Volkswagen is shifting its strategy, allocating a substantial portion of its budget initially dedicated to electric vehicles (EVs) to maintain the competitiveness of its gas and diesel engines. Out of the $193.5 billion previously set aside for electrification, one-third will now be used to enhance combustion engines.
Once eager to surpass Tesla in the electric vehicle market, Volkswagen is now reconsidering its EV ambitions. According to Automotive News Europe, Volkswagen Group CFO and COO Arno Antlitz confirmed at a recent Reuters event in Munich that the company will continue to invest significantly in internal combustion engine (ICE) technology. While the initial plan was to invest €180 billion ($193.5 billion) in electrification and digitalization, the revised strategy allocates two-thirds for these efforts, with the remaining one-third dedicated to ICE development.
Volkswagen is not alone in rethinking its electrification strategy. Mercedes-Benz has also decided to slow its transition to an all-electric lineup by 2030, choosing instead to offer a mix of hybrids and plug-in hybrid electric vehicles (PHEVs). Similarly, General Motors has adjusted its ambitious EV goals, planning to release its first PHEVs by 2027. Land Rover and Kia have made similar changes to their EV roadmaps, emphasizing a balanced approach between combustion engines and electric powertrains.
Volkswagen is also focusing on increasing its PHEV sales. The company had explored a partnership with Renault to co-develop a small EV, but the collaboration ended earlier this year. Despite this setback, Volkswagen remains committed to launching a small, affordable electric car priced at around $22,000. Additionally, the automaker is preparing to introduce plug-in hybrids in the US, following the delay of the ID.7 in America.
The adjustment in strategy raises questions about Volkswagen’s plans for its battery factories. The first factory is expected to be operational by 2025, but full capacity might take longer to achieve due to the slower-than-anticipated EV sales. Despite these changes, Volkswagen continues to offer the ID.4 in the US and plans to introduce the ID. Buzz later this year.
In conclusion, while Volkswagen remains committed to electric vehicles, it is also ensuring that its combustion engines remain competitive. This balanced approach mirrors a broader industry trend, with several major automakers adjusting their electrification strategies to align with market demands and technological developments.
Sources: CarBuzz via Automotive News Europe
