In its continued effort to transition into an all-electric car brand, Volkswagen is aiming to entirely stop the manufacturing of combustion vehicles in Europe by 2033. The brand chief, Thomas Schaefer, announced on Wednesday that VW will be launching 10 new EV models by 2026. This announcement is in line with the brand’s previous commitment of going all-electric sometime between 2033-2035.
Volkswagen is committed to bringing the EV revolution to the masses, which is why the company will launch an entry-level electric car with a tentative price of €25000.
“Do Less But Better”
Schaefer said that the brand would reduce the number of its offerings and focus on improving the production and quality of its core models. It aims to improve the profit margin for its models like Volkswagen, Skoda, and SEAT. The idea is to decrease wasteful production and focus on improving quality. Schaefer plans to use each factory to manufacture multiple models to cut costs and increase efficiency. He mentioned the “platform thinking” paradigm to build various VW models on top of a common design.
Standardizing EV Parts to Cut Costs
One of the key hurdles in the mass adoption of electric vehicles is their price tag. Volkswagen aims to bring the price of EVs down by standardizing the components of its vehicles. The entry-level electric vehicle that Schaefer talked about will sport a battery pack having a standardized chemistry and format. The standardization, Schaefer claims, will enable the company to keep the price of its electric vehicles low.
Volkswagen has always tried to compete with Tesla in the EV sphere. Unfortunately, its ID series of cars faced delays, functional issues and software glitches which dented its EV plans. If its low cost EV model gains popularity, it will open a niche for VW since Tesla exclusively targets the premium segment. It already promotes the ID 4 model with the tagline- “A car for the millions, not the millionaires.”
State of EV Adoption in Europe
The EU is going to be an extremely important market for EV makers in the coming years. In fact, the estimated sales projection indicates that Europe will pip North America in EV uptake. Statista estimates that a whopping 4.4 million EVs will be sold in Europe in 2026, while in the US, that figure will hover around 1.9 million. The recent development resulting from the Russia-Ukraine war is further going to boost the adoption of electric vehicles.
However, despite a 70% increase in the sale of electric vehicles in 2021, the European EV sphere has some challenges in front of it. The biggest challenge is the lack of a charging ecosystem. A 2021 report by Volvo reveals that, on average, there are just five fast charging stations per 100 km which can be a problem for EV makers that are trying hard to match the mileage of EVs with traditional vehicles.
The Challenge before Volkswagen
The dream of Volkswagen to be the EV company for the masses might be in jeopardy thanks to the Russia-Ukraine war. Russia supplies metals (like nickel) which are needed to make batteries for EVs. Due to the sanctions and low supply, the prices of these metals have increased by 50 per cent, as reported by Barron’s. Unless Europe finds other sources of raw materials for batteries, solar panels and smart grids, Volkswagen’s strategy of keeping the prices low will remain in danger.