Volkswagen is reducing its India electric vehicle development budget and seeking a strong domestic partner as it tries to strengthen its very small footprint in the country’s competitive car market. People familiar with the matter said the company has brought down its planned spending for its EV platform to about 700 million dollars from the earlier target of 1 billion dollars. They added that the automaker is cautious about investing further since it holds only a 2 percent market share even after operating in India for almost twenty years.
The company is now looking for a partner who can share both cost and risk. Talks with Mahindra and Mahindra last year did not move forward, which has made the need for a new ally even more urgent for securing internal approvals. Its subsidiary Skoda Auto Volkswagen India is speaking with several potential partners, including an Indian contract manufacturer. The company has also reached out to JSW Group, which is the local partner of a major Chinese automaker, to explore possible collaboration. Some local publications have earlier reported on these talks. A spokesperson for Volkswagen did not respond to questions about the cut in India spending.
The broader Volkswagen Group sells cars under the Skoda and Volkswagen brands, along with luxury names like Audi, Lamborghini and Porsche. As India prepares to introduce tighter carbon emission rules in 2027, automakers face growing pressure to speed up their shift to cleaner technologies. Since Volkswagen’s own EV launch in India is expected only in 2028, the company is considering short term options such as importing EVs if a trade agreement between India and the European Union is finalised.
The reduced budget highlights the careful approach many global automakers are taking as they balance investments across India, China and western markets. Although senior leaders have described India as one of the company’s most important global markets outside Europe, Volkswagen has still struggled to grow its market share in the country despite two decades of presence and significant investment. Skoda, however, is seeing some momentum with its locally built compact SUV Kylaq, which has gained interest because of its pricing.
European automakers have historically found it difficult to succeed in India’s highly price sensitive market. Local players such as Maruti Suzuki India, Hyundai Motor India, Mahindra and Tata Motors Passenger Vehicles continue to dominate with affordable models that offer high mileage and strong value for buyers.
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