The Volkswagen Group is in the process of developing agreements with notable Indian corporations Mahindra & Mahindra (M&M) and JSW Group to support its electrification plan in that country. The purpose of the talks is to identify a suitable collaborator who is ready to share production capacities, vehicle designs, and financial commitments for future technological improvements and product development, particularly in the electric vehicle (EV) market.
Investigating Strategic Partnerships
The Volkswagen Group is thinking about working with a partner that can support its objectives in electrification and sustainable mobility by reducing its ownership in its wholly-owned local subordinate, Skoda Auto Volkswagen India Pvt Ltd (SAVIPL). This action is a component of the larger group's plan to use its local manufacturing footprint to produce EVs for the Indian market in the second half of this decade, as well as for international markets.
M&M and JSW Express Interest
The JSW Group, which recently joined the automobile industry through its partnership with MG Motor India, has been the subject of initial talks. Furthermore, M&M has expressed interest in working together. Skoda Auto's worldwide CEO, Klaus Zellmer, is said to have traveled to Mumbai to discuss potential collaborations on projects with M&M's management team.
Previous Partnerships and Upcoming Opportunities
Before this, M&M and the Volkswagen Group had discussed working together to develop a compact electric vehicle (EV) based on VW's MEB21 platform. Even though the project was ultimately discarded the cooperation set the stage for more joint ventures. A major step in their collaboration was recently taken when M&M and Volkswagen established a business agreement for the sourcing of motors and batteries for battery-electric vehicles. Following delays brought on by legal and administrative challenges, this arrangement has improved the technical working relationship between the two businesses and inspired M&M to look into a more extensive partnership with the Volkswagen Group.
Opportunities and Challenges for India's EV Market
Since the EV market in India has not taken off as quickly as expected, businesses like the Volkswagen Group are developing partnerships to share risks and work together to develop a scalable and sustainable business model. The suggested collaboration with M&M or JSW may offer essential assistance to manage the difficulties of the Indian EV market such as the requirement for substantial investment in product localization and the EV segment's presence in sufficient quantities. However given the expected rise in EV demand, successful entry into this developing industry may be possible through collaborative efforts.
In the automotive business, corporations are looking for innovative methods for combining resources and raising profits. This appears in the qualitative conversations that the Volkswagen Group is having with possible partners in India. While Ola and Hyundai Motor are investigating the capital markets through public offerings or initial public offerings (IPOs), Tata Motors and M&M have chosen to look into private equity. Comparable to MG Motor's strategy with JSW, the Volkswagen Group is thinking of selling shares to strategic partners to create joint ventures. With the growth of the EV market in India, joint ventures between automakers such as Suzuki-Toyota, Renault-Nissan Alliance, Hyundai-Kia, and the Stellantis Group (Jeep-Citroen) are going to get more frequent, depending on shared vehicle architectures to satisfy the increasing need for EVs.