Volkswagen CEO Claims Shift to EVs Won't Impact Margins

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【Summary】What’s the secret? High volume and a single platform that’s used on numerous vehicles are key to keeping costs in check.

Original Vineeth Joel Patel    Nov 27, 2019 4:00 AM PT
Volkswagen CEO Claims Shift to EVs Won't Impact Margins

Point a finger toward dieselgate or a keen sense to see where the automotive industry is going, but Volkswagen has dived headfirst into the electric-vehicle pool. Nearly every automaker is working on coming out with electric cars, but few have the same vision as VW. The German brand has bold plans that few automakers dare to replicate with plans to launch roughly 70 new EVs within the next 10 years. Other dramatic figures that VW's aiming for are to manufacture 22 million EVs during the same period and an investment to the tune of $33 billion into electrifying its vehicles.

Volkswagen Doesn't Expect To Lose Money
With so many moving gears and funds being thrown around, one can't help but wonder how much money Volkswagen will lose from pivoting to electric vehicles. Automakers haven't figured out a way to make profitable electric cars, so pouring billions into manufacturing EVs while cutting back on cars with internal combustion engines doesn't seem like a profitable business plan. But VW believes it's worked out a way to ensure profits remain just as high during the transition toward electric cars.
According to Reuters, citing an interview VW CEO Herbert Diess had with daily la Repubblica's Monday supplement A&F, VW doesn't expect the move to produce more EVs will hurt the brand.
"We do not expect a deterioration in margins. Our advantage is that all our brands have the same platform for electric products and the same batteries that we buy in China," said Diess.

Shared Platform And Batteries Are Key
It may sound like a simple formula – having one platform for numerous cars and sharing batteries across the entire line – but VW is betting quite a lot of money on having a high scale. If demand for the automaker's electric cars isn't there, VW's plans could fall apart. That isn't the only thing Diess is worried about, as the outlet reports that the CEO also had concerns over the trade war between the United States and China. The trade war between the two countries has resulted in VW's sales in China falling.
Volkswagen is expecting to see strong demand for its electric vehicles increase in the near future, despite not having 70 options on the market. The all-new Audi e-tron is expected to rack in 20,000 units of sales this year. The all-electric Porsche Taycan is doing extremely well already, too, as that car's first year of production is already accounted for. Then, there are options like the Volkswagen ID 3, which has enough interest for the automaker to cover production until mid-2020.
Some consumers may take an issue with Volkswagen, Audi, and Porsche sharing a lot of major components, especially as two are marketed as luxury brands. But if it helps keep costs down and Volkswagen manages to find a way to differentiate offerings from three it shouldn't be a massive problem.

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