Volkswagen Cuts India EV Costs as It Seeks Local Partner

• VW cuts EV platform cost to $700M from $1B
• Hunts Indian partners like JSW post-Mahindra fail
• Targets 2028 EV launch amid 2027 emission norms

Volkswagen​‍​‌‍​‍‌​‍​‌‍​‍‌ Group is cutting the spending for electric vehicle technology in India by about 67%. It reduces the budget for a tailor-made EV platform from $1 billion to $700 million, as the German carmaker is looking for a local partner to help it navigate the highly competitive market. After 19 years of presence in India, where it has only a 2% market share, Volkswagen is reluctant to invest billions more in a region that is very sensitive to price and is dominated by local giants such as Maruti Suzuki, Hyundai, Mahindra, and Tata Motors.

The saving of the cost is a reflection of a more realistic and different approach towards the formation of risk-sharing partnerships, as a bid for partnership with Mahindra & Mahindra failed last year. Present negotiations comprise possible collaborations with an Indian contract manufacturer as well as the JSW Group, which is a great help to China's SAIC Motor. They plan to co-develop technology, share the expenses, and expedite the launch of the product in the market.

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This adjustment is made against the backdrop of escalating regulatory pressures in India, where strict carbon-emission standards will be enforced from 2027, thus necessitating a faster adoption of EVs. Volkswagen anticipates the release of its first electric vehicles made locally in 2028, thus potentially temporarily importing units. It they EU-India free trade agreement comes into being, it would be easier for the units to be shipped duty-free.

Meanwhile, the group is facing a large number of obstacles to penetrate the mass-market segments in India despite the early successes of Skoda, a sister brand, with the budget-friendly Kylaq SUV. Volkswagen is reallocating its resources globally between high-growth regions, including India and China, and Western operations, which require stabilization, hence, a more prudent approach to capital expenditures in emerging markets. A company representative refused to comment on the matter of investment changes directly, but insiders point out that the need for localization is the key to competing in terms of affordability and supply chain ​‍​‌‍​‍‌​‍​‌‍​‍‌resilience.