VW's PEAK EV project to bring EV SUV to India by 2026

VW has begun the localisation of its EVs for India after discussions with Mahindra did not bear fruit.

Published On Jan 03, 2024 12:00:00 PM

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VW's PEAK EV project to bring EV SUV to India by 2026

After years of studying the electric vehicle space in India, the Euro 272.9 billion (about Rs 25,089 crore) Volkswagen Group has finally begun work on localising its electric vehicle with a project codenamed “PEAK EV”, which is likely to spawn multiple vehicles starting 2026. According to several people in the know, Volkswagen Group’s lead entity in India – Skoda Auto Volkswagen India – has started work on the born EV platform on its own. The company had engaged in a discussion with Mahindra to explore possibilities of jointly developing a small electric vehicle platform, but it has decided to go on its own.

VW Group’s PEAK EV project to localise EV platform and powertrain
First born EV SUV likely to get VW badge; to be followed by Skoda derivative
Additional investment of at least Euro 1 billion needed for the localisation

Sources said Skoda Auto plans to localise the MEB21G architecture in the country, which is likely to spawn multiple SUVs for both, the Volkswagen and Skoda brands, with a significant export potential over a lifecycle. “The potential volume is in excess of half a million vehicles on the platform from India – it will be sold in India as well exported out of the Chakan plant. The focus is on SUVs, it is still early days but the core focus is likely to be in the entry- and mid-size SUV segment. The details of the project are yet to be crystallised,” said one of the several people in the know.

Skoda Auto Volkswagen India EV plans

The first SUV EV is likely to get a Volkswagen badge – with a potential of volumes of 5,0000 units – for both domestic and export markets. This will be a major intervention under the German brand, which has decided to shift focus to all electric vehicles in the country. Skoda's mainstream EV alternative is planned to follow Volkswagen's product.

Interestingly, Skoda Auto Volkswagen’s upcoming small SUV, positioned below the Kushaq and Taigun, is likely to only have a Skoda badge and not a Volkswagen alternative. The German carmaker will put its EV in the market in the early part of the race, rather than being a late mover.

Piyush Arora, MD and CEO, Skoda Auto Volkswagen India, in an official response to a query from our sister publication Autocar Professional, said that India holds a crucial position for the Volkswagen Group due to its robust economic growth. Skoda Auto Volkswagen India will further expand its footprint in the electric vehicle space in the coming years.

“We have already introduced electric vehicles in the country from Audi and Porsche with fully built-up units (FBUs), and going forward, we will be introducing EVs from other brands as FBUs and locally manufactured models. While specifics are premature, at the opportune moment, we will speak about our future plans. Our portfolio will include both ICE and BEV models, as we remain committed to offering a diverse range of powertrains across various market segments,” added Arora.

Skoda Auto Volkswagen India localisation hurdles

On the sidelines of Munich Mobility Show, Thomas Schafer, the global CEO of Volkswagen AG, had said that the brand has lined up an investment of Euro 180 billion (about Rs 15,81,840 crore) in the next five years and every country, including India, is staking a claim for a share. The localisation move will call for an additional investment of at least Euro 1 billion (about Rs 9,183 crore), if one were to go by the direction of the Volkswagen brand’s global CEO concerning the Indian market.

He said the Group will have to adhere to sound capital allocation of this significant investment. “India has a ticket to be a part of this investment. The ticket is defined by the business case – volumes, localisation plans, how many brands are a part of it? Is it just the two of us Skoda and Volkswagen, or is Audi also a part of it? If we industrialise, then you are easily looking at a billion-euro investment,” explained Schafer on the magnitude of investment required for localising the EV.

On the future of EVs in the Indian market, Schafer said there are multiple challenges on cost and scale and VW was exploring two alternatives for India, and the teams are working on a strong business case. “My wish would be to localise the MEB21 – make a good business case, with a localised battery, export from India and ramp up our volumes. That could be fantastic but we have not yet cracked it as yet,” he had told Autocar India in Munich.

Following that, Skoda Auto’s board – the lead corporate arm of VW Group in India – had visited the country in October. This was the second trip made in less than 15 months to evaluate future growth opportunities. The go-ahead for the EV appears to be from the series of meetings that have taken place in India and Europe over the last year or so.

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