Mahindra and Volkswagen expect to join hands for electric SUVs

In a significant milestone for India's electric vehicle industry, Mahindra & Mahindra (M&M) and Skoda Auto Volkswagen India (SAVWIPL), a Volkswagen Group subsidiary, are expected to be in the final stages of forming a 50:50 joint venture, according to a report by The Economic Times. Under the latest update, both companies intend to share technology, costs, and vehicle platforms for future product development, according to The Economic Times.

The joint venture will largely focus on the development of battery-powered SUVs for the Indian and foreign markets. Moreover, it will also include fossil fuel-powered versions. The discussions of the venture are progressing and a formal announcement is likely to come before the end of the year.

The agreement will exclude Volkswagen and Skoda's sedans and SUVs, as well as the Volkswagen Group's luxury brands Audi and Porsche. The new models will be produced at SAVWIPL and Mahindra facilities in Chakan, near Pune. The development comes after Skoda Auto's worldwide CEO, Klaus Zellmer, stated that the business had made "significant progress" in negotiations about forming an equity partnership with an Indian company, the report further read.

Citing Zellmer, The Economic Times reported, that while using the local partner's sourcing, engineering, and experience, the alliance aims to share costs and risks. According to Zellmer, the partnership took several rounds of virtual and in-person conversations to get here.

VW Group and Mahindra began their collaboration with the signing of a supply deal for components of Volkswagen's MEB (Modular electric drive matrix) platform for Mahindra's electric platform, the INGLO. This deal was concluded in February 2024, following two years of discussions.

This agreement comes at a time when the Indian government is framing policies that push for electric vehicles, along with tighter carbon emission norms. These demands will require large investments. Skoda has also marked India as its second-most important market beyond Europe, after its more tepid approach in China and its pullout from Russia. Mahindra currently sells only one EV model the XUV4OO and plans to sell seven more by 2030.