2015 was a challenging year for Volkswagen, to put it mildly. The company was found to have been intentionally bypassing emissions controls on most of its diesel vehicles, violating the trust of customers, shareholders, and employees around the world. Given this challenge, all Volkswagen press conferences now seem to start with several minutes of apologies and status updates on the emissions fixes being worked on around the world.
Make no mistake that out of the settling diesel particulate matter of 2015, Volkswagen is intent on evolving into a leaner, more focused automotive company. CEO Matthias Müller doesn’t mince words and cuts straight to the heart of the catalyst behind the current transformation:
“We are using the current crisis to fundamentally realign the Group. I strongly feel we now have the chance to build a new and better Volkswagen.”
Behind the scenes, Volkswagen continues to aggressively push forward with leadership changes and, most recently, a reorganization of the structure of the company. Several recent press releases detail these changes, sharing that Volkswagen plans to:
- Cut R&D by $1.1 billion dollars vs previous targets
- Increase speed of planned cost-cutting measures
- New senior management appointed to 4 primary production categories: Small, Compact, Mid- and Full-Size, and Battery-Powered Cars
Tightening the belt, as can be seen in the first two items, are obvious first steps as the giant attempts to regain footing coming out of the dieselgate scandal of 2015. They have massive fines, repairs, and gift cards to pay for and need to find that cash somewhere, as it is not likely to be made up for in sales anytime soon.
The creation of what are essentially four smaller car companies inside of the Volkswagen brands, however, allow each the independence to create unique designs, manage R&D budgets, demonstrate financial results, and — more importantly — move faster to change. This is the turning of the rudder… the path forward for the behemoth that is Volkswagen. Dr Herbert Diess, Chairman of the Board of Volkswagen, puts it this way:
“This allows us to provide clear structures and responsibilities, which carve out more time for the workforce to focus on their core tasks. Personal responsibility, initiative and team-spirit will be strengthened as a result.”
The creating of a new unit dedicated to “battery-powered vehicles” is a milestone as well — indicating that the auto giant has confidence that battery-powered vehicles are not just a passing fad, a compliance requirement, or a one-off R&D technology — but that the future of Volkswagen is electric.
Jumping across the pond to Europe, Volkswagen is as bullish as ever. CEO Matthias Müller speaks to the dominance Tesla is enjoying in luxury automotive sales, and specifically about EVs:
“We must not leave this playing field to Silicon Valley.”
Many automotive giants have been quick to start up offices in “the valley,” not wanting to be left out of the massive surge in automotive startups and technologies bubbling up there. Volkswagen has been paying attention and, indeed, is actually one of the veterans of the valley, having started up the Electronics Research Laboratory in 1998 as a source for new innovation and technology stemming from the tech boom of the nineties. Even with the early lead, it seems that Volkswagen is not content to let the future of the automotive industry be determined by Silicon Valley companies, but rather, is using the current success of big players in the valley in an attempt to catalyze change back in Europe.
Müller fleshes out his request by calling on European authorities for closer collaboration. This is a curious play for a conglomerate that was just run through the global wringer for massive emissions violations for which it is still being penalized. Anyhow… he calls for a unified effort to beef up EV charging infrastructure across the continent. This is not just a request for more Level 2 stations, but a call to arms to up the ante and install an “extensive network of 150kW rapid charging stations,” stating that customer trust in e-mobility will only grow “if there is a visible, functioning infrastructure.”
If this — a call to arms of governing bodies and public officials — is Volkswagen Group’s plan to initiate the installation of a Level 4 charging network, well… I’ll pass on the stock, thank you very much. No mention is made of the fact that the Tesla Supercharging network (that works amazingly well!) has been offered up to other manufacturers that just have to opt in… or about the gaping hole that is the lack of a single Level 4 charging standard, but who am I to judge?…
Finally, and this is more of a summary of existing data points than breaking news, but the press release (#3) closed with a note that “the company’s brands will introduce about 20 additional models with electrical or plug-in hybrid drive trains by 2020.” While this is an exciting number, it is important to note that it is across all of the brands in the company, not just Volkswagen. The full Strategy 2025 plan for the Group will be fleshed out this summer with more specifics behind the high-level numbers.
Overall, these latest announcements from the giant paint a hopeful future for the company without spending too much time talking about the mountain of challenges yet to be conquered just to get out of the dieselgate woods…