By on February 6, 2019

Image: VW

Following its diesel emissions scandal, Volkswagen leaned hard into electrification. The automaker needed to look environmentally conscious after being caught cheating on emissions tests, and promising a glut of electric vehicles seemed like a good way to accomplish that goal. Of course, building EVs also allows companies to offset fleet-wide emissions — protecting the existence of highly profitable crossovers using the internal combustion engines that most people still prefer.

However, Volkswagen isn’t talking about chucking in a few zero-emission vehicles under its I.D. sub-brand. Back in 2017, the automaker promised $84 billion for EV development after announcing an initial investment of $10 billion. VW Group subsidiaries like Audi and Porsche are busy readying electrics of their own. While incredibly ambitious, the swift change in direction means Volkswagen is effectively gambling with its future.

As good as new automotive tech looks on Wall Street, typical consumers wandering around dealer lots haven’t been nearly as interested.

Globally, plug-in sales (including hybrids) have risen dramatically but are not on pace to overtake internal combustion vehicles anytime soon. As of 2018, less than 4 percent of the American market constituted plug-in vehicles — and the vast majority of those went to California buyers. But even China, which has a fairly aggressive plan to impose EV adoption and builds more of them than any other country, still sees plug-ins occupying a niche subset of the market.

VW intends to launch 300 electric vehicle models by 2030 and finish developing its final round of internal combustion engines in 2026. What happens if demand doesn’t shoot up? Not to put too fine a point on it, but Volkswagen will probably be ruined.

Reuters recently explored the decisions that led to the German automaker’s big push into electrification. If you’re looking for the abridged version, widespread panic from within the company (stemming from the emission crisis) resulted in VW throwing all of its eggs in one basket.

The outlet also got some hot takes on the issue, with Arndt Ellinghorst, an analyst at Evercore ISI, saying the automaker is taking a big risk with its current strategy. “What if people are still not ready to own EVs? Will adoption be the same in the U.S., Europe and China?” he mused, adding that EU and Chinese emissions regulations have made electric vehicle adoption inevitable.

Whether or not consumers are ready, government intervention assures an influx of electric vehicles over the coming years. While this seems like it should be a boon for Volkswagen, it might not be. Most global brands are considering adding EVs to their lineup as a way of coping with regulatory measures enacted by China and the EU. If the market isn’t ready, that means an even smaller cut for VW.

Every cloud has its silver lining, though. Due to Volkswagen’s immense manufacturing capacity, the company feels it can reduce the cost of electric vehicles dramatically. “We are Volkswagen, a brand for the people. For electric cars we need economies of scale. And VW, more than any other carmaker, can take advantage of this,” a senior Volkswagen executive told Reuters, requesting anonymity.

Battery cost is expected to gradually drop as mining and production efforts ramp up over the next few years. Most analysts believe this will ultimately lower the cost of EVs to a point where they become competitive with their gas-powered rivals — probably by 2025.

“On a 2025 view, we expect Volkswagen to be the number one electric vehicles producer globally,” UBS analyst Patrick Hummel said. “Tesla is likely to remain a niche player.”

Assuming everything goes perfectly and electric vehicles explode in popularity, the company should find itself sitting pretty by the end of the coming decade. But no such guarantee exists. While many automakers are investing heavily into electrification and autonomy, several have taken a more cautious approach.

Volkswagen I.D. crozz concept

Popular or not, EVs will remain a fixture of the automotive landscape for a while. Following a post-Dieselgate crackdown, including citywide bans for passenger models using the fuel, the European Union announced its intent to further cut CO2 emissions from passenger cars. The EU now wants to cut vehicle carbon dioxide emissions by 37.5 percent by 2030 (vs 2021 levels). The region previously embraced a 40-percent reduction in emissions between 2007 and 2021. Regardless of what happens with the United States’ efficiency mandates, automakers will still have to contend with global policies. Many feel the only way to do that is through rampant electrification.

“This goal is no longer reachable using combustion engines alone,” Volkmar Denner, CEO of Bosch, the world’s biggest auto supplier, said of the European proposals.

Perhaps the futility of resistance will be Volkswagen’s biggest asset. But, as things currently stand, VW still isn’t on schedule to meet Europe’s existing emission rules for 2021. There’s a lot of work to be done before it becomes the world’s largest EV manufacturer, and its management team prays the world will be ready once that happens.

[Images: Volkswagen]

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38 Comments on “Electric Ambitions: Can Volkswagen Pull Off Its Aggressive EV Strategy?...”


  • avatar
    nels0300

    Could it be that one of the main reasons demand is soft is because the only EVs available that are on the verge of affordability are subcompact crap boxes?

    If VW can bring EV manufacturing to scale and bring down prices, demand will increase for both EV vehicles and infrastructure.

    It’s pretty simple, they’re currently too expensive, infrastructure isn’t there because not enough people have adopted EVs… because they’re too expensive.

    • 0 avatar
      darex

      Furthermore: EVs are best suited to cities. Residents of cities need a charging site, but they don’t generally even have a parking spot. Ergo, EVs will fail to attract the average city dweller. Vicious Cycle!

      • 0 avatar
        SCE to AUX

        “EVs are best suited to cities”

        False. Early predictions about computers and TV were similarly short-sighted.

        My EV is pretty happy in the suburbs and on toll highways.

        However, charging for garage-less city residents is going to be a challenge until city planners and private firms figure out a solution, and it doesn’t have to be a free one.

      • 0 avatar
        HotPotato

        I’d say “best suited to suburban commuters with a garage.” But if plugs proliferate on light poles as in some Euro neighborhoods, city dwellers can just park and plug. Assuming a crackhead doesn’t steal the cord, of course: the Euro setup is bring-your-own-cord.

  • avatar
    nels0300

    And I would take a chance on a VW EV. I’m sure they’ll find a way to screw it up somehow, but at least you won’t have to worry about carbon build up, HPFP, DSG mechatronics, plastic water pumps, ignition coils, intake manifold, fuel injector, etc etc headaches.

    • 0 avatar
      jalop1991

      Son, we live in a world that uses big honkin’ electronics, and those electronics have to be cooled with circulating coolant. Who’s gonna pump it? You?

      No. Plastic water pumps.

      Germans gonna overengineer. And the world keeps on spinnin’.

  • avatar
    Asdf

    And then there’s of course the elephant in the room – the charging conundrum. All BEVs currently on the market are inherently DEFECTIVE, having a charging time that well exceeds the five minutes it takes to refill a fuel tank, which is OUTRAGEOUS considering we’re in 2019 and there have been BEV automakers around for more than 15 years (!), and so this defect should have been taken care of long ago.

    If VW isn’t able to fix this defect before it launches its big BEV initiative, then the VW BEVs will not be viable in the marketplace (and the marketplace happens to be quite different from the bubble in which TTAC’s green and embarrassingly vocal herd of idiots reside), and as a result, VW not only “probably” will be ruined, it DEFINITELY will be ruined, a similar fate to the one awaiting the incompetent BEV automaker Tesla in a few months’ time.

    • 0 avatar
      nels0300

      It is definitely an issue, but has any automaker with an R&D budget comparable to VW group ever put their full weight behind EVs?

    • 0 avatar
      Kendahl

      As Asdf correctly points out, BEVs are not yet practical anytime the distance to your destination and back home again exceeds their range. I suspect the current market is limited to buyers who (1) fly long distances rather than drive or (2) can afford to indulge their appetite for novelty.

      For everyone else, PHEVs are the solution. Unfortunately, there aren’t enough models to choose from and they are too expensive compared to ICE models. I don’t understand why GM built the Bolt as a BEV when they had already done the engineering for the Volt PHEV.

      Tesla’s demise has been predicted for years. Yet, they are still here.

    • 0 avatar
      islander800

      Add GM to that group, as Barra and the rest her think tank in the silos-by-the-river insist on throwing billions at electrification and the pipe dream of autonomous vehicles, to the neglect of real vehicle research and development – and the insistence that future GM vehicle owners want to lease their cars out to Uber drivers. No, I’m not making this up.

      GM got bailed out by the taxpayer and this what they’re doing with it? GM, even more than Volkswagen, has a real challenge ahead, as selling electric to consumers on this scale will take a mammoth marketing effort – and GM, in Barra’s infinite wisdom, doesn’t even think they need a VP of Marketing and boy, does it show in their current pathetic campaigns.

    • 0 avatar
      Spike_in_Brisbane

      I wanted a Jaguar iPace. It’s a beautiful car but to get it to my holiday house requires a flat bed truck. There is no possible alternative.
      I don’t understand why highway rest stops are not rushing to install chargers. Surely a cashed up customer who is forced to spend an hour in your shop/restaurant is a great opportunity on top of whatever margin is made on the electricity.

  • avatar
    darex

    VW’s initiative is not unlike BP’s polluting of the Gulf of Mexico, then running commercials, in which they brag about their big role in the clean-up efforts. That’s the definition of “chutzpah”.

    VW isn’t worthy of a cheer-leading squad! They brought their predicament upon themselves, and dragged a lot of other people down with them. Do I hope they can “pull it off”? I don’t give a crap about VW and their future success or failure.

  • avatar
    28-Cars-Later

    “Most analysts believe this will ultimately lower the cost of EVs to a point where they become competitive with their gas-powered rivals — probably by 2025.”

    Haha. Keep smoking that hopium.

    “VW intends to launch 300 electric vehicle models by 2030 and finish developing its final round of internal combustion engines in 2026”

    300 models? Typo for 30?

    • 0 avatar
      ToddAtlasF1

      There are currently 27 Porsche 911 ‘models’ listed on their website.

    • 0 avatar
      RHD

      They plan to manufacture 300 models, and sell each and every one of them.

      Seriously, though, VW’s plan is to literally create a platform that can take various body shells. So a Kombi can be a rebodied sedan, SUV or wagon with little other modifications. It makes a lot of economic sense.

      The upside of this is that maybe we’ll be back to the 1920’s, with companies building customized bodies for the automakers’ frames.
      It would be fantastic to see new Deusenbergs riding on electric platforms. Make Automobiles Great Again!

  • avatar
    SCE to AUX

    Tesla is currently the world’s largest producer and consumer of lithium ion batteries.

    VW will have to match, then dramatically exceed Tesla’s capabilities in order to become a world leader in EVs. Then they’d have to develop a charging system which surpasses the Supercharger network in speed and availability.

    Finally, VW would have to sell EVs in mfr stores instead of dealers, because dealers will always push the incentivized ICEs over the EVs.

    I have no doubt that VW can build a car with better quality than Tesla (did I really say that?), but it is possible that Tesla will surpass VW’s US sales this year. So how can VW seriously believe that its niche EV program will eventually overtake Tesla in just a few years?

  • avatar

    So Mazda is doomed? And Subaru, Toyota and Honda too? Mitsubishi will be a winner though.

  • avatar
    vehic1

    Keeping hope alive here, for the anti-EV granddad crowd. But with China and the EU already mandating cleaner air, and EVs already selling some here (even with high prices, few models, and currently modest infrastructure), the EV future is likely to enlarge significantly. The 1950s are over, no matter how badly some pine for the “good ol’ days”.

    • 0 avatar
      MoparRocker74

      Ummm…have you actually LOOKED at who’s embracing EVs? Theyre all aging ex hippies 20 years plus deep into AARP territory. Obviously you don’t go to car meets. The 18-45 crowd who are actually INTERESTED in cars wants absolutely nothing to do with electrics and hybrids. They have a dorky image that no one will touch.

      • 0 avatar
        la834

        Yeah, the Tesla Model S has a dorky image; no wonder they can sell every one they can build for $75,000+. My 20-something nephew who is not an AARP member is in the queue for a Model 3.

      • 0 avatar
        Lee in MD

        Where I live you can’t swing a dead cat without hitting a Tesla Model 3. Aging hippies? Hardly. The demographic I see tearing around in them, and I DO mean tearing around, is pretty much the same demographic as I was when I bought my fully loaded black on black 1998 BMW 328i back in the day. That is to say an early 30’s upwardly mobile legend in his own mind driving what they consider to be the Ultimate Driving Machine and trying to prove it to anyone who dares get in their way. You know what else I see in my neck of the woods? BMW M3s, Audi S4s and the like fading away as fast as their lease turn-in dates allow.

    • 0 avatar
      darex

      I thought hipsters sought out 70s and 80s cars, because irony.

      Anyhow, we don’t really value your opinions too much, because you’re the China of our culture: you only steal and borrow other people’s “played-out” ideas, and create nothing new. That’s why everything’s “neo-this or neo-that”. Lame!

  • avatar
    MoparRocker74

    VW is definitely shooting themselves in the foot with this. They’ve long positioned their products as ‘drivers cars’ among mainstream entries. EVs are the anti-drivers cars. At best, they’re conspicuous status symbols for the techie types (Tesla) but that’s not a driving enthusiast crowd. I see a crash and burn.

    • 0 avatar
      HotPotato

      Dude. Look up C/D’s review of the Model 3 Performance. You are way off base.

    • 0 avatar
      mcs

      Here are some more articles:

      http://www.thedrive.com/news/24855/tesla-model-3-disqualified-from-tracks-time-attack-for-not-using-approved-fuel

      For Drag Racing:
      youtu.be/iHRICKM03Sc

      Then again, this is what happens if you drive to race something like a Demon:

      youtube.com/watch?v=yZeiQT0yDj0
      youtube.com/watch?v=6jQwm8se5VM
      youtube.com/watch?v=yImwDPeKX8s
      youtube.com/watch?v=FSQF86sJCYk

  • avatar
    TDIandThen....

    Just because of all the angry cynicism above I’ll take the yes position.

    * VW will have one enormous hit in its new EV line – likely the microbus or camper. This will absorb two or more dogs.
    * they will adjust as they go – killing some models quickly or limiting others to specific profitable markets
    * battery production will not be a problem as sales will not meet hopes, and capacity flex is provided by Tesla and other battery factories
    * many current competitors will effectively fail because they don’t have the balance sheet to sustain multiple semi-profitable models as VW does. Only Hyundai / KIA will outperform VW in this space due to their internal efficiencies and supply chains.
    * Tesla will not do better than muddling along as their S buyers will have little else to buy from them. Current S owners will be aging out of their current S in the next five years and will face good options from Porsche, Jag, even GM. A fair number will pick a VAG product such as an Audi e-tron without realizing it’s VW.
    * Performance hybrids will also continue to improve and drop in price. Take the GTE offered in Europe, make it AWD and maybe drop engine size, call it the Golf R and offer it at a subsidized price below $40k. What a great snow-tier option for N Americans if it has low-end torque, an effective DSG and the R’s suspension.
    * VW paying for much of the US charging infrastructure means that they will effectively define plug and voltage specs, offering this in their own models and rationalizing some of the charging stupidity to their advantage.

    What did I miss…?

    • 0 avatar
      darex

      The Microbus will be as much of a hit as the “New Beetle” was: a niche product, attracting some enthusiastic initial interest, then FIZZLE. VW is historically terrible at reading the North American Market.

  • avatar
    nels0300

    I’m no aging hippie, I’m a 42 year old car enthusiast. I’ve had all kinds of cool cars, all but 2 manual transmission, and I’m interested in EVs.

    And honestly, the environmental aspect isn’t even the main reason.

    As much as I enjoy maintaining my own cars, the simplicity of electrics is appealing to me.

    I’m also interested from a performance perspective. Newcomer Tesla already challenges the most insane ICE vehicles available. Hellcat? No prob.

    I have a feeling regular, common EVs are going to make current regular, common ICE vehicles feel malaise era slow.

    • 0 avatar
      Lee in MD

      Bingo on the malaise era slow observation. I put my wife’s piddly diddly Volt in sport mode at a traffic light and squirted away from a guy behind me in an Audi S6. To be fair, I don’t think he was expecting to give chase and was therefore caught somewhat flatfooted, but nevertheless the way his car was screaming and his face frowning when he finally caught up to me an eighth of a mile down the road, made me chuckle. It also made me realize I was driving the future.

      • 0 avatar
        ajla

        The Volt is a mid $30s car that runs a low/mid 15 second quarter mile time. That’s fine, but don’t get carried away.

        • 0 avatar
          Lee in MD

          That’s exactly my point. A piddly front wheel drive Volt on low rolling resistance tires was able to hang with a car several classes above it in the short burst stop to stop driving that dominates the National Capital Region driving experience. I suspect it wasn’t really even the acceleration that flustered the S6 guy but the way I threw the Volt around a 90 degree curve much faster than any similarly shod econobox could have. The Volt’s battery weight and CG distribution really helps reduce the understeer relative to its FWD ICE peers.

        • 0 avatar
          ToddAtlasF1

          Car and Driver says 16.1 seconds for the new Volt. That must be with a full charge, and it is still almost four seconds behind an S6. I drove a Volt that a woman came to visit me from out of town in. With a depleted battery and no time for a charge, the Volt was the slowest car I have driven since my Mercedes-Benz 240D. 3,523 hp and 101 HP will do that for you. It was a hazard trying to merge onto the freeway, and certainly nothing like the A6 3.0T that was my daily driver at the time. The idea of taking a long trip with the Volt loaded with 600 lbs of people and cargo is not appealing.

          • 0 avatar
            Lee in MD

            What part of the S6 caught up to me an 1/8th of a mile later aren’t you guys understanding? Yes the car was charged up, yes it was in Sport mode. The Volt is an econobox through and through, yet in EV mode it performs way better than “it has any right to” relative to a similar FWD ICE box in the kind of real-world driving urbanites/suburbanites live with every day. Just imagine if it were a RWD vehicle with a real motor? Oh yeah, I don’t have to. I see Teslas quietly wasting people every damn day as I WALK to work. Yes, my boy-racer BMW/Mustang days are largely behind me.

          • 0 avatar
            HotPotato

            Testing has never found the Volt to be slower in hybrid mode than EV mode. There’s always a reserve in the battery; you’re never drawing on only the 101 hp gas engine. It’s not an S6, but it’s not a 240D either; more a Civic Turbo.

        • 0 avatar
          HotPotato

          Story checks out. 0-30 mph acceleration is the EV’s wheelhouse; the Volt does it about as fast as the less expensive Teslas, which are still PDQ. Good for the Stoplight Grand Prix.

          GM geared the Bolt EV a little taller for more balanced performance, but it’s a quick little commuter too (6.5 seconds to 60, vs. maybe 7.5 for a Volt.).

  • avatar
    BulletBob

    They have their work starkly cut out for them to succeed. The two big things with electric is range anxiety and recharge time and convenience. Neither has really been overcome and presented in a convincing manner. GM marketing was not able to show the necessity of having a range extender in the Volt without it appearing as a design deficiency rather than the necessity it really was. BEVs lose a large percentage of available power in frigid weather. Recharge times are still preposterously slow as compared to filling up with fuel. Good luck to VW as they will need it. As yes you meet the nicest people at the charge pump.

  • avatar
    IBx1

    I look at the pictures in this article and I do not want the future

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