Herbert Diess
“We are very committed to batteries and continue to invest.”
(Photo: dpa)
Düsseldorf Volkswagen CEO Herbert Diess sees no alternative to the electric offensive that the Wolfsburg-based car company has launched this year. Only with these vehicles can the new EU climate targets be achieved.
At the Handelsblatt Auto Summit 2020 this Friday, Diess explained his strategy for the coming years – especially with regard to the US competitor Tesla. When it comes to software, Volkswagen should be on a level similar to that of the electric car pioneer from California in three to four years.
Read the full interview here:
Mr. Diess, Volkswagen has focused very strongly on electromobility. Why don’t you also use other drives? Their use in electromobility is analytically derived. The entire automotive industry is now bringing electric cars onto the market, and new competitors are constantly emerging. You could say that this is mainstream. Electromobility is the only way to achieve the climate targets by 2030. We anticipated this development early on; we started planning five years ago. This then includes our own electric platform, which is specifically designed for electric cars only. We can use this platform worldwide, in Europe, in the USA and in China.
Initially, the German automotive industry did not dare to manufacture its own cells. Volkswagen is now building its own cell factory. How can this rethinking be explained? It’s different at Volkswagen. We were very much geared towards this from the start and quickly approached suppliers from Korea and China in the early phase. I was the first European automotive agent who persuaded the Chinese CATL group to invest in electromobility. Back then, CATL was a small company; today, CATL is the largest battery manufacturer with around six billion dollars in sales.
But what happened directly at Volkswagen? About a year ago we decided to get into cell production ourselves. Together with our Swedish joint venture partner Northvolt, we are building a factory in Salzgitter. We also have a 20 percent stake in the large Chinese battery manufacturer Guoxuan. So we are very committed to batteries and continue to invest. We will see dramatic growth in cell capacity for the industry as a whole. This is also an opportunity for the major German suppliers to get involved there. The growth is not over yet, the growth is only now beginning.
So you don’t see the Asians have a technological lead? German companies can become innovators in this? Absolutely. Germany is a good research location for batteries. We have the universities, mechanical engineering, process engineering. Germany could play a leading role if we finally made up our minds.
Are German suppliers too cautious about battery technology? Yes. I’m a little disappointed at this point. It is us who are now investing billions in building a battery cell production facility.
The production of battery cells consumes a lot of energy. Is that even the right way to achieve the climate goals? You are addressing an important topic. The electric car is only sensible if we use CO2-free electricity for it. Thankfully, renewable energies are growing very quickly worldwide. There are regions where you can drive an electric car with a clear conscience. There are CO2-free nations in power generation, the Scandinavian countries, for example. Austria and Spain have also come a long way, and Great Britain will soon be coal-free as well.
But there are also counterexamples, right? Poland is such a counterexample. There, the use of electric vehicles is not particularly useful because of the high proportion of coal used to generate electricity. The introduction of e-cars must go hand in hand with the expansion of renewable energies. Then the whole thing will also be economically viable and it will be possible to replace CO2 in mobility.
Do you also have specific vehicle types in mind? At this point I would like to make a plea in favor of plug-in hybrids, which in my opinion are described a bit too negatively from an ecological point of view. In our new plug-in models such as the Tiguan or Golf, the batteries used have a CO2 load of around 700 to 800 kilograms. The production of the battery for a purely electric vehicle, on the other hand, binds around 4,000 kilos of carbon dioxide. This is why a plug-in hybrid – if used correctly – is a very good technology in a phase in which the electricity is not yet completely CO2-free.
At the Handelsblatt Auto Summit, Bavaria’s Prime Minister Markus Söder proposed an extension of the e-car premium and demanded lower energy taxes. What do you think of it? This is future-oriented and promotes the fight against climate change, and it supports the restructuring of German industry. That is absolutely the right signal, one can only congratulate it.
Would you like green issues to be promoted more strongly in Brussels too? The greatest lever against climate change is the generation of primary energy. The worst would be to continue generating electricity from lignite for decades. Here in Germany we have around ten tons of CO2 emissions per inhabitant and year. In Sweden, for example, it is around four tons, although it is colder there.
This difference mainly comes from the generation of primary energy, Sweden is almost CO2-free thanks to its hydropower. The electric car can help accelerate this change. The more renewable energy we have in the grid, the more important it is to store electricity. One million electric cars in Germany can store as much energy as all pumped storage plants in Europe put together.
The US has just elected a new president. Is everything going to be better now with a new man in the White House? Basically, the Democrats are more focused on the issue of climate change – and that is more coherent with our corporate strategy. But we have also established a very good working relationship with the Trump administration. We have invested around 800 million euros in the USA over the past two years, for example to build a new factory for electric vehicles. So far, we have been able to prevent the threatened car tariffs.
Tesla comes from the USA, also with a new factory in Germany. You are watching this very closely. What are you looking at at Tesla? For us, Tesla is a competitor who does a lot of things differently and thus comes up with different solutions that are sometimes quite innovative. Tesla comes much more from the software and tech culture of the US West Coast, which explains the differences. And then there is the boss Elon Musk, who is driving the company forward very strongly.
Tesla is an important benchmark for us. It is good that this company exists. I am also excited that Tesla is coming to Germany with a plant. This gives us the chance to participate in this ecosystem and to measure ourselves against what is being created on the outskirts of Berlin.
Elon Musk was back at the Tesla construction site near Berlin just this week. Are you sometimes jealous of the hype he creates with visits like this? It’s always the case that the innovator who walks into an established area can create a special aura. But I have to say: We are also doing well. We are also building software resources. In the past few months we have hired 400 top people, especially many from the US West Coast. So we can’t complain about talent. Tesla is also coming to Germany to skim off the talent pool here. I think this is a healthy competition and we want to face it.
Herbert Diess and the new ID.3
VW got its start in electromobility with the car, and there will be a lot more to come in the next few years.
(Photo: Reuters)
Elon Musk visited you a few weeks ago. What did he say about your new ID.3 electric car? He was already impressed, especially our cost position with which we are bringing the car to market. We at Volkswagen can do something, we can build cars. We can represent functions that Tesla still has to work very hard on. Our operating concept, for example, impressed him.
How long will it take Volkswagen to be as good at software as Tesla, where the cars learn a little more every day? We’re already doing this on a smaller scale today. All Passats and all new Golfs continuously record road data and thus improve our map material. The functions get better with each update. As extensively as Tesla uses software functions, this is a new way of dealing with the car. The car is constantly collecting data in order to continuously change the driving functions.
We at Volkswagen will be entering this update capability phase next year, with the new ID vehicles being the first. Then we have to increase the frequency of such updates, and the Audi and Porsche vehicles will start up later. In 2023 and 2024, we want to use the software in the way Tesla is already doing today.
What did you learn from the software problems with the ID.3? I was not surprised by our software problems. We come from a world in which we used to buy software from suppliers in small computers. We now come to a situation in which we have to program larger computers ourselves. This is an innovation, a big step for the Wolfsburg team. I think my colleagues did very well. And with every new model we get better.
The diesel scandal was five years ago. Did this affair accelerate the switch to electromobility? You can’t say that in retrospect today. Even before diesel was discovered, the concept of creating its own electrical platform existed. The decision to actually do that was made shortly after the discovery. But that had nothing to do with Diesel.
It was foreseeable that something would happen to electromobility by 2020 and 2021. It was clear to us that we had to get involved in this area. In our very important foreign market China, too, it was clear that electromobility would move ahead.
Diesel has probably already accelerated the whole thing a little, because it gave us more dynamism in the company. But it shouldn’t be underestimated: Diesel has also cost us a lot of energy. To sum it up: with or without diesel, we would have come about the same today. Mr. Diess, thank you very much for the interview.
More: VW boss Diess: Corona has “not slowed down but accelerated” corporate restructuring.