Skoda Auto is pushing forward with its electric vehicle (EV) manufacturing plans in India, despite its parent company, Volkswagen Group, facing a $1.4 billion tax dispute with the Indian government. The Czech carmaker has reaffirmed its commitment to India’s fast-growing automotive market, stating that it will invest independently if it fails to find a suitable local partner.
Volkswagen’s Legal Battle in India
Skoda Auto Volkswagen India, Volkswagen’s local subsidiary, is embroiled in a legal battle with Indian tax authorities over allegations that it misclassified imports of Audi, VW, and Skoda vehicles to evade higher duties. If the company loses the case, it may have to pay a total of $2.8 billion, including penalties and interest—a figure that one of Volkswagen’s lawyers previously called “impossibly enormous” and a potential threat to the company’s survival.
Skoda CEO Klaus Zellmer declined to comment on the ongoing tax dispute but emphasized the company’s strong interest in the Indian automotive sector, the third-largest car market in the world.
“It is still our will and strategy to form a joint venture to be even stronger in India … but if there’s no right partner, we stay single and be still attractive and successful.” — Klaus Zellmer, Skoda CEO
Skoda’s EV Strategy in India
With new vehicle fuel efficiency standards set to take effect in 2027, automakers will need to expand their EV portfolios to remain competitive. Skoda believes its access to Volkswagen Group’s EV technology could give it an advantage in India’s emerging electric vehicle market.
Zellmer highlighted Skoda’s ability to provide cost-efficient battery electric vehicle (BEV) solutions, which aligns with India’s push for localized EV manufacturing.
“We can offer very innovative, very cost-efficient solutions for battery electric vehicles, and this is our strategy also for India.”
Potential Collaborations & Local Partnerships
Skoda already has an agreement with Mahindra & Mahindra to supply certain EV components, though Zellmer did not confirm whether Mahindra would be part of a broader partnership. The company is actively in talks with potential local partners who have strong domestic market roots.
India: A Key Market for Skoda’s Global Strategy
Western carmakers have struggled to gain traction in India, where small, affordable vehicles from Suzuki Motor and Hyundai dominate the roads. However, Skoda sees India as a major focus, especially after withdrawing from China and Russia.
The company has previously expressed interest in India’s government-backed incentive programs for local EV manufacturing and has signed an initial agreement with Maharashtra state to invest $1.7 billion in EV production.
India as a Gateway to Emerging Markets
Zellmer emphasized that getting the product portfolio right is crucial for success in India, which he views as a gateway to Southeast Asia and the Middle East.
“We are really looking at India as one of the biggest potential growth markets globally.”
Despite legal challenges, Skoda remains committed to expanding its footprint in India’s evolving EV market, positioning itself for long-term sustainable growth in the region.
