VW & Mahindra Form Partnership For Indian Market
In many ways, the Indian market is challenging for electrification. With a predominance of 2-wheelers and 3-wheelers, as well as a lack of charging infrastructure, the country presents a unique set of circumstances. But, at the same time, it’s an opportunity that can’t be ignored. India’s population makes for a large market, and it’s also one of the top global emitters. As the country develops and becomes more wealthy (some experts think it will catch up with the US and China by 2047), it’s in everyone’s best interest that it doesn’t do this with fossil fuels.
At the same time, poverty makes this difficult. Making affordable electric cars has been a challenge even in the United States, and would be even more challenging there. The lack of charging infrastructure, and sometimes even electric infrastructure, adds a second big challenge. Finally, there’s the issue of coal-fired power plants to tackle to make EVs greener over time.
With all of these challenges, it makes sense to work with a local partner who knows the market and has the trust of people living in the area. Fortunately, this is something Volkswagen is doing.
Today, the Volkswagen Group and Mahindra & Mahindra Ltd. (M&M) announced their plan to expand their business relationship. The companies signed a Term Sheet regarding the supply of MEB electric components for Mahindra’s new INGLO electric platform, which builds on the Partnering Agreement from earlier this year.
The two firms plan to collaborate on the manufacture of 1 million electric vehicles over their lifetimes, with 5 all-electric SUVs equipped with MEB components. Furthermore, the two businesses will look for further opportunities for collaboration, hinting at a broader strategic partnership to speed up the electrification of India’s automobile industry.
“We are happy that we have identified a larger scope of collaboration between our two companies. Together, Volkswagen and Mahindra can contribute significantly to the electrification of India, a huge automotive market with ambitious climate protection commitments.” said Thomas Schmall, Volkswagen Group Board of Management member for Technology and CEO of Volkswagen Group Components. “The MEB Electric Platform and its components are key to affordable sustainable mobility around the globe. The partnership not only demonstrates that our platform business is highly competitive, but also that the MEB is well on track to become one of the leading open platforms for e-mobility. We are thus delivering on the focus of our Volkswagen NEW AUTO strategy to make the platform business a strong pillar of our Group and to unlock future profit pools through economies of scale.”
Mahindra recently introduced its new electric SUV family at the Mahindra Born EV vision reveal event in Banbury, England. The electric SUVs will be launched on INGLO, the company’s newest platform architecture, and are expected to include MEB components such as an electric drivetrain, battery system, and Volkswagen’s unified cell. All main commercial and technical terms as well as a road to potential battery system localization have been agreed upon.
“The signing of the techno-commercial term sheet is a significant step forward in our partnership with Volkswagen. Our purpose-built INGLO platform offers unmatched potential for growth and further customization for developing new and innovative products, not just for India, but for global markets,” said Rajesh Jejurikar, Executive Director, Auto and Farm Sectors, Mahindra & Mahindra Ltd. “Our vision is to lead the electric mobility revolution in India by bringing authentic electric SUVs with cutting-edge technology, as showcased in the UK today. We are very pleased to explore further areas of potential collaboration with Volkswagen and are confident that together, we will be able to shape an exciting electric future.”
India’s two leading e-mobility companies have agreed to explore additional areas for collaboration, including electric vehicle projects, localized battery cell manufacturing, and charging and energy solutions. This is a key step forward in the formation of a strategic alliance that will solidify India’s position as a global leader in sustainable transportation.
India is one of the top five automobile markets in the world, with three million new vehicles per year. Unlike other regions, India’s number of new registrations increased in the first half of 2022. In the coming years, electrification of passenger cars is expected to grow rapidly.
Why This Matters
One of the big challenges facing the Indian EV market, beyond those described at the beginning of the article, is sourcing. If you can’t start out buying in volume, you can’t get EV components at prices that make for reasonably affordable vehicles. Buying key components, like battery cells, power electronics, motors, and control systems from Volkswagen allows Mahindra to get better pricing and sell something more people will be able to afford.
The long-term plan has to be local manufacturing, but there’s nothing about the MEB platform that prevents that. Unlike many other automotive platforms, VW’s MEB platform is a set of systems and not a physical frame or body. It even gets used in boats. Swapping out individual components for those manufactured in India is definitely possible. This could give India and Mahindra the bump they need to get local demand going and get manufacturing started to further reduce costs.
By collaborating with other companies, VW would improve its economy of scale for common MEB components while also helping to dilute development costs for the automaker using MEB. This plan is mutually beneficial for all those involved.
One Dangerous Question
One problem manufactures have sometimes got caught up in when expanding into the Indian market is trying to cut corners. Sadly, and tragically, this sometimes comes in the form of reduced crash safety, with some cars scoring zero stars on the crash tests that would be applicable in Europe or the United States.
While EVs tend to be safer than their ICE counterparts, it’s not unimaginable that corner-cutting could lead to EVs with bad crash safety and other disadvantages to save a few bucks in production. So, Volkswagen does need to make sure its name and the reputation of the MEB platform doesn’t get caught up in that practice.
It may be a quick way to get sales up, but in the long run it’s bad for companies involved and it’s bad for the people who ride in those cars.
Featured image provided by Volkswagen.
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