Why Volkswagen has paused EV investments in India
What's the story
Volkswagen has halted further investments in its electric vehicle (EV) program for India. The decision comes as the German automaker seeks more clarity on a potential partnership with Sajjan Jindal's JSW Group. The company had completed preliminary design work using an affordable EV platform developed for China, but is now waiting for a clearer business plan before committing more funds to the project.
Measures
Volkswagen's global cost-cutting drive
The pause in investment comes as part of Volkswagen's larger global cost-cutting drive.
The company is looking to reduce its spending by some 15% and has also announced plans to cut tens of thousands of jobs.
The move comes as it faces weak demand in Europe and increasing competition from Chinese automakers.
Market strategy
Currently no battery-powered cars in India
Volkswagen had already cut development costs for EVs in India by a third last year while looking for a local partner.
The decision to slow down further investment could delay its efforts to compete more effectively in the Indian market.
Notably, the German automaker currently doesn't sell any battery-powered cars in India under its own or Skoda brands.
Partnership prospects
Proposed joint venture with JSW Group
Last month, Volkswagen and JSW had announced their plans to explore a joint venture for the development, production, and marketing of passenger vehicles in India.
The proposed partnership would cover internal combustion engines (ICE), battery electric vehicles (BEV), plug-in hybrids (PHEV), and hybrids.
Volkswagen has been looking for an Indian partner to share costs since talks with Mahindra fell through nearly two years ago.