Mahindra & Skoda Auto to Finalize 50:50 Joint Venture for Electric SUVs

21 Oct 2024 , 10:25 AM

Mahindra & Mahindra (M&M) and Skoda Auto Volkswagen India (SAVWIPL) are nearing the finalization of a 50:50 joint venture agreement aimed at enhancing their collaborative efforts in the automotive sector.

This partnership will focus on sharing costs, technology, and vehicle platforms, particularly emphasizing the development of battery-powered SUVs that cater to both Indian and international markets. An official announcement regarding the joint venture is anticipated by the end of this year.

While the joint venture will encompass some fossil fuel-based models, the primary focus is on creating electric SUVs, aligning with global trends towards sustainable transportation.

The companies plan to utilize existing production facilities in Chakan, Pune, owned by both SAVWIPL and Mahindra, for the manufacturing of these new vehicles. It is important to note that vehicles sold under the Volkswagen, Skoda, Audi, and Porsche brands will not be part of this joint venture.

Mahindra has set ambitious plans to invest ₹12,000 Crore in its electric vehicle (EV) business over the next three years, with a goal for electric vehicles to make up 20-30% of their total SUV sales by 2027.

For the VW Group, this joint venture represents a strategic move to bolster its position in India’s expanding automotive market, especially given the competitive landscape against Japanese, South Korean, and local manufacturers.

The discussions regarding this joint venture have progressed through multiple rounds of both virtual and in-person meetings, indicating strong mutual interest in collaboration.

This partnership builds upon a previous supply agreement for components of Volkswagen’s Modular Electric Drive (MEB) platform, which Mahindra plans to integrate into its forthcoming Born Electric (BE) models.

The joint venture also aligns with the Indian government’s initiatives to promote electric vehicles and implement stricter carbon emission regulations, necessitating substantial investments from automotive companies.

Skoda has identified India as a critical market outside of Europe, particularly as it faces operational slowdowns in China and has exited the Russian market. This partnership signifies a significant step for Mahindra as it aims to strengthen its presence in the EV sector.

Mahindra plans to launch seven new electric models by 2030, making this joint venture a crucial milestone in its strategy to expand its footprint in the electric vehicle market and respond to the evolving automotive landscape.