Skoda Auto Volkswagen India is in discussions with multiple potential partners including an Indian contract manufacturer and has also approached the JSW Group for the same.Volkswagen AG has slashed the cost of developing electric vehicles for the Indian market by nearly one-third and is actively scouting for a domestic partner to revive its long-stagnant presence in the country, according to people familiar with the matter.
Europe’s largest automaker has brought down its EV platform development cost for India to about $700 million from the earlier estimate of $1 billion, the people said, requesting anonymity. The reset reflects the company’s reluctance to continue committing billions of dollars to a market where it has secured only around a 2 per cent share despite nearly two decades of operations.
The company is now prioritising a partnership model to share investment and risks, especially after talks with Mahindra & Mahindra Ltd. collapsed last year. Securing an Indian ally has become essential for unlocking further internal funding, the people added.
Skoda Auto Volkswagen India is in discussions with multiple potential partners — including an Indian contract manufacturer — and has also approached the JSW Group to explore a possible collaboration. JSW is the local partner of China’s SAIC Motor Corp. Some local publications, including Moneycontrol, have previously reported the approach to JSW. Volkswagen did not respond to an email seeking comment on its revised investment plan.
Navigating regulatory pressures
The Volkswagen Group sells vehicles in India under the Skoda and Volkswagen badges, along with luxury marques such as Audi, Porsche and Lamborghini. With India’s stricter carbon-emission norms coming into effect from 2027, carmakers face mounting pressure to shift to cleaner technologies.
Volkswagen, whose India-specific EV launch window is likely in 2028, is evaluating short-term alternatives, including importing electric cars if a trade agreement between the EU and India makes such shipments more feasible.
Balancing global priorities
The spending cuts come at a time when global automakers are recalibrating their investments across India, China and western markets. While Skoda Auto chairman Klaus Zellmer last year described India as the brand’s most important global market outside Europe, the group has not been able to convert that interest into significant share gains despite several billions of dollars invested over the years. Skoda, however, has shown signs of traction more recently. Its locally-manufactured compact SUV, the Kylaq, positioned with accessible pricing, has seen encouraging demand from Indian buyers.
A tough market for global brands
European automakers have historically struggled to build profitable operations in India’s highly price-sensitive market. Homegrown players such as Maruti Suzuki, Hyundai Motor India, Mahindra and Tata Motors Passenger Vehicles continue to dominate with affordable, high-mileage and value-driven offerings — a segment where most global brands have found it difficult to compete.
Volkswagen’s latest cost-cutting drive and hunt for a local partner signal a strategic reset as it works to stay relevant in one of the world’s fastest-growing automotive markets, while navigating rising investment pressures and an accelerating transition to cleaner mobility.
