Skoda Looks To Tap Into EV Manufacturing In India Even As The Automaker Fights Tax Demand Of $1.4 Billion

The Czech automaker’s CEO, Klaus Zellmer, said that if the company fails to find a suitable collaborator, it will proceed with the investment independently.

Volkswagen’s local subsidiary, Skoda Auto Volkswagen India, has been accused of misclassifying certain Audi, VW, and Skoda car imports to avoid higher customs duties.

Source : SKODA

Skoda Auto recently announced its intention to manufacture electric vehicles in India, with or without a local partner. The Czech automaker’s CEO, Klaus Zellmer, said that if the company fails to find a suitable collaborator, it will proceed with the investment independently. This development comes as its parent company, Volkswagen Group, tries to deal with a legal battle over a $1.4 billion tax demand in India.

Volkswagen’s local subsidiary, Skoda Auto Volkswagen India, has been accused of misclassifying certain Audi, VW, and Skoda car imports to avoid higher customs duties. If the company loses the case, it could be required to pay $2.8 billion, including penalties and interest, which a company lawyer previously described as an existential threat.

Zellmer refrained from commenting on the ongoing legal dispute but reaffirmed Skoda’s commitment to the Indian market, reported Reuters. He highlighted India’s importance as the third-largest automobile market globally and a crucial region for the company’s expansion outside Europe.

Speaking with reporters at a post-earnings press conference, the CEO said, “(It) is still our will and our 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.”

Strategy for India’s Evolving Auto Market

Skoda has been at the forefront of Volkswagen’s India strategy since 2018, yet the combined market share of the Volkswagen and Skoda brands remains at just 2 per cent in a market that sells around 4 million cars annually. 

However, with new fuel efficiency regulations set to take effect in 2027, automakers are expected to expand their EV portfolios. Skoda hopes its access to Volkswagen Group’s EV technology will provide a competitive advantage.

“We can offer very innovative, very cost-efficient solutions for battery electric vehicles, and this is our strategy also for India,” Zellmer said during the interaction.

Skoda has already partnered with India’s Mahindra & Mahindra to supply EV components. While Zellmer did not specify Mahindra or any other potential collaborators, he confirmed that discussions with local partners were ongoing.

Western automakers have historically struggled in India, where customers have a larger preference for compact vehicles from Suzuki Motor and Hyundai. However, Skoda remains optimistic, especially after exiting markets like China and Russia. The company has identified India as a critical market for growth and has shown interest in the country’s incentive scheme for local EV manufacturing.

As part of its commitment, Skoda has signed an agreement with the Maharashtra state government to invest approximately $1.7 billion in EV production. Zellmer emphasised that India serves as a strategic ‘gateway’ to Southeast Asia and the Middle East, reinforcing its significance for the company’s global expansion plans.

“We are really looking at building on one of the biggest potential growth markets globally,” Zellmer remarked, underlining Skoda’s long-term vision for India.