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Volkswagen’s Electric Car Lineup Will Cost Billions More Than Estimated

Industry News / 2 Comments

Bad math or poor planning? Perhaps both.

According to Bloomberg, recently installed Volkswagen CEO Herbert Diess has announced the automaker's plan to launch an electrified version of each of its vehicles will cost more than the $23 billion originally estimated. How much more? Diess didn't provide a number, but did make clear VW will have to cut expenses in order to make the proper investment in its technological future.

All told, the VW Group wants to have 80 new EVs across its many brands, among them Audi, Porsche and VW, by 2025. Five years following that the aim is to offer an electrified version for every one of its 300 group models. "The burden for our company, such as the cost of bringing to market electric cars, will be higher than expected," Diess said.

"This is particularly so since some of our competitors have been making more progress." One of VW Group's main rivals, Daimler-Benz, just launched its Mercedes EQC all-electric crossover. Not to be outdone, Audi will unveil its all-electric e-tron crossover next week in San Francisco, following a several weeks-long delay. One of the ways for VW Group to find funding for future EVs plans is to further increase profitability from its VW namesake brand, which currently provides a third of overall revenues.

Just last year, for example, VW's profitability increased to 4.1 percent from 1.8 percent, which is quite impressive. However, that's still not good enough for Diess, who wants to see that figure increased to 7-8 percent.

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Any figure below that would only allow for some, but not all, future investments. We're sure additional ways to increase revenue will be found, whether it'd be by pushing sales, selling a brand (Ducati?), or spinning off Bentley, Bugatti, Lamborghini, and Porsche as a premium sub-brand to potentially unlock billions more in revenue. But whatever happens Diess and his core team will need to act fast especially since the competition, as Diess clearly noted, is about to become even fiercer.