Volkswagen AG plans to supply electric vehicle components and battery cells to Mahindra & Mahindra Ltd. as the German maker tries to break into India’s emerging clean transportation market.
Mahindra will equip some of its five planned electric sport utility vehicles to be launched in December with Volkswagen’s MEB platform and integrated cell components, the Mumbai-based carmaker said in an exchange filing on Friday.
Mahindra said the supply agreement signed in 2022 will last for several years and will amount to about 50 gigawatt hours in total. According to the filing, the companies will continue to explore further opportunities for collaboration and strengthen their presence in India’s electric mobility sector.
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Global carmakers are taking interest in India’s emerging EV market as demand for battery-powered transportation has slowed in Europe and the US after a few years of growth. BMW believes that electric vehicles will account for 25% of its sales in India by 2025, up from 10% last year. Elon Musk has said that Tesla Inc. will likely make “significant investments” in India.
Ashish Gupta, brand director of the company’s passenger car division in the South Asian nation, had said earlier this month that for Volkswagen, EVs will be the “key focus” in India this year. The carmaker will initially bring fully built electrified units to India, and assemble more premium EVs later. He said it will make EVs locally only after reaching the inflection point around 2026.
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Although India’s EV market is growing, its size is small. Price-conscious consumers are reluctant to purchase expensive battery-powered cars without subsidies, especially given the limited availability of charging stations. According to BloombergNEF, electric cars accounted for just 2.3% of total passenger vehicles sold last year.
According to the Society of Indian Automobile Manufacturers, Volkswagen sold 8,265 cars in India last month, down 11% from a year ago.
