Düsseldorf Volkswagen is intensifying its cooperation with the Indian car manufacturer Mahindra. In the UK, the companies signed a contract under which Volkswagen will supply Mahindra’s new SUV range with electrical components.
These include, among other things, the electric powertrain, the battery system and the standard battery cell, which are used in Volkswagen’s current MEB series. The vehicles of the series include, among other things, the all-electric ID models.
The binding supply agreement is to be finalised by the end of 2022. The first components are to be delivered from 2024. The companies do not provide any information on the terms of the contract.
The aim is to achieve a volume of more than one million units over the lifetime of a vehicle generation and the supply of five electric SUV models with MEB components, according to a joint statement.
In May, Volkswagen and Mahindra had already reached a contractual agreement to examine cooperation in the supply of MEB components. In addition to the Indian group, the US car manufacturer Ford also relies on components of the MEB series.
Thomas Schmall, Chief Technology Officer at Volkswagen and Head of the Components Department, sees great opportunities in the Indian market: “Together, Volkswagen and Mahindra can make a significant contribution to the electrification of India, a huge automotive market with ambitious climate protection goals.“
It does not yet look as if electrification in India is making strong progress. But according to Schmall, the government is pursuing an aggressive expansion plan. According to forecasts, around four million vehicles will be registered in India every year from 2030, about half of which will be purely electric.
The cooperation between Volkswagen and Mahindra could be further expanded. In the long term, the companies are examining the establishment of a cell production facility in India. According to Schmall, the requirement of at least 20 gigawatt hours would have to be available for such a cell plant to be economically worthwhile.
Strong dependence on China
So far, around three million new vehicles have been sold in India every year. This makes the subcontinent one of the five largest car markets in the world. In a globally declining passenger car sales market, only there and in China have new registrations increased in the first half of 2022.
But despite this development and the high number of inhabitants, the Indian market is so far no more than a hopeful value for the car industry. In contrast to China, where German car manufacturers in particular generate large parts of their annual sales, India does not yet play a role.
However, the strong China commitments of Volkswagen, Mercedes and BMW are under criticism after the Russian invasion of Ukraine, the political tensions between the US and China and the human rights violations in Xinjiang in China and pose long-term economic risks.
In the long term, carmakers are dependent on expanding their sales in other markets. VW, for example, continues to try its hand at the US market, which has not yet been exhausted. The increased involvement in India is likely to be part of the strategic considerations to reduce dependence on China, especially in the Asian market. So far, the People’s Republic as a whole has no alternative: Volkswagen sells around 40 percent of its vehicles produced worldwide there.