Volkswagen Group and Mahindra & Mahindra Ltd (M&M) have signed the first supply agreement on the use of key electric components of the German carmaker's MEB (modular electric drive matrix) for Mahindra's electric platform INGLO.

The deal covers the supply of certain electric components as well as unified cells, the two automakers say in a joint statement.

With the agreement, Volkswagen and Mahindra are further deepening their collaboration which started with a partnering agreement and a term sheet in 2022. Both companies will continue to evaluate a potential expansion of the collaboration, the statement says.

Mahindra will be the first external partner to use the German carmaker's unified cell concept, the core element of Volkswagen's battery strategy, it says.

The supply agreement will run over several years and will have a total volume of about 50 gigawatt hour (GWh) over lifetime.

Volkswagen Group and Mahindra aim to strengthen their e-mobility footprint in the Indian automotive market and to accelerate electrification in the region.

Mahindra is eyeing 20-30% of its sales from EVs by 2027. Currently, it is India's third-largest electric carmaker after Tata Motors and MG Motor India.

Electric car sales in the country more than doubled last year. However, out of 41 lakh cars shipped by carmakers in 2023, only 2.2% were electric. The government is targeting EVs to account for 30% of all new-car sales by the end of the decade.

Mahindra plans to launch five all-electric SUVs in India based on its new, purpose-built electric platform INGLO, starting December 2024. It is also looking to launch an electric version of its popular off-roader Thar.

"The quality of the vehicles will be better than the best in the industry today. We will have a whole range of vehicles and consumers will be able to move to electric faster," Mahindra Group managing director and CEO Anish Shah told Fortune India last year.

Shah believes long charging time is the only gating factor as far as the adoption of EVs is concerned. "It is really the charging time that will play the biggest role," he said, adding that charging time will come down to 30 minutes with Mahindra’s ‘born-electric’ EVs.

With more than four million new vehicles sold per year in 2023, India is one of the largest automotive markets in the world. The electrification of the passenger car segment is expected to gain significant momentum in the coming years.

Volkswagen's MEB platform and its components are used by the Group brands Volkswagen, Audi, Škoda and SEAT/CUPRA as well as external partners like Ford and Mahindra. The partnership with Mahindra is led by Volkswagen Group Technology and its Platform Business unit.

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Mahindra signs deal with Volkswagen for EV components