Skoda Auto plans to manufacture electric vehicles (EVs) in India and is considering independent investment if it does not secure a local partner, according to a report by Reuters. The announcement comes as its parent company, Volkswagen Group, faces a USD 1.4 billion tax dispute over import classifications.
Skoda Auto Volkswagen India is engaged in a legal case with Indian tax authorities regarding allegations of misclassification of imports, which could lead to a total liability of USD 2.8 billion, including penalties and interest. Zellmer declined to comment on the ongoing legal proceedings but stated that India remains a key growth market for the company outside Europe.
Since 2018, Skoda has led Volkswagen’s India strategy, but the company’s market share remains low, accounting for approximately 2% of the country’s annual four million-unit car market. With stricter fuel efficiency regulations set to take effect in 2027, Skoda plans to introduce EVs using technology from the Volkswagen Group.
The company has an existing agreement with Mahindra & Mahindra to supply EV components. Zellmer confirmed that discussions with potential partners continue but did not specify names. Skoda has also signed an initial agreement with the Maharashtra state government to invest around USD 1.7 billion in EV production.
India’s passenger vehicle market is dominated by smaller cars from Suzuki Motor and Hyundai, posing challenges for Western automakers. However, Skoda views India as a strategic market with potential expansion opportunities in Southeast Asia and the Middle East.