VW revs up electric shift with RM100b onslaught

By BLOOMBERG

FRANKFURT • Volkswagen AG (VW) is putting its full force behind a shift into electric cars as the world’s largest automaker moves away from combustion engines and tries to draw a line under the emissions-cheating scandal that’s weighed on the company for two years.

Speaking on the eve of the Frankfurt auto show, CEO Matthias Mueller announced sweeping plans to build electric versions of all 300 models in the 12-brand group’s lineup. The German auto giant laid out the enormity of the task ahead, vowing to spend €20 billion (RM100.43 billion) by 2030 to roll out the cars and earmarked another €50 billion to buy the batteries needed to power the vehicles.

VW’s plans are the most ambitious in the auto industry and reflect the company’s efforts to recover from admitting that it rigged 11 million diesel vehicles to cheat on emissions tests. The scandal set off a backlash that has led consumers to turn away from the technology amid concerns about pollution and driving bans. That creates problems for VW as it relies on diesel cars to boost profit and lower carbon-dioxide emissions to reach tightening European environmental targets.

“We have got the message and we will deliver,” Mueller said in his speech to hundreds of guests at the carmaker’s event in Frankfurt. “The transformation in our industry is unstoppable. And we will lead that transformation.”

Mueller on Monday said that diesel remains a key part of the company’s strategy.

Dieter Zetsche, his counterpart at Daimler AG, said he regrets that consumers have lost trust in diesel.

Adding urgency to the push for electric cars, China over the weekend became the latest country to announce intentions to phase-out fossil-fuel powered vehicles, following the lead of the UK and France, which have outlined bans on combustion-engine models by 2040. Mueller said the company would await firm commitments before reacting.

Underscoring the enormity of the shift taking place in the industry, Mueller said VW will need the equivalent of at least four gigafactories for battery cells by 2025 just to meet its own vehicle production. At €50 billion, the CEO announced one of the largest tenders in the industry’s history for the procurement of batteries. “Financially we’re very robust,” Mueller said in a Bloomberg TV interview. “We’ll generate the money we need to make these investments.”

By 2025, VW aims to have 50 purely battery-powered vehicles and 30 hybrid models in its line-up, with a goal of selling as many as three million all-electric cars by then. The transformation will pick up speed after that to reach the 2030 goal as economies of scale and better infrastructure help bring down prices and accelerate sales.

The automaker in Frankfurt is giving the public its first glimpse of the coming overhaul of the product portfolio. The namesake brand is presenting the latest design iteration of the fully-electric ID Crozz compact crossover and the ID Neo hatchback — both come to market in 2020.

Luxury brand Audi, the group’s largest earnings contributor, will start selling its first all-electric SUV in 2018 and add two more purely battery-powered vehicles in the next three years. The premium-car brand is slashing spending to free up €10 billion to develop an electric-car line-up that will comprise as many as 12 models in 2025.

“The heated debate on driving bans in cities, on the future of diesel and e-mobility shows the times when our industry celebrated itself here in Frankfurt, basking in its own glory, are definitely over,” said Mueller, who arrived on stage in a self-driving prototype dubbed Sedric. “‘Business as usual’ is no longer enough.” — Bloomberg