Due to a possible deal with JSW: Volkswagen is holding back investments in India
Volkswagen appears to be holding off on further investments in its planned electric vehicle program for India for now. The company likely wants to wait before finalizing negotiations with the Indian JSW Group over a joint venture. However, the basic development work for an affordable electric car has already been completed.
Skoda dealer in Bengaluru, India
Image: Skoda
Volkswagen has apparently put off further investments in its planned electric vehicle program for India for now. According to Bloomberg, citing people familiar with the matter, the company wants to gain more clarity on a potential partnership with India’s JSW Group before investing additional funds in the project. Development work is said to be advanced enough that the project could move forward quickly once an agreement is reached with the potential partner.
There is no official confirmation yet regarding the suspension of investment. Last year, it was reported that Volkswagen or Skoda, VW’s most important brand in India, might not be able to invest as much money in the platform as originally planned. Currently, neither Skoda nor VW offers electric vehicles in the Indian market, only internal combustion engines. This is set to change by 2028. Volkswagen and JSW declined to comment on Bloomberg’s new report at first.
Local partner expected to reduce costs
Volkswagen and Skoda announced in early September that they were exploring a strategic partnership with JSW. The companies signed a Memorandum of Understanding to this end. The goal is to establish a potential joint venture that could develop, produce, and market passenger cars for the Indian market and for export. In addition to electric vehicles, the collaboration is also intended to cover vehicles with other types of propulsion systems.
For Volkswagen, finding a local partner is primarily a cost issue. The company aims to expand its presence in India, but it currently holds only a relatively small market share there. Skoda bears the main responsibility for business in India within the group. According to departing Skoda CEO Klaus Zellmer, both brands combined increased their sales by 36 percent to 117,000 vehicles in 2025. Zellmer stated in September that significant investments are needed to enable further growth. A partner could provide capital while also improving access to local suppliers, production capacity, and market knowledge.
Volkswagen’s talks with JSW are also part of earlier efforts in India: After failed negotiations with Indian automaker Mahindra, Volkswagen has been looking for a way to share the costs and risks of its expansion with a local company for almost two years. According to Bloomberg, the company decided last year to cut development costs for electric vehicles in India by a third.
Inexpensive Electric Vehicle Platform from China
Techinally, Volkswagen has been planning for some time to adapt its Chinese electric vehicle architecture CMP 21 for India, under the working name India Main Platform (IMP). To be competitive in India, Volkswagen is likely to rely heavily on local components and manufacture the vehicles there. Only by doing so can costs be reduced sufficiently to compete with offerings from local manufacturers.
According to Bloomberg, Volkswagen has already completed the design work for this project. This suggests that the company could advance the project relatively quickly once an agreement is reached with JSW.