According to reports, Skoda Auto plans to manufacture electric cars in India and will invest in the country by itself if its search for a local partner fails, as its parent Volkswagen Group fights a $1.4 billion tax demand case.

Skoda Auto, VW's local division, claims that it misclassified imports of some Audi, VW, and Skoda vehicles to avoid paying higher taxes. Volkswagen India is currently involved in a legal battle with the nation's tax agency.

According to one of VW's attorneys last month, the corporation will have to pay $2.8 billion in penalties and interest if it loses the fight against what it claims is an unachievably high demand. This might become a matter of survival.

Skoda is focusing on India as it seeks to expand outside of Europe in the third-largest automobile market in the world.

Since 2018, Skoda has spearheaded Volkswagen's India effort; nonetheless, sales have remained low, with the combined Volkswagen and Skoda brands making up only two percent of India's annual automobile market of 4 million units.

However, all automakers will have to start producing EVs by 2027 due to higher vehicle fuel economy regulations, and Skoda thinks it may have an advantage because of its access to the Volkswagen Group's EV technology.

"We can offer very innovative, much cost efficient solutions for battery electric vehicles, and this is our strategy also for India," Zellmer says.

 

Mahindra & Mahindra of India and Skoda have an arrangement for Skoda to supply certain EV components.  Zellmer stated that discussions were still going on with partners who had local roots, but he did not name Mahindra or any other corporation as possible partners.

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India has proven to be a challenging market for Western automakers, as the country's roadways are dominated by compact cars made by Hyundai and Suzuki Motor.

However, Skoda, which has left Russia and is no longer well-represented in China, claims that India is a major focus for its operations.