In an interview with Handelsblatt, Pablo Di Si, the newly designated head of Volkswagen for North America, said Volkswagen Group plans to introduce 25 electric vehicle models to the American market by 2030 in order to increase its market share from a fairly dismal 4% to 8% or more. He said the company expects 50% of its sales from all brands in the US to be electric vehicles by that date.
“As a group, we currently have a market share of four percent in North America. That has to be much more,” said Di Si. “In the coming years we want to achieve a five percent market share, and then ten percent in 2030.”
Currently, Audi and Porsche cars are sold in America in addition to Volkswagen models. We know Volkswagen group plans to revive the Scout brand to sell electric SUVs and pickups. There is always the possibility it might decide to bring Cupra or SEAT models stateside as well, although that is little more than speculation at this point.
What Di Si did say was that larger electric SUVs are planned for the US market and that more of them will be locally produced. While the ID.4, which is now manufactured in Tennessee, is enjoying a good reception in the marketplace, it is still relatively compact by US standards. “We need more all-electric models for North America within the next five to seven years. And we want to produce more models locally.”
He indicated there would be more news about US production coming next year. “In 2023 we will be able to announce concrete steps here.” Insiders tell Handelsblatt the Volkswagen design team in California is being expanded. The company is planning to build its own battery cell production facility in North America and the capacity of the Chattanooga plant could be doubled to 500,000 vehicles in the long term. At the present time, it has the capacity to build 90,000 ID.4 SUvs annually.
Handlesblatt says Volkswagen needs an electric SUV similar in size to the Atlas, the largest vehicle currently in the company’s US lineup. A battery-electric variant of the Atlas could be offered in a few years and either assembled in Tennessee or in the Volkswagen factory in Puebla, Mexico.
Other large electric SUVs could follow. “We want to open up the important SUV segments in the US market even more, and also electrically,” Di Si says. An electric SUV comparable to the Tiguan is a possibility, as well as a battery-powered version of the Taos, which is only available in the US.
Volkswagen & The Inflation Reduction Act
Volkswagen announced in August that it would step up its activities to procure raw materials for its North American operations in a way that complies with the complex rules of the Inflation Reduction Act. It has signed new agreements with mining companies in Canada, but it will be years before those initiatives begin to pay off.
Di Si warned that automakers would need more time to meet the new requirements from Washington on the origin of raw materials for electric car batteries. “I don’t think you can switch mineral production and mining in the next two to three years,” Di Si said. The sources from the Congo, China and other countries cannot be replaced in such a short time.
The IRA is an “important project,” Di Si said. “We are investing billions in localizing our procurement, development and production in North America. But the transformation of the auto industry must take place step by step as part of a process planned until 2030. We all source our goods from different parts of the world and these long term contracts cannot be changed overnight. We have 10, 15, 20 year contractual commitments.”
Volkswagen as well as most other manufacturers in Europe and South Korea are pleading for more time to comply with the provisions of the IRA. French president Emmanuel Macron met with President Biden last week to stress the need for more flexibility. The unspoken subtext is that if America does not relent somewhat on the timetable, other nations may consider trade or tariff restrictions of their own that might penalize American businesses.
Turning VOA Around
For decades, Volkswagen has struggled to make a profit on its US operations, despite some brilliant advertising campaigns.
The US business was long considered Volkswagen’s problem child. The product range missed the taste of the Americans and then the diesel scandal shook people’s trust in the company completely.
It was only under the guidance of Scott Keogh, the person Di Si replaced, that the trend was reversed. Thanks to a greater number of SUVs in the North American product lineup, Volkswagen managed a profit of €200 million for the first time in 2021 after a decade of losses.
Nevertheless, VW’s market share in the States is still significantly smaller than in China or Europe. The expansion of the all-electric range will be Di Si’s most important future task, Handelsblatt says. The plan to increase sales in America was strongly endorsed by former Volkswagen Group CEO Herbert Diess and continues to be a priority for new boss Oliver Blume.
The Takeaway
Here at CleaTechnica’s posh intergalactic offices in the GigaTower, we wish Volkswagen well, we really do. But we do have to bemoan the fact that yet another company has decided there is no money in making electric cars ordinary people can afford. If one watches the commercials on TV these days, you could be forgiven for thinking everybody spends all day every day camping out by secluded lakes high in the mountains, accompanied by a bevy of bicycles, paddleboards, jet skis, and kayaks. Either that or their days are filled with hauling loads of concrete or pig iron in the back of pickup trucks.
Where are the electric Civics, Elantras, and Corollas — the cars that Americans have depended on for generations to take them to work, or college, or soccer practice? The American mania for gigantic automobiles is a sickness, one that impoverishes the environment while leaving many drivers deep in debt paying for a vehicle that may seem like a dream but is unsuitable for the reality of daily life.
New Volkswagen Brand chief Thomas Shäfer says his company is working on a crossover version of the ID.3 and at least two smaller electric cars. But Volkswagen refuses to bring the ID.3 to America, so it seems unlikely any of those new models are intended for the North American market. He has also hinted lately that a new generation e-Golf is possible. Don’t look for that in US showrooms either.
General Motors seems to have the affordable EV segment of the market all to itself with its Bolt/EUV twins. Either GM is prescient or it is wildly out of step with the rest of the industry. We prefer to think it is ahead of the competition.
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