Volkswagen Admits It Is Moving Into EVs Too Late, Pushes Back On Emissions Cuts

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Volkswagen chief Herbert Diess has threatened massive job losses across its European factories — up to 100,000 workers — if the EU moves forward with new regulations that would mandate automakers slash emissions 35% in the coming years.

He continued the posturing, noting that, “Such an industry can crash faster than many believe,” in seeming denial of the multitude of factors mandating a shift to lower emission vehicles. The threat of losing market share to Tesla may not be the first thing on his mind, but the giant company is already feeling the impact of the fully electric Model 3, which continues to eat into Volkswagen, Audi, and Porsche shares every day.

Stacking on this market-driven mandate, Volkswagen is faced with doing its part to provide meaningful solutions that address anthropogenic climate change, an area VW has historically fallen short on, to say the least. The global dieselgate scandal revealed that VW execs knowingly pushed out diesel powertrains that skirted emissions regulations, polluting far more than the allowed limits for many years. Some of those execs are now in jail. Others aren’t.

It should come as no surprise, then, that Diess is back at the podium this week to push back on the proposed EU emission regulations, threatening with the only trick left in the book — jobs. Underpinning his comments is the truth that the entire German auto industry, which employs 1 in 7 German workers directly and as many as 1 in 3 German workers indirectly, is at risk of being washed out if it does not build electric vehicles in line with customer demand.

Emissions regulations are the stick in the equation, while the potential to gain (or lose) market share is the carrot. Diess does not seem motivated by either, as if sales of VW’s vehicles are guaranteed in any potential future scenario. The truth of the matter is quite different, as increasingly aware consumers vote with their wallets for vehicles that produce low or no emissions from the tailpipe.

We’ve had our eye on VW for a while now.

Diess followed with a comment that, “the transformation in speed and impact is difficult to manage,” as if the world or its human inhabitants have the option to wait for a time that’s more convenient for VW. Unfortunately, the time for waffling commitments, vaporous concept cars, and dreamy commercials is over. It is time for action and that mandate is increasingly coming from the market and regulators. It may be painful and financially challenging to quickly transition from pollution-mobiles to electric vehicles, but we need it.

The time for excuses is past. Go read version 6 of the IPCC report and let me know tomorrow morning if you still feel like trimming emissions back a tad over the next decade is too hard. Meanwhile, Tesla will be eating your lunch in 1,000,000 car increments with its increasing array of fully electric cars (those are the ones that create no tailpipe emissions) produced from new factories around the world, including one in Germany, where the company will likely employ some highly skilled German auto industry workers.

Despite objections from Volkswagen, the environmental ministers at the EU agreed to lower CO2 emission limits by the full 35% between 2021 and 2030. They aren’t content with even that measure and the European Parliament is looking to raise the bar even further to 40%.

In related news, Volkswagen has partnered with Microsoft to develop the Volkswagen Automotive Cloud to support its growing fleet of connected cars. The number of connected (internal combustion) cars coming out of VW is expected to be around 5,000,000 by 2020, creating a nice business case for building their own connectivity platform. VW has also come up with some nice graphics of cars that are not yet available, that it apparently can’t build in sufficient volumes to meet the needs of the discerning automotive customer around the world.

Hello, car that’s not in production. Hi, fake people!

The time for blue sky graphics and concept cars is in the past. It is now time for action. As they say, lead, follow or get out of the way, and at this rate, VW is tracking to turn over some of its highly trained workers and some unnecessary factories to whichever company steps up to build electric vehicles in Germany in earnest. It would be some sort of cruel irony if the American car company Tesla ended up being the only company with a clear enough vision to invest in the future of the German automotive industry.

Source: Süddeutsche Zeitung

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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