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Mahindra (Photo: Reuters)
In a significant development for the electric vehicle segment in India, Mahindra & Mahindra (M&M) and Skoda Auto Volkswagen India (SAVWIPL), a subsidiary of the Volkswagen Group, are reportedly in the final stages of establishing a 50:50 joint venture. This partnership aims to share costs, technology, and vehicle platforms for future product development, according to a report by The Economic Times.
The proposed joint venture will concentrate primarily on the development of battery-powered SUVs for both the Indian and international markets, although it will also encompass fossil fuel-based models. The negotiations have indicated that an official announcement is expected by the end of the year, the business-daily said citing sources.
Business Standard could not independently verify the development.
Exclusion of certain models
The collaboration will not include the sedans and SUVs currently sold by Volkswagen and Skoda, nor will it involve the luxury brands Audi and Porsche under the Volkswagen Group. Production of the new models will take place at SAVWIPL and Mahindra’s facilities in Chakan near Pune.
This development follows a statement by Skoda Auto’s global CEO, Klaus Zellmer, who mentioned that the group had made “significant progress” in talks regarding a potential equity partnership with an Indian company, the report added.
It quoted Zellmer as saying that the partnership seeks to share costs and risks while benefiting from the local partner’s sourcing, engineering, and expertise. Progress towards this agreement has been made through several rounds of discussions, both virtual and in-person.
The relationship between VW Group and Mahindra began with the signing of a supply agreement for components of Volkswagen’s MEB (Modular electric drive matrix) platform for Mahindra’s electric platform, INGLO. This agreement was finalised in February 2024 after two years of negotiations.
The collaboration comes at a time when the Indian government is pushing for electric vehicles and stricter carbon emission regulations, necessitating significant investments. Additionally, Skoda has identified India as its second-most important market outside Europe, following a slower approach in China and its exit from Russia. Mahindra, which currently offers only one EV model (XUV4OO), plans to launch seven new electric models by 2030.
Volkswagen group’s strategic move in India
For the Volkswagen Group, this joint venture represents a critical step in the Indian auto market, where it has struggled despite over two decades of presence. The group, including Skoda, Volkswagen, Porsche, and Audi, sold 88,412 units in FY24, a 9% decline compared to the previous year, resulting in a market share drop to 2.24 per cent from 2.43 per cent.
Mahindra’s previous attempts at global partnerships
It’s worth noting that this isn’t Mahindra’s first attempt at a joint venture with a global automaker in recent years. The company’s planned partnership with Ford Motor Co. was called off in January 2021 before it could commence. Similarly, a previous collaboration with Renault ended in 2010 after a few years.
First Published: Aug 30 2024 | 6:14 PM IST
