Volkswagen is scaling down its EV investment in India, mainly by cutting its spending for an EV platform from $1 billion to around $700 million. With only a 2% market share after nearly 20 years, the company aims to save money and find a local partner to share costs and risks.
Cost Cuts Confirmed
Skoda Auto Volkswagen India Pvt. Ltd. has brought down the anticipated cost for making an electric car platform from the initial amount of $1 billion to around $700 million. This budget reduction is a signal of the increased caution that has affected the whole global automotive industry, where the major players have to consider investment priorities for different global markets such as India, China, and the West.
Search For Partner
Getting an Indian partner is now seen as a must for Volkswagen to be able to count on further internal financing for its future projects. The German car maker is on the lookout for a partner who would be able to share with it the heavy costs and risks related to the development of electric vehicles for the Indian market.
Market Share Struggle
Last year, Volkswagen’s Executive Chairman, Klaus Zellmer, referred to India as the “most important global market for the company after Europe,” but still, the company did not manage to get the desired impact. European car manufacturers have always found it hard to earn good profits in India’s price-sensitive market, which is accessible only through local players like Maruti Suzuki, Hyundai, Mahindra, and Tata, who have the advantage of low-cost, high-mileage models.
Future EV Options
In 2027, the new and stricter local carbon-emission norms are going to be implemented in India. Since the first electric vehicle from Volkswagen in the country is not expected until around 2028, the company is currently thinking about how to comply in the short term. The options the company is considering are bringing in complete electric vehicles from overseas to fill the gap, especially if the trade deal between the EU and India is successfully concluded.
