Diesel is dying. Not a slow death, but an immediate one.
Diesel was already on the ropes with the advent of powerful electric vehicles, but now with the Volkswagen scandal it all but seals its fate.
It’s not diesel’s fault; it’s a cleaner-burning fuel than people realize, capable of powering incredibly large, powerful vehicles. There was only one major downside: pollution. While diesel burns cleaner, it still produces carcinogens, soot and nitrous oxide, which can be just as harmful to the environment as traditional gasoline. Now it seems even “clean diesel” wasn’t so clean. It was only a matter of time before it was ushered out of the commercial vehicle space. Now it will be forced out rather unceremoniously, leaving electric to take its place.
Volkswagen has become the perfect test case for the future of the auto industry. As the leader in diesel-fueled vehicles and the second-largest automotive manufacturer in the world, VW had to pivot to a new vertical eventually. They were already in the early stages of joining the electric vehicle arms race, having announced three new EV concepts just a few weeks before the scandal broke. Now the world is different, as the ire of the nation comes down on them they need a new flagship to drive them into the future, and that’s electric.
When Tesla broke Consumer Reports’ ratings system, every major manufacturer was put on notice. When ‘dieselgate’ broke, it shook the foundation. The traditional fuels of the past are no longer a preferred solution. Electric vehicles cannot be ignored: they are the future. Over the next 3 years the once lopsided EV market is going to explode with options. Nearly every major manufacturer will debut a brand new electric vehicle line. With this new focus on EVs the companies who get an early start will be in the drivers seat.
By having to pivot now, Volkswagen is well-placed to win the future. Had the scandal not happened, VW would have slowly repositioned over time assuring their current offerings got the maximum lifespan. Now they must change direction quickly and the best market to focus on is electric. Currently, there is only one name in the mid- to high-end electric market, Tesla, and there is plenty of room for more. If VW can release a quality electric vehicle line soon, they can certainly begin to fill out that space before others have a chance. By pouring their substantial, diesel focused, resources into EVs they can move to market much quicker then before. It may not see like it but Volkswagen isn’t totally lost. A few well-timed decisions could right the ship rather quickly.
Fossil fuels are far from done but the writing’s on the wall, electric is here to stay and Volkswagen is hurting, but it may end up being a blessing in disguise.
Reprinted with permission.
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