VW Launches Attack on Mass Market for e-Cars

No other mass producer of passenger cars is steering as resolutely in the direction of e-mobility as the Volkswagen Group. The conversion of the plant in Zwickau, to exclusive e-Car production, alone cost €2 billion and VW now has similar plans in store for its Emden plant. VW plans to invest a total of €33 billion in electromobility by 2024. In addition to the costs of converting existing plants and setting up its own production of battery cells, considerable funds are flowing into research and development.

The ID.3 is VW's first passenger car to be developed exclusively as an electric car. Production of the compact car in the Golf class has been underway for some time with the first deliveries only beginning this past September. Production delays were primarily the result of since-resolved problems with the software. Initially, VW built unfinished vehicles and parked them at the Emden plant and at a nearby regional airport where they awaited installation of the software. Evaluations of drone footage by MainFirst, a European financial services firm, confirm that these temporary parking lots have since been cleared.

Overall, the launch of the ID.3 appears to have been successful. The 30,000 “First Edition” models that customers were able to pre-order were quickly sold out. VW is aiming to deliver a total of 75,000 ID.3s in Europe this year. By comparison, Tesla came up with around 139,000 vehicles in the third quarter of 2020. The targets for the coming years are high: as early as this year, the share of fully electric cars at VW is forecast to more than double to 6%-8% - that would be 745,000 battery-powered VWs on the roads. That could overtake Tesla.

VW's first “world car”

Next up is the proof of concept for the ID.4, which is an electric compact SUV. VW is building the vehicle with its partners SAIC and FAW in China. Production has already begun. The ID.4 is a so-called world car, which is to be launched on the markets in China, Europe and America largely at the same time. A battery-electric sedan and a full-size SUV are to follow this year, before the e-BULLI successor, ID.Buzz, is launched in 2022. Finally, the launch of the ID.2 is planned for 2023, an electrically powered small car that is expected to cost no more than €20,000 (around $24,000) without subsidies. In total, the Germans plan to add up to 70 different models with electric drives to their lineups in the coming years.

Aiming for world market leadership

Renowned automotive experts, such as Professor Ferdinand Dudenhöffer of the Center for Automotive Research, believe it is possible that VW will become the market leader in Europe for electrically powered vehicles as early as this year. However, this should only be the beginning. VW plans to produce a total of 500,000 ID.4s per year starting in 2025. A total of 15 million electric cars are then to be produced and sold worldwide every year. World market leadership would then also be in sight.

VW's attack on the mass market for e-cars has serious implications for suppliers irrespective of the fact that other volume manufacturers such as Renault are following suit. As a first step, demand for battery cells is rising dramatically. Ford's current problems show that the production of these cells is complex. Its hybrid SUV, Kuga, cannot currently use the powertrain battery because of the risk of fire. Against this background it was a logical decision by VW's board members to enter cell production themselves and not leave the manufacture of the heart of e-cars to South Korean and Chinese suppliers alone.

Blueprint Tesla

Right from the start, the Americans have manufactured all the key components themselves: This applies to the batteries as well as the hardware and software. Now Tesla is going one step further and has announced that it will enter the lithium mining business. Until now, the company has always acted as a pacemaker for the large established manufacturers when it comes to electric cars. First they hesitated for a long time to develop electric cars, then they didn't want to produce the battery cells themselves but buy them. In both respects, however, they eventually followed Tesla. The question is when VW and others will secure the entire value chain and take over lithium production themselves.

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