Trefis.com: Volkswagen crossed record sales of 10 million units in 2014, narrowing its gap with the global sales leader Toyota, and extending its lead over the third-placed General Motors, in terms of volumes.
The German automaker makes large investments in new technologies, construction of manufacturing facilities, and assembly lines, in order to increase supply closer to the end customer and ensure strong volume growth. Volkswagen incurred $11.13 billion in research and development costs through the first three quarters, 14% more than its 2013 levels.
The group has accelerated investment in cleaner and low emission technologies, in a bid to launch more environmentally viable cars in the future. In China, Volkswagen’s single largest market, the company is looking to launch over twenty electric and plug-in hybrid electric vehicles over the next few years, ranging from small-sized cars to large SUVs. The luxury vehicle division, Audi, which forms a fifth of the automaker’s valuation by our estimates, plans to step-up investment by 2 billion euros ($2.44 billion) to a record 24 billion euros over the next five years, of which approximately 70% will be in new cleaner technologies such as plug-in hybrid vehicles.
Volkswagen, which boasts a diverse portfolio of brands, including passenger vehicle divisions Skoda, Audi, Porsche, Bentley, Bugatti, Lamborghini, commercial vehicle brands Scania and MAN, and its own branded cars and trucks, has lost out to the likes of GM, Ford, Nissan, BMW, and Tesla in the fast growing electric vehicle (EV) segment.
By accelerating investments, the German car company hopes to gain momentum in the plug-in electric vehicle (PEV) space, which is estimated to grow at a CAGR of almost 25% through 2023, outpacing the expected 2.6% annual growth for the overall light-duty vehicle market. Apart from China, which is the most important market for Volkswagen volume-wise, the automaker’s push for PEV growth is evident in the U.S., the world’s largest PEV market, and which grew by 22.8% last year to almost 120,000 units.
Volkswagen Teams Up With BMW
Demand for electrically powered vehicles is rapidly rising around the world mainly due to a relatively less harmful impact on the environment, rising concerns over global warming, and lower running costs, as compared to gasoline-powered engines.
Volkswagen Teams Up With BMW
Demand for electrically powered vehicles is rapidly rising around the world mainly due to a relatively less harmful impact on the environment, rising concerns over global warming, and lower running costs, as compared to gasoline-powered engines.
In addition, governments around the world provide various incentives to boost electric vehicle sales. Moreover, electric vehicles also have lower battery prices, adding to their appeal. However, the absence of a well established battery-charging infrastructure and weak efforts to expedite building of charging networks has hurt EV sales, dissuading customers from buying such vehicles, especially the ones with a low electric range. The Volkswagen e-Golf, an all-electric car launched in the U.S. at the tail-end of October, has only around 70-90 miles of electric range. In contrast, the Tesla Model S can go 265-300 miles on a single charge.
In a bid to compete better with the likes of Tesla, Volkswagen is now teaming up with BMW to build 100 direct current (DC) fast charging ports across the U.S. this year. The two companies are working with ChargePoint, a startup that already operates a network of card-operated chargers.
In a bid to compete better with the likes of Tesla, Volkswagen is now teaming up with BMW to build 100 direct current (DC) fast charging ports across the U.S. this year. The two companies are working with ChargePoint, a startup that already operates a network of card-operated chargers.
The new charging stations will add to ChargePoint’s present network of 20,000 stations in North America. Tesla is also in the middle of expanding its Supercharger network across the continent, but the stations only support a Tesla model. On the other hand, the new charging stations being built by the German automakers will support any vehicles with DC fast charging capabilities and those that use the SAE Combo connector, which is used in both Volkswagen and BMW EVs, among others. The new Volkswagen-BMW collaboration will augment battery-charging facilities in the U.S., and as the new stations won’t be placed more than 50 miles apart, concerns regarding low electric ranges of EVs will also be addressed.
Volkswagen isn’t a big player in the PEV space in the U.S. as of now, but the company could extend its partnership with BMW, and maybe other electric vehicle manufacturers, to add more charging stations in the country in the future. EV sales as a whole could rise at a fast pace if big-time automakers decide to collaborate and build infrastructure that supports these vehicles, as opposed to each individual company building its own exclusive charging stations.
New Technology Could Shake-Up The EV Market
Apart from building more charging stations in the U.S., Volkswagen is also investing in a completely new technology that could potentially shake-up the PEV market. Last month, Volkswagen Group of America bought a 5% stake in QuantumScape Corporation, a battery start-up, aiming to develop a new energy-storage technology that could more than triple the range of an electric car. QuantumScape is working on solid-state batteries as a substitute for the lithium-ion technology, which is used in many electric vehicles today. By doing so, the company believes the range of an electric car could be extended to nearly 430 miles (more than the electric range for Tesla). Another advantage of the solid-state batteries is that these are burn resistant, boosting the safety aspects of electric vehicles using such battery packs.
The new battery technology is only in the initial testing stage as of now, and the tests to show if the system is viable for cars are expected to be completed not before the end of 2015.
Volkswagen isn’t a big player in the PEV space in the U.S. as of now, but the company could extend its partnership with BMW, and maybe other electric vehicle manufacturers, to add more charging stations in the country in the future. EV sales as a whole could rise at a fast pace if big-time automakers decide to collaborate and build infrastructure that supports these vehicles, as opposed to each individual company building its own exclusive charging stations.
New Technology Could Shake-Up The EV Market
Apart from building more charging stations in the U.S., Volkswagen is also investing in a completely new technology that could potentially shake-up the PEV market. Last month, Volkswagen Group of America bought a 5% stake in QuantumScape Corporation, a battery start-up, aiming to develop a new energy-storage technology that could more than triple the range of an electric car. QuantumScape is working on solid-state batteries as a substitute for the lithium-ion technology, which is used in many electric vehicles today. By doing so, the company believes the range of an electric car could be extended to nearly 430 miles (more than the electric range for Tesla). Another advantage of the solid-state batteries is that these are burn resistant, boosting the safety aspects of electric vehicles using such battery packs.
The new battery technology is only in the initial testing stage as of now, and the tests to show if the system is viable for cars are expected to be completed not before the end of 2015.
But Volkswagen’s aim is clear — to solve the low-electric-range problem by building a closely-packed network of battery-charging stations and/or developing new technology to improve ranges on its vehicles, thereby boosting the company’s prospects in the electric vehicle market.
