VW Plots Beetle for the Electric-Car Era to Overcome Scandal

  • ‘The future is electric,’ CEO Mueller says at Paris Motor Show
  • I.D. concept car boasts range that beats the Tesla Model 3

VW's Mueller: We're Looking Ahead Confidently

Volkswagen AG is laying out a bold plan to bring electric vehicles to the masses with dozens of new models and unprecedented driving ranges, challenging other carmakers to keep pace a year after the emissions scandal rocked the German automaker.

The process will get a boost at the Paris car show on Thursday, when the company will unveil the I.D. concept car, a battery-powered hatchback that boasts a range almost twice as far as Tesla Motors Inc.’s Model 3 sedan. Rather than an offshoot of an existing model in VW’s portfolio, the prototype is the company’s first electric vehicle built around a unique platform, a major commitment in financial and engineering resources.

“The future is electric,” Chief Executive Officer Matthias Mueller said at an event in Paris. “We are creating a new Volkswagen that is tackling the fields of future importance with determination.”

The stakes are high for the company, with the scandal bleeding billions in fines and tarnishing the company’s image. To emphasize the importance of the new direction, VW is likening the hatchback to groundbreaking models such as the iconic Beetle, which put it on the map around the world, and the Golf compact that propelled the manufacturer to the top of the European auto industry in the 1980s.

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The September 2015 revelation of diesel-emissions manipulation forced VW to change course. The emphasis is now on new technologies such as battery power and autonomous driving rather than the diesel engines that it pushed in the U.S., where the cheating was uncovered. With that technology besmirched, diesel cars accounted for 46.8 percent of German auto sales in the first eight months of 2016, the lowest level since 2012.

Instead, Volkswagen now plans to bring out 30 battery-powered cars by 2025, with the Audi luxury division targeting three by 2020. The strategy, the most aggressive in the industry, includes a target of selling as many as 3 million electric autos a year. That would be about 25 percent of its global sales, whereas IHS Markit estimates battery-powered vehicles will account for just 3 percent of worldwide demand by then.

“Volkswagen needs to finally get away from the diesel scandal that’s been dominating what we hear about them,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “The Paris show presentation of an actual product for its electric-car strategy will be key.”

The push at Volkswagen, which includes developing rapid-charging technology, is part of the industry’s response to ever-tightening pollution standards. The European Union is seeking efficiency improvements in the next five years that would effectively be double the gains made since 2010. With the future of diesel technology compromised due to the Volkswagen scandal, manufacturers are now seeking to lure consumers to electric cars, which until now have failed to win wide popularity.

Originally Electric

Among battery-powered models currently available from top carmakers, BMW AG’s i3, Renault SA’s Zoe and Nissan Motor Co.’s top-selling Leaf were designed from the outset as all-electric vehicles. Otherwise, manufacturers have depended on established models as the basis of electric versions, such as the van-like Mercedes B-Class and VW’s Golf and Up! city car, to hold back costs amid uncertain demand.

To make electric cars more appealing, automakers will also use the Paris show to promote longer-range models. French manufacturer Renault will showcase an upgraded version of the Zoe that can drive farther on a single charge. The VW car on display will have a top range of 600 kilometers (370 miles) on a fully charged battery, compared with the planned 345 km of U.S. competitor Tesla Motors Inc.’s Model 3 sedan.

The German manufacturer will have to balance investments in the electric line-up with the growing cost of the emissions cheating. So far, Volkswagen has set aside 17.8 billion euros ($20 billion) for resolving the scandal, and Chief Financial Officer Frank Witter said in an interview this month that strict financial discipline will be needed as more spending may come. Investors are suing for billions of euros in Germany, and U.S. authorities are considering the size of a potential criminal fine.

“We made a huge mistake and we’re going to pay for it,” CEO Mueller said in a Bloomberg TV interview with Caroline Hyde, adding that he hopes to have a settlement with the U.S. Justice Department by the end of the year. “It’s not up to me to give the DoJ any deadlines. But of course we do need a sound and stable planning basis so that we can look ahead.”

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