Skoda Ready to Go Solo for India EV Business If Right Partner Not Available

Skoda, the Czech carmaker, is ready to go it alone and establish EV manufacturing operations in India if it continues to find it difficult to find a local partner.

"(It) is still our will and our strategy to form a joint venture to be even stronger in India ... but if there's no right partner we stay single and be still attractive and successful," Skoda CEO Klaus Zellmer told reporters at a post-earnings press conference this week.

This strategic pivot comes after months of unsuccessful negotiations with potential Indian partners, suggesting a significant shift in Skoda's approach to the challenging but promising Indian market.

Partnership Attempts

Industry sources familiar with the matter indicate that Skoda had been in advanced talks with Mahindra & Mahindra for a joint venture, with the Indian automaker reportedly interested in acquiring a 50% stake in Skoda Auto Volkswagen India Pvt Ltd (SAVWIPL) valued at approximately $1 billion.

However, these negotiations reportedly stalled due to disagreements over valuation, vehicle platform sharing, and other key terms.

Following the breakdown with Mahindra, Skoda reportedly explored agreements with JSW Group and Tata Motors for EV manufacturing. 

JSW Group, which already has a foothold in the automotive sector through its joint venture with SAIC Motor (MG Motor India), seems a promising candidate with its plans for integrated EV and battery manufacturing, including a project in Odisha with an estimated investment of Rs 40,000 crore.

Similarly, discussions with Tata Motors—a dominant player in India's EV market with models like the Nexon EV—were aimed at leveraging Tata's established EV infrastructure and market presence to help Skoda meet India's stringent Corporate Average Fuel Economy (CAFE) III norms set to take effect by FY28.

Market Challenges

Skoda's decision to consider going solo comes against a backdrop of significant market challenges. 

The company has struggled to gain substantial market share in India, although it has introduced a strong offering in the form of Kylaq. Its current lineup also includes Kushaq and Slavia.

Regulatory Hurdles

Compounding Skoda's challenges is the $1.4 billion tax demand faced by parent company Volkswagen from Indian authorities, stemming from allegations that the German automotive group undervalued car imports into India. Despite this significant regulatory overhang, Skoda appears determined to forge ahead with its investment plans.