Thanks to a regulatory crunch, we can expect to see a few electric models on the road shortly.
Largest automaker in the world or not, there is no doubt that Volkswagen has a mountain of obstacles ahead of it, although none seem to be as challenging as entering the electric car market. Following an admission of guilt to US regulators over Dieselgate, Automotive News has found that the automaker will now need to speed up its efforts to introduce electrification by 2020 in order to meet CO2 emissions reduction targets in Europe and in China.
Coming first will be a Golf-sized hatchback that runs on battery juice and is based on the I.D. Concept. That will be followed by two additional models that will utilize the MEB modular electric platform. One of these will be an SUV, which we won't see until after 2020, and the third an autonomous minibus, the likes of which we saw with the I.D. Buzz Concept. The minibus shouldn't be out until 2022, but momentum has been building as the automaker has already signed contracts for batteries and is sourcing components for the electric architecture. It's imperative that Volkswagen reaches these deadlines, and not just because the EU and China are implementing harsh emissions standards on new cars by the deadline.
It's also due to the fact that the automaker is relying on China to become the mainstream adopter of its electric vehicle technology. Unlike Europe, there is no diesel market in China, meaning that Volkswagen cannot build efficient (and compliant) diesels to skirt under emissions standards. Additionally, the Chinese market is oriented towards SUVs and larger cars, meaning small ultra-light cars won't be the answer either. Instead, the electric I.D. SUV is expected to be the VW badge-bearing star, helping the automaker stick to its commitment of selling 400,000 New Energy Vehicles (which are plug-in hybrids or pure electric vehicles) in China during 2020 with the number set to increase in the following years.
China will be the first mainstream market for Volkswagen's electric cars, due more to regulation than choice, and it will use the lessons it learns in meeting these stringent targets in order to debut electric cars in other markets. "We have to sell there close to 1 million electric vehicles by the year 2025 -- just Volkswagen -- and from this volume base we can really do something in the rest of the world," said VW CEO Herbert Diess. This investment may sound as if it comes paired with a small profit margin, but Diess believes that it will be possible to squeeze some coin out of these electric vehicles in the coming years thanks to the internal sharing of the MEB platform among Volkswagen's subsidiaries Skoda, Seat, and Audi.
Then, when the electric SUVs are introduced, it's time to sit back and watch the money roll in. "I am confident that already the first cars will be profitable, not hugely profitable but profitable, and the later-coming, more SUV-based, bigger cars should achieve good returns on investment and also good margins," Diess said. Expect a US invasion of Volkswagen electric cars to follow, but in either case, who would have thought that notoriously smoggy and regulation-hating China would be the major player leading the green car charge? Either way, the world is changing and it's doing so fast. Volkswagen, like all other automakers, will need to keep up the pace in order to successfully adapt.