German car maker Volkswagen (VW) is reportedly in preliminary talks with Mahindra and Mahindra (M&M) to scale up their supply agreement on components for a joint venture.
In February, the two companies signed a supply agreement covering components of VW's vehicle platform for M&M's purpose-built electric platform called INGLO. The deal includes certain electric components and unified cells, with the first electric SUV on the INGLO platform set to launch later this year.
It is to be noted that, as per media reports, the Volkswagen Group is currently in talks to sell its stake in its India business to a local partner. Despite having invested over $2 billion USD, Volkswagen has faced challenges in the Indian market, which is highly cost-sensitive.
The German carmaker is now focusing on developing new products for India, where "over-engineered" vehicles have struggled to gain traction. Klaus Zellmer, global CEO of Skoda Auto, emphasized the importance of finding the right partner for a true collaboration, including shared engineering, sales, and procurement competence. While Zellmer did not reveal the potential partner, Mahindra is rumored to be a front-runner.
VW's India business has faced challenges due to premium pricing and poor brand recall, while M&M has well-defined plans for the electric vehicle segment. The joint venture could be a strategic move for both companies as they explore opportunities in the Indian market.
Besides the potential joint venture with Mahindra and Mahindra in India, Volkswagen has been actively engaged in other collaborations globally. Volkswagen recently resolved to invest initially $1 billion USD in Rivian Automotive, Inc., and intends to establish a joint venture in the area of E/E architecture for electric vehicles. The joint venture would allow Volkswagen access to Rivian's current E/E architecture technology.
In China, Volkswagen has three joint ventures — SAIC Volkswagen, FWA-Volkswagen, and JAC Volkswagen. These ventures produce Volkswagen Group brand models for the Chinese market.
Volkswagen has also partnered with companies like Umicore, 24M Technologies, and Vulcan Energy Resources to enhance electric vehicle production and technology.
Additionally, Volkswagen plans to take a 60% stake in a $2 billion tech joint venture with China's Horizon Robotics to further develop software and technology.
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