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Volkswagen Has A New Way To Make LOTS Of Money

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Though it may not be a glamorous method.

Next week at the 2019 Frankfurt Motor Show, Volkswagen will unveil its highly anticipated ID.3, the first of many ID-branded all-electric vehicles due to arrive over the next few years. Expected to be around the size of the Golf five-door hatchback, the similarities mostly stop there. The ID.3 is all-new and its EV powertrain requires an entirely different type of maintenance than traditional internal combustion-powered vehicles.

Eventually, ID.3 owners will require replacement components, such as batteries, and VW is already laying the groundwork. Automotive News Europe reports the German automaker wants to build a new warehouse in Kassel, Germany to specifically store high-voltage traction batteries.

via Volkswagen AG
via Volkswagen AG
via Volkswagen AG

The goal is not only to provide replacement parts for regular repairs and maintenance but also to "significantly expand" its aftersales business in general. VW firmly believes EVs will soon become commonplace and it must be ready for this. Above, all, industry experts believe this will soon become an extremely lucrative business, though detailed profit margins are not yet available. It's important to know that EV repair costs are predicted to be 20-30 percent less than combustion-engined vehicle parts because they're mechanically simpler and are likely more durable.

"For a long time now, aftersales has been an important source of support for Volkswagen Group profits. In view of the transformation towards electric mobility and digitalization, we are hard at work to ensure that remains the case in the future as well," said Christian Dahlheim, head of group sales.

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via Volkswagen AG
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via Volkswagen AG

Let's put it like this: if VW's 2030 forecast of 10-15 percent of its 150 million vehicles are EVs comes true, then having a large stock of replacement parts will be extremely profitable. For example, revenue from the aftersales business increased by 1.9 percent last year to 15.9 billion euros – an even faster pace than delivery of its passenger cars.

Basically, VW knows there will be demand for EV replacement components, specifically battery packs, in light of crashes and any other issue that could compromise a vehicle's structural integrity. Building and storing extra parts may sound boring, but at the end of the day, business is business.

via Volkswagen AG
via Volkswagen AG
via Volkswagen AG
via Volkswagen AG
via Volkswagen AG

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