Volkswagen Group is reportedly considering the best way to enter the Indian market with a low-cost electric vehicle. The German group, which, like many other manufacturers, is attracted by the country’s potential, would like to leave a compact, electric and affordable mid-decade SUV.

Anyway, here’s what Piyush Arora, Managing Director of Skoda Auto Volkswagen India had to say: “We are actively working on an entry-level electric car. We are currently evaluating which group platform would be the best fit for this India-focused project.”.

India before Europe?

However, this decision is not easy to make, as it still represents an investment of several hundred million euros, knowing that EV sales in India are only 2% of total car sales today. “The penetration of electric cars will not be as fast as one might think”added Piyush Arora, “which makes us think about the possibility of selling this vehicle in other markets as well”. The regulatory changes and safety standards that need to be followed in India are making the country more competitive in the world. So it’s easy to adapt and sell a car made here somewhere else. In short, many options are on the table.
Volkswagen wants this SUV to be purely electric, and it could be the famous €20,000 electric model that could be built together with Renault. Also, to further encourage Volkswagen, India has a 5% tax on zero-emission cars, while the tax on hybrids rises to 43% and on diesels to 48%.

The turbulent Indian market

The Indian market has become the third largest market in the world after China and the US in 2023. It has overtaken Japan and promises very rapid growth in the coming years because it is the most populous country in the world and because the automobile is still in its infancy. Ecological transition also contributes to this. Many foreign manufacturers are investing in India, also attracted by the capacity created by the government, which wants to consolidate the automotive sector through numerous initiatives. Even Tesla is considering building there. Indian authorities intend to achieve 30% of the electric car market by 2030.

An ambitious but elusive goal, at least according to analysts who agree that the percentage is likely to be between 10 and 20 percent by the end of the decade.

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