The JSW Group, which recently partnered with MG Motor India, is in preliminary discussions with the Volkswagen Group (VW Group) for a potential partnership, as revealed by sources who spoke to CNBC-TV18.
The VW Group would use this partnership to boost its local manufacturing capabilities to produce electric vehicles for both the Indian and global markets. Conversely, its partner would share production capacities, vehicle architecture, and investments in future product development and technologies.
According to Autocar Professional, Mahindra & Mahindra (M&M), a Mumbai-based automaker, is also interested in partnering with the VW Group. The German vehicle manufacturer is considering reducing its stake in its fully-owned subsidiary, Skoda Auto Volkswagen India, to bring in a suitable partner.
Meanwhile, M&M and the VW Group formalised a commercial agreement last month for sourcing batteries and motors for electric vehicles. Volkswagen will initially supply some electric components and unified cells, which can reportedly halve the cost of a battery used in electric vehicles. M&M will be the first company, apart from Volkswagen, to use this unified cell concept.
These exploratory talks between the JSW Group and the VW Group reflect a trend of automakers exploring new ways to raise funds. This comes at a time when the electric vehicle market is witnessing sub-optimal volumes but has significant volume potential in the future.
Tata Motors and M&M have taken the private equity route, while companies like Hyundai Motor and Ola are tapping into capital markets with plans for an Initial Public Offering (IPO) or public issue. The VW Group is considering selling equity to strategic partners to form a joint venture, similar to what MG Motor has done with JSW.
Recently, Nissan and Honda have also announced that they will collaborate on developing electric vehicles and auto intelligence technology to pool resources in a sector where Japanese automakers have fallen behind. Other automotive groups like Suzuki-Toyota, Hyundai-Kia, and Jeep-Citroen are also active in this space.
(Edited by : Akanksha Upadhyay)
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