Volkswagen was slow to move into electric cars but its ‘dieselgate’ emission scandal almost 3 years ago, has finally pushed the automaker to a new start. The largest automaker in Europe has now taken a strategic shift in its policies, moving over to electric cars.
The automaker is serious about its commitment to the zero-emission and low-pollution causing vehicles. In a recent move to prove its aggressive shift to low-pollution vehicles, Volkswagen assigned $20 billion for batteries for its EVs. On Tuesday, Volkswagen said that it has secured a battery technology delivery for China and Europe, which captures 80% of its market. Battery supplier for North America will also be selected soon.
A good time for EVs?
The recent releases at the Geneva Motor Show has brought electric car ambitions of most big automakers to the forefront. Jaguar launches its electric vehicle, Porsche launched a crossover SUV and Aston Martin tried to recreate the Lagonda sub-brand to fit into the luxury electric car segment.
Tesla Model 3, the most anticipated electric car, has missed some important production targets which could boost the market for Volkswagen. It currently has 3 plants for electric vehicles, which could be expanded to 16 by the end of 2022. The group also plans to launch 80 brand new electric cars by 2025.
Matthias Mueller, Chief Executive at Volkswagen said, “We have pulled out all the stops over the past months to implement the Roadmap E swiftly and resolutely. Building up expertise and mastering the technology does not necessarily imply that we want to start large-scale assembly of batteries ourselves. Others can do it better than we can.”
A plan with outrageous costs
The company has planned to sell 3 million cars every year till 2025. This is not all, there could also be an eclectic version of all the 300 cars models under the group by 2030. Of course, this will not be an easy feat to achieve. The dieselgate has already attracted billions of dollars in fines and costs for the company.
Apart from this, they have pledged 34 billion euros on the development of electric vehicles, mobility services and autonomous technology. VW has a very ambitious plan for electric vehicle which will attract billion-dollar invoices for them. They have suggested that the operating margin for the group will remain between 6.5 to 7.5 percent. There is no major change from the 7.4 percent margin from last year.
Will electric cars finally help VW in getting good PR and profits? Mueller suggested that the top management is optimistic about the prospects of the group in 2018. However, he said that industry bottlenecks and stiff competition could lead to pressures. Note that carmakers are rushing to get their vehicles tested with the new WLTP lab emission and fuel consumption tests. The uncertainty over the test results could be the reason behind their lack of speculation.
VW’s aggressive shift towards electric vehicle could come in sharp contrast with the likes of Tesla who have already started presenting their best models to the world and gathering good PR.