Business News/ Auto News / VW plans to electrify 30% of its cars in India

NEW DELHI : Volkswagen AG’s Indian arm is planning to electrify 30% of its passenger vehicle portfolio by 2030, and will build a dedicated electric vehicle platform to manufacture them locally, the company’s brand director Ashish Gupta said in an interview.

Volkswagen India will be assembling its maiden electric car for India, the ID.4, at its Aurangabad plant for a potential 2024 launch, he added. On Tuesday, the company displayed the ID.4 GTX for the first time at its annual brand event in Kochi.

The brand carries out “parts and components assembly", which is a version of a completely-knocked-down assembly, for the Tiguan, its sport utility vehicle, the same model it will be using for the ID.4.

ID.4, Volkswagen’s top-selling electric car globally, will initially be assembled in India, before it localizes a ground-up electric vehicle (EV) platform to achieve scale and competitive pricing. This could entail an investment of €1 billion, in line with its investment for Skoda Auto Volkswagen India 2.0 project, said Gupta, although the group hasn’t made a formal announcement about the investment yet.

Volkswagen’s announcement comes at a time when homegrown Tata Motors and Mahindra and Mahindra are fast-tracking EV adoption strategies to garner an early-mover advantage in the electric passenger vehicle segment in India by electrifying their existing internal combustion-engine powertrains.

However, while some other original equipment manufacturers estimate EV penetration for private cars at 15%, Volkswagen is more bullish , estimating 25-30% electrification by 2030.

“ID.4 is a global product. The only way to get volumes is by local manufacturing of electric cars. Electrification will come in phases, and it is not possible to suddenly achieve 30% of the market, because the ecosystem and supply base is not yet ready. Nearly 50% of the cost of an electric car is in terms of the battery cost, and until and unless mass localization of battery manufacturing happens in India, none of the OEMs will be able to do mass electrification. The path to mass electrification is to go in with global premium products. And that’s where we will slot the ID.4," he said. “When we bring our own electric car to India, it will definitely be a ground-up new product."

Volkswagen has been testing the ID.4 in India since 2022, planning for a 2023 launch. However, testing and validating the product for India’s unique terrain and climate conditions is a process the brand was not willing to rush into, Gupta said. “The drivetrain, suspension and software, is a time-consuming and investment-heavy process and is under discussion at the moment."

Volkswagen sold nearly 41,000 cars in India in 2022, falling short by 25% of its planned production target due to a shortage of specialized semiconductor chips.

While chip availability has been improving, a shortage of airbag sensors may impact production for VW in this quarter, he said.

The company is banking on significant industry-beating growth as it foresees “normal" production output in 2023, with volumes buoyed by its new sedan Virtus, Gupta added.

Alisha Sachdev
Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
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Updated: 18 Apr 2023, 10:47 PM IST
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