By Aditi Shah and Nandan Mandayam
NEW DELHI (Reuters) -German automaker Volkswagen (ETR:VOWG_p) Group is looking to introduce an entry-level electric sport utility vehicle (SUV) in India by the second-half of this decade, the CEO of its local unit said at an event on Thursday.
"We are actively working on an entry-level EV. We are evaluating which VW Group platform can be best adapted to build a compact electric SUV in India," said Piyush Arora, CEO of Skoda Auto Volkswagen India.
The new electric vehicle (EV) would need the volumes to justify a "three-figure million-dollar investment", said Arora.
EVs currently make up just 2% of total car sales in India and the government is aiming for 30% by 2030. Analysts, however, say that EVs will likely make up just 10-20% of total car sales by then.
"Penetration of EVs in India will not be as fast as needed to justify the investment, so we are looking at the possibility of exporting that product," said Arora.
The group's focus on EVs comes down to their favourable taxation structure in India, Arora said, but added that the company may introduce hybrid vehicles if it gets government support.
India taxes EVs at just 5%, while the levy on hybrids is as high as 43%, just below the 48% imposed on petrol cars.
The carmaker will look at exporting the new EV to southeast Asia, Gulf Cooperation Council (GCC) countries and North Africa, just as it has done for its gasoline cars, he said.
With exports, the group is also looking to "leverage" the reducing effort required to build export-ready cars made in India.
"The regulatory and safety changes in India are making the country more globally competitive. Earlier, we needed more effort to produce cars for export from India," Arora said.
Volkswagen Group, like larger rivals Maruti Suzuki and Hyundai Motor, counts India as one of its export hubs.
While exports under the Volkswagen brand rose more than 80%, Skoda's exports are up around four-fold so far this fiscal year.
The firm is also extensively testing the Skoda Enyaq electric SUV for a possible launch in India, Arora said, without giving a timeline.