Volkswagen AG on Wednesday apologized for its announcement that it was renaming its U.S. operations “Voltswagen” — a marketing stunt that fooled some investors, analysts and journalists and sent shares up almost 9% on Tuesday.
The German automaker’s stock closed down Wednesday, declining more than 3.6%. VW’s securities had been the hottest auto stock this month after its March 15 Tesla Inc.-like “Power Day,” during which it emphasized its commitment to an electric future with investments in its battery production, gigafactories and a charging network in Europe.
“Volkswagen of America developed and implemented a marketing campaign to draw attention to Volkswagen’s e-mobility rollout and the market launch of the all-electric ID.4 SUV,” VW spokesman Brendan Bradley said in a statement. “Our intent was to bring light to this collective mindset in a fun and interesting way as an April Fools’ Day effort.”
The company noted it has employed similar marketing tactics in the past: In 2003, Wolfsburg, Germany, was temporarily renamed as “Golfsburg” to draw attention to the Golf compact car’s launch.
“The many positive responses on social media showed that the campaign resonated with consumers,” Bradley added. “At the same time, we realize the announcement roll-out upset some people and we are sorry about any confusion this has caused. We will continue on our mission towards an EV future, as Volkswagen.”
The ruse included a now-deleted news release and updates to its social media presence. It had drummed up inquiries, dealers told The Detroit News, but it also drew comparisons to Tesla CEO Elon Musk — not just for his EV strategy, but his troubles in the past for posting false statements on Twitter.
A tweet in 2018 that suggested Musk could take Tesla private at $420 per share resulted in a fraud settlement with the Securities and Exchange Commission that removed Musk as Tesla chairman and forced the Silicon Valley automaker to pay up $40 million. The National Labor Relations Board last week ordered Musk to delete an anti-union post.
“This is definitely in that general category, and it is a slippery slope,” said Daniel Ives, an analyst for investment firm Wedbush Securities Inc. who issued a note Tuesday saying the name change underscored VW’s EV commitment. “It creates buzz, but when it comes to a public company like this, it is a balancing act between buzz and also frustrating investors that actually believe it.”
Some businesses in the past have been known to share fake news around April Fools’ Day, including billionaire Dan Gilbert’s family of companies. In 2019, for example, it promoted its proprietary artificial intelligence engine as being able to approve potential mates as well as mortgages in as little as 8 minutes. That, however, was before the company went public in August.
VW also received criticism over the move because of its past cheating on diesel emissions Environmental Protection Agency tests. U.S. authorities discovered that its “clean diesel” vehicles cheated on emissions tests by switching pollution controls during Environmental Protection Agency treadmill tests.
The devices, however, were turned off while on real roads. The automaker pleaded guilty in 2017 and agreed to pay $4.3 billion in U.S. civil and criminal penalties and billions more to buy back vehicles. Two people were sent to prison.
“They are trying to reinvent themselves around electric vehicles,” Ives said of Volkswagen. “It was a genius marketing stunt, but it’ll cast a bit of skepticism around some of their future efforts from a marketing perspective.”
bnoble@detroitnews.com
Twitter: @BreanaCNoble