Exclusive: VW Group kicks off PEAK EV project for India, mainstream e-SUV likely by 2026

After years of studying the electric vehicle space, the 272.9 billion-euro Volkswagen Group has finally kicked off work on localising its electric vehicle in India with project ‘PEAK EV’ which is likely to spawn multiple vehicles starting 2026.  

According to industry sources, Volkswagen Group’s lead entity in India – Skoda Auto Volkswagen India – has started work on the grounds up EV platform on its own. The company had engaged in a discussion with homegrown auto major Mahindra & Mahindra to explore possibilities of jointly developing a small electric vehicle platform, but has decided to go on its own.

Sources say Skoda Auto plans to localise the MEB21G architecture in the country, which is likely to spawn out multiple SUVs for both the Volkswagen and Skoda brands in India with significant export potential over a lifecycle.

“The potential volume is in excess of half-a-million vehicles on the platform from India – it will be sold in India as well exported out of the Chakan plant. The focus is on SUVs, it is still early days but the core focus is likely to be in the entry and midsize SUV segment. The details of the project are yet to be crystalized,” said one of the people in the know.

The first SUV EV is likely to get the Volkswagen badge – with a potential of volumes of 50000 units – for both the domestic and export markets. This will be a major intervention under the German brand, which has decided to shift focus to all electric vehicles in the country. Skoda's mainstream EV alternative is planned to follow Volkswagen's product. 

Interestingly, Skoda Auto Volkswagen’s upcoming small SUV positioned below the Skoda Kushaq and VW Taigun is likely to sport only the Skoda badge, and the German car maker will put its EV in the market in the early part of the race, rather than being a late mover.

Piyush Arora, MD and CEO, Skoda Auto Volkswagen India in his official response to a query from Autocar Professional, said that “India holds a crucial position for the Volkswagen Group due to its robust economic growth. Skoda Auto Volkswagen India will be further expanding its footprint in the electric vehicle space in the coming years.”

He added, “We have already introduced electric vehicles in the country from Audi and Porsche with fully built-up units and going forward will be introducing EVs from other brands via both – FBUs and locally manufactured models. While specifics are premature, at the opportune moment, we will speak about our future plans. Our portfolio will include both ICE and BEV models, as we remain committed to offering a diverse range of powertrains across various market segments.”

On the sidelines of the Munich Mobility Show 2023, Thomas Schafer, the global CEO of Volkswagen AG, had said that that the brand has lined up an investment of 180 billion euros (Rs 15,81,840 crore) in the next five years and every country, including India, is staking a claim for a share.

The move will call for an additional investment of at least a billion euros, if one were to go by the direction of Volkswagen brand’s global CEO on the Indian market.  

Schafer said the Group will have to adhere to sound capital allocation of this significant investment and that “India has a ticket to be a part of this investment. The ticket is defined by the business case – volumes, localisation plans, how many brands are part of it, is it just the two of us Skoda and Volkswagen, or is Audi also a part of it? If we industrialize, then you are easily looking at a billion-euros investment,” explained Schafer on the magnitude of investment required for localizing the EV.

Commenting on the future of EVs in the Indian market, Schafer said there are multiple challenges on cost and scale and Volkswagen is exploring two alternatives for India and the teams are working on a strong business case.

“My wish would be to localise MEB21 – make a good business case, with a localized battery, export from India and ramp up our volumes. That could be fantastic but we have not yet cracked it as yet," he had told Autocar India in Munich.

Following that Skoda Auto’s board – the lead corporate arm of VW Group in India – had in fact visited India in October, his second trip in less than 15 months to evaluate future growth opportunities. The go ahead for the EV appears to be from the series of meetings that have taken place in India and Europe over the last year or so.

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