Volkswagen, Europe’s largest carmaker says it is looking to further invest in India and it is likely to be for all electric vehicles with a big focus on localisation and exports. Autocar Professional interviewed Thomas Schafer, the global CEO of Volkswagen brand earlier in the year at Munich Mobility Show, wherein he shared his view on the market and role of electrification in the future.
What’s your view on the Indian market?
We’ve invested a lot of money in India, we are very happy with that. We have made good progress with both Volkswagen and Skoda winning five stars at the NCAP. The cars are doing really well, including exports. We are testing the ID.4, and in India there are good policy messages. There are some really good messages from India on moving towards electrification. We will see if it develops further, then we are obviously looking into further investments and they will mainly be in the electric space.
That will call for significant investments. What are the next few steps?
Multiple steps. The first step would be to invest into the platform. A new platform invested in a factory, you’re easily talking between Euro 500 and 800 million to industrialise it. Plus, the cell factory somewhere, because shipping cells from around the world is never a great idea. So you want the cell factory, and then you need the battery system assembly, and that is by itself, Euro 200-300 million. One can only do this if there is a significant market to be absorbed. The key question is how quickly India will move towards an electric future.
With a complete infrastructure of cell, battery, vehicle we are talking about a couple of billion Euros at least?
The cell factory could be an external company doing it, or a local partner. No problem. But for the vehicle, all in, you’re easily talking well over a billion euros because we also want to localise it. We did India 2.0 and India only works if you really use the full localisation, local partners and the buyers.
Exports have always been critical, will EVs figure in the plan?
I think we’re exporting at the moment to 52 markets (from the VW brand). Can’t say for Skoda, but for VW brand, 50 countries, and that’s going well. Can they do more? Yeah, and I’ve been pushing them and Piyush Arora (MD of Skoda Auto Volkswagen India). My good old friend, has clear instructions. So, I’m happy.
Can VW cater to global ICE markets from India?
That’s the point and you can see that certain traditional ICE markets are also moving. Brazil has an electrification strategy and even countries that you’ve not heard of before, they’re going all of a sudden electric, so it’s debatable if you can really have a last man standing kind of policy (for India). I doubt it to be honest, so I wouldn’t bet on it. I think India is well positioned for EVs now. It will obviously take a while to electrify the whole country, but good steps have been made and I think this will change the country too, and when people drive it they’ll take to it.
Your view on the current Indian administration’s focus on clean energy?
There’s been really good progress from the current administration in supporting electrification. Is it enough to change it? We will see. It is favourable on electricity costs versus fuel, so there’s some really good things going for EVs in India but there’s always a little bit more that can be done and I think India cannot stay behind, while the rest of the world goes electric. It also has to jump on this wagon and go along with technology and use leadership to further this.
Will you move to EVs with an alliance partner or on your own?
It happens regardless. However, we are always open to partnerships. It just has to make sense. It has to be mutual; you know partnerships that come works both ways.
Skoda has the responsibility for a low cost MQB A0 ICE architecture, could there be a low-cost version of MEB electric vehicle architecture for India?
Well, not planned yet, but if we go in, then definitely we will use the low-cost advantage of India and work within the brand group for Skoda, and how we split the jobs and we do it in the most cost-effective way. India could play a leading role then.
This interview was first published in Autocar Professional’s December 15, 2023 issue.
