Cash Flush VW Bolsters EV PlanBy Scott Doggett March 16, 2011
It is often the case with German automakers that, after showing an initial reluctance to commit to a technology or vehicle type, they decide to become world leaders in it. Coming readily to mind are Daimler's decision in recent years to make fuel efficiency a top priority at Mercedes-Benz -- placing it on par with luxury and performance -- and BMW's decision five years ago to invest heavily in advanced hydrogen-gasoline combustion hybrids. This ambitious program aimed at global dominance of the hydrogen-vehicle segment has since been scaled back.
Most recently, Volkswagen Group did an abrupt about-face, replacing a long-held reluctance to embrace electric-drive vehicles with an announcement at the 2010 Geneva Auto Show last year of its intention to "take the hybrid out of its niche with volume models," as CEO Martin Winterkorn (left) put it. Addressing a rapt audience at the show a year ago, he vowed that "Volkswagen will also be the first automaker to launch a mass-produced electric car for everyone."
Nissan might argue that its 2011 Leaf EV, introduced in December, beat VW to that last goal, but Winterkorn's Volkswagen Group will soon offer five hybrids - in the form of dual-mode variants of the VW Touareg, Golf and Jetta, and the Audi Q5 and A8 - and has plans to offer an electric VW Up (top) in 2013 and an electric VW Golf the year after. What's more, the cash-flush parent of Volkswagen, Audi, Bentley, Bugatti, Lamborghini and other carmakers plans to expand what it calls its e-mobility activities this year, Winterkorn said at the company's annual investor conference earlier this month.
Among other things, VW Group intends to invest $122 million to create an E-mobility Campus at its headquarters in Wolfsburg, Germany, in order to concentrate the expertise of its various brands. The campus will employ more than 1,000 researchers and other staff tasked with developing electronic transport solutions for the future, he said.
VW subsidiary Audi has a similar facility (right) in the southern German city of Ingolstadt with about 130 employees. That program, as well as the one planned for Wolfsburg, are part of VW Group's efforts to become the automotive industry's global economic and environmental leader by 2018, Winterkorn said. "A new technology era is dawning and we must make new drive systems ready for production," he told investors. "New solutions are needed for mobility in the world's mega-cities. We already have solutions in every vehicle class."
VW Group will turn to weight-lowering construction designs, greater use of lightweight materials such as aluminum and carbon fiber, and wider use of hybrid- and electric-vehicle drivetrains to increase the fuel efficiency and lower the greenhouse-gas emissions of its lineup over the next few years, he said.
Added VW sales and marketing chief Christian Klingler, "E-mobility will play a larger role, especially in Europe and China. The price of the vehicle and the battery determines the price of an electric car, and we are considering a lot of options on sale and leasing, but our cars must be affordable. We are studying what our competitors are doing and the requirements of customers and will create packages to meet expectations."
This was the same Klingler who less than six months ago said he didn't believe much of a market existed for electric-drive vehicles. The EV "is not a request from the customer, it is request of the government," he told journalists at VW Group's headquarters in November.
In the months since the 2010 Geneva Auto Show, when Winterkorn said Volkswagen Group would make hybrids mainstream, the company initiated electric-vehicle fleet testing in the U.S. and China in what would become the most-profitable year in the Group's history, with best-ever figures for deliveries, sales revenue and earnings. The strong growth has continued into the first quarter of this year and record figures are forecast for the full year.
As IHS Automotive analysts noted in an email to AutoObserver this week, the VW Group has a cash war chest of about 18.6 billion euros ($26 billion) and consequently plenty of ready capital to invest in projects such as the e-mobility campus.