VW Cuts EV Platform Costs in India, Opens Talks With New Homegrown Partners

TLDRs;

• Volkswagen cuts India EV platform investment to US$700M and seeks new homegrown partners to accelerate development.
• Talks underway with contract manufacturers and JSW Group as VW looks to share costs and reduce market risks.
• First local EV expected in 2028; company may import EVs earlier if EU–India trade deal progresses.
• India strategy aligns with VW’s global reboot, including its joint software venture with Rivian targeting 2027 rollout.

Volkswagen is reshaping its electric mobility strategy in India, cutting back its planned investment and opening discussions with new local partners as it attempts to gain a foothold in one of the world’s fast-growing EV markets.

The automaker has reduced development spending on its India-focused EV platform by roughly one-third, from an initial US$1 billion commitment to approximately US$700 million, according to people familiar with its internal planning. The recalibration reflects an urgency to manage risk as competition intensifies and timelines tighten.

The move comes at a pivotal moment for the German automaker, which has struggled to convert its long-standing presence in India into meaningful scale. Despite nearly two decades of operations, Volkswagen’s market share stands at just 2%, far behind domestic players and global rivals that have aggressively expanded localized manufacturing and product portfolios.

Fresh Push for India EV Entry

India’s EV market is shifting rapidly, fueled by government incentives, falling battery prices, and rising consumer interest in cleaner mobility.

Yet the segment remains highly competitive, and cost-sensitive. Volkswagen’s decision to trim development costs highlights both caution and a renewed push to accelerate progress after years of slower-than-hoped momentum.

The company’s first locally manufactured electric vehicle is not expected until 2028, leaving a significant gap in its EV lineup in the short term. As a temporary bridge, the automaker is reportedly exploring the possibility of importing EVs, contingent on the progress of a potential EU–India trade agreement that could ease tariffs.

Searching for Local Allies

Volkswagen’s updated strategy places heavier emphasis on local collaboration. Its subsidiary, Skoda Auto Volkswagen India, has begun fresh discussions with an Indian contract manufacturer to jointly produce future EV models.

The automaker has also approached the JSW Group, an Indian conglomerate expanding into mobility and batteries, to assess partnership potential.

These conversations follow stalled talks with Mahindra & Mahindra, which ended last year after both companies were unable to finalize terms of a shared EV development roadmap. For Volkswagen, securing a partner would help spread financial risk and accelerate platform development during a critical period of global transformation.

Short-Term Import Alternatives

Beyond manufacturing partnerships, Volkswagen is evaluating short-term stopgaps to maintain relevance in the country’s evolving EV landscape.

If trade negotiations between New Delhi and Brussels progress favorably, Volkswagen could temporarily introduce imported EVs to strengthen its presence before local production scales up. Such a strategy would mirror moves taken by other global automakers facing similar localization delays.

Global Strategy Ties In

Volkswagen’s India pivot also aligns with its broader global effort to rebuild competitiveness in electric vehicles and software, an area where it has lagged behind Tesla and fast-moving Chinese brands.

Just last week, the company highlighted advancements from its partnership with US EV maker Rivian. Volkswagen has invested US$5.8 billion into Rivian to co-develop next-generation software and vehicle architecture through their joint venture, RV Tech. The platform is expected to underpin multiple models across Volkswagen Group brands, with the first production vehicles debuting RV Tech-powered systems by 2027.

Winter testing for the new architecture is set to begin soon, covering Volkswagen’s ID.Every1, an Audi model, and a Scout vehicle. Analysts note that if the system remains on schedule, it could unify software layers across VW’s lineup by 2030, a milestone critical to the company’s long-term EV ambitions.

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