Mahindra in talks with VW Skoda for low-cost EV

Mahindra is reportedly in talks with VW Skoda to collaborate on using key electrical components of the German carmaker’s platform for electric vehicles, called MEB. The plan also includes a low-cost EV.

VW SKODA EV
VW SKODA EV

Mahindra to join hands with VW Skoda

Its becoming a common trend to join hands with another carmaker to share development costs, components and technology. This enables the brands to build a cost-effective car.

For Skoda to build a low-cost EV in India it is necessary to join hands with an Indian OEM to share the development cost. That’s when Mahindra comes into the scene.

Mahindra already announced the partnership with the global automotive giant a year ago during Mahindra’s annual Independence Day event, they are now in advanced talks to use this opportunity and build a low-cost EV in India based on the MEB21G for both Skoda and VW.

The Indian carmaker already got its hands on the latest-generation electric motors (AP550), which is said to give more performance and efficiency, and also VW’s unified battery cell technology for its future EV portfolio on the INGLO platform.

VW group’s India operations has been under Skoda’s lead for a while now thanks to its favorable cost structure, which according to a study by consultants Ronald Berger found Skoda’s cost structure to be more competitive than Mahindra’s. The plan is for the brands to build their respective top guns on the MEB21G platform using common resources, but with a plan so great, there are always problems lurking around.

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What is the MEB21G project?

Under the project, key components, like the motor and battery, will be localized. The target price set for VW and Skoda EVs is under Rs. 20 lakhs, which is quite aggressive. But to achieve such a low-cost EV, there has to be cost-cutting in the equipment and technology of the cars in respect to the competitors, which is honestly quite understandable.

If given the greenlight, this project will be led by Skoda, who also looked after the “India 2.0” project and the experience gained from it made the Czech automaker confident of achieving a high level of local content for MEB21G products.

Volkswagen’s PTSD

What’s problematic in this partnership is the PTSD VW Group got from the Dieselgate scandal back in 2015, which made the company very cautious when giving out greenlights to any projects or transfer any rights to an outside company. To complicate matters even more, Skoda is the one in charge of VW group’s India operations and automatically they are taking the lead in discussions with Mahindra, and the MEB21G is owned by VW, and hence VW’s approvals is necessary here.

Though, the partnership is desired is strong from both Mahindra’s and VW group’s sides, the legal procedures when it comes to the technology and information sharing with Mahindra, can become a big issue.