Volkswagen launches mammoth bet on electric at IAA car show
September 10 2019 09:49 AM
Presentation of Volkswagen's electric ID.3 pre-production prototype car on the eve of the Internatio
Presentation of Volkswagen's electric ID.3 pre-production prototype car on the eve of the International Frankfurt Motor Show IAA in Frankfurt

AFP/Frankfurt am Main

With a new car and range sporting a spruced-up logo, German car giant Volkswagen enters the Frankfurt IAA car show hoping bets worth tens of billions of euros will pay off.

The new model, known as ID.3, is the highest-profile response from Germany to strict new European carbon emission limits and to battery-powered competition from the US and China.

The ID.3 was unveiled to the media on Monday, with VW chief executive Herbert Diess saying ‘the car for the new era is here’.

With ID.3 and its attendant range, ‘they can catch up the shortfall in electric mobility,’ said industry expert Stefan Bratzel of the Center of Automotive Management.

‘It has to be a success.’

Ralf Brandstaetter, head of the Volkswagen brand, says the sprawling group is investing hugely into polishing its image to be ‘younger, more dynamic and more modern’.

First across Europe, then around the world, tens of thousands of logos at VW dealerships will be switched for the first time since 2012 -- in time for the next top model's arrival.

‘We want to earn back the recognition of society,’ Brandstaetter added as the group works to put its scandal-ridden past behind it.

Four years ago, public respectability appeared out of reach for VW, as it admitted to installing software to cheat regulatory emissions tests in 11 million vehicles worldwide.

It was the biggest industrial debacle in post-war German history.

- 'Key product' -

But while ‘dieselgate’ has so far cost VW more than 30 billion euros ($33 billion), it has also become a ‘catalyst for electric mobility’ at the firm, Bratzel said.

The first model in a broader ‘ID’ range, priced below 30,000 euros, is a ‘key product’ for a ‘key moment’ in VW's development, he added.

A slew of future cars will be based on the battery-powered platform known as ‘MEB’ that underpins the ID.3.

VW is introducing the technology just as tougher new European emissions regulations enter into force.

From 2020, manufacturers' fleets must produce on average less than 95 grammes of carbon dioxide (CO2) per kilometre.

Breaching the limit means fines of 95 euros per excess gramme, multiplied by the number of cars sold in the European Union.

VW hopes to sell one million so-called ‘zero emission’ vehicles per year by 2025.

More than 30,000 people have already pre-ordered a one-off special edition of the ID.3, which costs more than the base model.

But the broader German market is less encouraging.

Battery-powered vehicles make up just two percent of sales, while only 16 percent of Germans planning a car purchase would choose an electric car, according to a poll for energy firm EON.

‘They have to find a way of selling them, otherwise they're not going to survive,’ said Ferdinand Dudenhoeffer of the Center Automotive Research (CAR).

- SUVs cover costs -

For now, electric cars are more expensive to build, as numbers aren't yet large enough to achieve economies of scale.

‘In the medium term, there isn't any money to be made in electric cars,’ Dudenhoeffer judged.

‘By 2023-24, battery production capacity will be available in Europe and prices will fall,’ he predicted.

VW aims to scale up as quickly as possible by agreeing to license its MEB technology to Ford, one element of a partnership that also includes a focus on autonomous driving.

Meanwhile many manufacturers are going through belt-tightening programmes including job cuts to lift profitability.

And car sales are running out of steam, especially in the vital Chinese market.

Those factors combined rule out stopping production and sales of large, popular SUV models -- highly profitable but also high on the hit list of environmentalists and city planners looking to slash space accorded to cars.

VW has launched an ‘SUV offensive’ that will bring its offer in the class to 30 models by 2025, from 11 at present -- some of them battery-powered.

‘The money we'll earn from SUVs will allow us to face up to the future,’ VW's Brandstaetter forecast.

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