Volkswagen India targets entry-level EV market, will soon launch first SUV

German auto major Volkswagen is targeting the entry-level electric vehicle (EV) market in India.

The company is reportedly expected to launch its first SUV in the segment later this year.

Tata Motors and MG currently dominate the entry-level passenger electric vehicle segment in the domestic market. While Tata’s Tiago is the most affordable four-wheeler in the segment, the MG Comet has also received good response since its launch in India in April 2023.

Volkswagen is reportedly planning to enter this segment. According to Reuters, the German automaker plans to launch an entry-level electric SUV in India.

“We are actively developing entry-level electric vehicles. We are evaluating which Volkswagen Group platform is best suited for manufacturing compact electric SUVs in India,” Skoda Auto Volkswagen India CEO Piyush Arora told the news agency.

Arora said the Volkswagen Group would need to invest “three-digit million euros” to launch an electric SUV in India. The company will likely need to sell a large number of vehicles to make this huge investment financially viable. The export potential of the product is therefore crucial and Volkswagen is currently analyzing the possibility of exporting Indian-made electric vehicles as part of its feasibility study.

In India, the share of electric vehicle sales currently accounts for only 2%, but the government hopes to increase it to 30% by 2030. However, based on recent growth, analysts predict that EV sales may account for only 10-10% of India’s sales. By 2030, it will account for 20% of all car sales.

“Electric vehicles are not going to take off in India at the pace required to justify the investment, so we are looking at the possibility of exporting the product,” Arora said.

Exports have been an important part of Skoda Auto Volkswagen India over the past few years. The Volkswagen brand has previously been based in India, exporting its midsize Vento sedan to South Africa and Mexico.

With the Polo discontinued, Volkswagen is focusing more on redesigning its product line-up in India. The launch of Virtus and Taigun has promoted the company’s continued growth in the domestic market.

Volkswagen India will sell 1,34,667 units in 2022 as compared to the carmaker’s sales of 1,45,713 units last year, registering a sales growth of 8.2% in just one year.