Skoda to Invest in EV Manufacturing in India Despite $1.4 Billion Tax Dispute.

Skoda Auto has reaffirmed its commitment to manufacturing electric vehicles (EVs) in India, even as its parent company, Volkswagen Group, faces a $1.4 billion tax dispute in the country. If its search for a local partner does not materialize, the Czech automaker is prepared to invest independently, CEO Klaus Zellmer stated.
Volkswagen’s local unit, Skoda Auto Volkswagen India, is currently embroiled in a legal battle with India’s tax authorities over allegations of misclassifying imports of Audi, VW, and Skoda cars to evade higher duties. A loss in the case could result in a total payout of $2.8 billion, including penalties and interest, which a Volkswagen lawyer previously described as a potential existential threat.
While Zellmer declined to comment on the tax case, he emphasized that India remains a strategic growth market for Skoda. “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 remain attractive and successful,” he said during a post-earnings press conference.
Skoda’s EV Ambitions in India
Skoda has been leading Volkswagen’s India strategy since 2018, though it currently holds only 2% of the country's 4-million-unit annual car market. With stricter fuel efficiency regulations coming into force by 2027, automakers will need to expand their EV offerings, and Skoda sees an opportunity to leverage Volkswagen Group’s EV technology to gain an edge.
“We can offer very innovative, very cost-efficient solutions for battery electric vehicles, and this is our strategy for India,” Zellmer noted.
The company has an agreement with Mahindra & Mahindra to supply some EV components, and Zellmer confirmed ongoing talks with potential partners with “local roots.” However, he did not specify any names.
India as a Key Market for Skoda’s Global Growth
India has proven a challenging market for Western automakers, where small cars from Suzuki Motor and Hyundai dominate. Despite this, Skoda sees the country as a “major focus” following its exit from Russia and its reduced presence in China.
The automaker has already shown interest in India's EV incentive program and has signed an initial agreement with Maharashtra’s government to invest $1.7 billion in EV manufacturing. Zellmer highlighted the importance of getting the product portfolio right for 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,” he said.
BS