Volkswagen Vows to Overtake Tesla With World's Largest Electric Car Fleet
March 13 2018 - 12:05PM
Dow Jones News
By William Boston and Max Bernhard
BERLIN-- Volkswagen AG has pulled into Tesla Inc.'s rearview and
vowed to overtake the electric car pioneer with a massive rollout
of battery and hybrid models over the next five years and
production facilities around the world.
The German car maker, which is the largest world-wide with sales
of 10.7 million vehicles last year, said Tuesday that it would
build at least 16 new electric vehicle plants by 2025, nine of
which will be in operation by 2020, in Europe, China and the
U.S.
One of the plants will be set up at Volkswagen's factory in
Chattanooga, Tenn., five are planned for China and the remainder
will be added to the three sites it already operates in Europe.
Volkswagen aims to sell three million electric vehicles a year
by 2025.
By comparison, Tesla sold 102,807 cars last year, mainly its
high-end Model S sedan and Model X sport-utility vehicle.
Production of the Model 3, the company's first large-volume family
sedan, began last year, but Tesla has struggled to meet production
goals. It has taken about 500,000 orders for the Model 3 but is
well below its target of building 250,000 cars a year.
On Tuesday, Volkswagen Chief Executive Matthias Müller said that
his company, which owns a dozen brands including VW, Audi, Porsche,
Skoda, Bentley and Lamborghini, would launch a new electric vehicle
"virtually every month" from 2019.
"This is how we intend to offer the largest fleet of electric
vehicles in the world, across all brands and regions, in just a few
years," he said at Volkswagen's annual media conference, according
to a press release.
Global demand for electric cars is still only a tiny fraction of
new car sales and it is far from certain that the huge investments
Volkswagen and other car manufacturers are making is going to pay
off.
"The absolute numbers are still small," Mr. Müller told
reporters Tuesday. "But that will change at the latest when the
first models of the next e-generation come to market."
The shift to electric comes after Volkswagen pleaded guilty in
2016 to rigging millions of diesel-powered cars to cheat emissions
tests and was forced to pay around $25 billion in fines, penalties
and compensation.
Now, Volkswagen is back to churning out profits. Its net income
more than doubled last year to EUR11.4 billion ($14.1 billion) and
revenue rose 6% to EUR230.7 billion. Looking ahead to 2018,
Volkswagen said it expected revenue to rise by as much as 5% and
saw an operating return on sales of between 6.5% and 7.5%, compared
with 7.4% last year.
The company has already invested nearly half the EUR50 billion
it has earmarked for batteries as it ramps up electric vehicle
production to three million cars a year by 2025.
It has secured battery supply from China's Contemporary Amperex
Technology Co. Ltd. and South Korea's Samsung SDI Co. and LG Chem
Ltd.
Traditional auto makers' aggressive push into electric cars is
putting pressure on Tesla. While the technology leader is having
trouble ramping up production of its Model 3 , Volkswagen already
has a global network of more than 100 factories and years of
experience.
The new electric car plants are expected to be built inside
existing factories and will use standard underlying technology to
create greater scale and cut costs. It is the same strategy
Volkswagen used to create savings in production of its conventional
cars.
It began rolling out a standardized technology for its midsize
family cars in 2012 that is now used to produce 40% of the
company's vehicles. The technology is shared by the VW brand,
Skoda, Seat and some Audi models.
Using this strategy, Volkswagen's brands are planning to launch
50 new electric models and 30 new hybrids by 2025 and to create
electric versions of its entire range of more than 300 models by
2030.
Write to William Boston at william.boston@wsj.com and Max
Bernhard at Max.Bernhard@dowjones.com
(END) Dow Jones Newswires
March 13, 2018 11:50 ET (15:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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