the West.
Given that stricter carbon emission standards will come into force in India in 2027, and the first Volkswagen electric car produced in India is unlikely to appear before 2028, the company is considering the possibility of temporarily importing electric vehicles if a trade agreement is concluded between the EU and India. Despite India being considered Skoda's most important market outside of Europe, Volkswagen is trying to gain popularity in a price-sensitive environment dominated by Maruti Suzuki, Hyundai, Tata Motors and Mahindra. However, there are also positive developments: the demand for an affordable compact Skoda Kylaq SUV of local production is growing.