Volkswagen Group, the global automotive giant, has set its sights on India’s burgeoning electric vehicle (EV) market, announcing plans to introduce a made-in-India, mass-market EV in the latter half of the current decade. This strategic move signifies a significant shift in the company’s approach to the Indian market, acknowledging the growing demand for affordable and accessible electric mobility solutions.
Volkswagen catering to the Indian Market
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Unlike its existing ICE (Internal Combustion Engine) strategy, Volkswagen emphasizes the development of an India-specific EV tailored to the unique needs and preferences of local customers. This localized approach aims to offer a vehicle that resonates with Indian sensibilities, considering factors like driving range, charging infrastructure, and affordability. Additionally, the company acknowledges the export potential of such a product, aiming to leverage India’s manufacturing capabilities and access new markets in Southeast Asia and beyond.
Significant Investment and Volume Focus
Piyush Arora, Managing Director and CEO of Skoda Auto Volkswagen India, has confirmed that introducing EVs in India will require “triple-digit million euros” in investment. To justify this substantial financial commitment, Volkswagen recognizes the need for high volumes. This necessitates exploring export opportunities to achieve economies of scale and ensure the project’s viability.
The PEAK EV Project and its SUV Focus
As part of its EV roadmap for India, Volkswagen has unveiled the PEAK EV project, which will bring an electric SUV to the market by 2026. This vehicle is expected to be based on the localized MEB21G architecture and cater to the popular entry- and mid-size SUV segment. The SUV will likely wear the Volkswagen badge, targeting both domestic and international markets with a potential volume of 50,000 units. This marks a departure from the company’s usual approach of offering Skoda derivatives, showcasing their commitment to Volkswagen’s brand identity in the Indian EV space.
Skoda’s Role and Platform Exploration
While Volkswagen spearheads the PEAK EV project, Skoda is also actively involved in India’s EV scene. The brand is exploring the MQB A0 37 platform for localization, aiming to introduce larger, premium, and tech-laden models. Additionally, they are working on a compact SUV based on the MQB A0 IN platform, demonstrating their commitment to cater to diverse customer segments within the Indian market.
Exports: A Key Pillar for Growth
Exports have been a cornerstone of Skoda Auto Volkswagen India’s success. In 2023, they exported 600,000 units, representing 30% of their total production, significantly exceeding the industry average of 15%. This export-oriented approach will continue to play a crucial role in their EV strategy. The company sees Southeast Asia and GCC countries as potential export destinations for the made-in-India EV, capitalizing on the similarities in customer preferences between these regions and India.
Leveraging Global Strength and Network
Volkswagen Group’s established global presence and extensive distribution network provide them with a significant advantage in exporting Indian-made EVs. This network allows them to quickly access suitable markets and establish their brand in new territories.
Looking Ahead
Volkswagen’s entry into the Indian mass-market EV segment marks a significant development in the country’s automotive landscape. Their commitment to developing India-specific solutions, exploring export opportunities, and leveraging their global expertise positions them well to capture a significant share of the growing EV market. As the company progresses with its PEAK EV project and Skoda’s platform exploration, it will be interesting to see how they navigate the challenges and opportunities within this dynamic market. The success of their strategy will not only impact their own future in India but also influence the overall development of the country’s EV ecosystem.