Is Volkswagen all in on electric cars? The company has been saying it is for almost 2 years now as it tries to climb out of the hole it dug for itself with its diesel cheating scheme. The secret of manufacturing automobiles in large quantities and doing it profitably is utilizing a common platform or chassis that can be the basis for several models and hopefully millions of vehicles.
The platform is like the skeleton of the car. What we see on the outside is just cosmetics. The platform defines such minutia as where the vents for the climate control system go so that when the cars travel along the assembly line, workers and robots can build several models with common components that go together quickly with maximum efficiency.
The major costs associated with designing new models goes into creating the platform. After that, the more vehicles that get built on that platform, the lower the unit costs are thanks to economies of scale. Look at it this way: If a company spent $100 million designing a new platform and used it to build 100 cars, its unit cost for the chassis is $1 million per car. But if it can build 10 million cars using that platform, its unit cost per vehicle is a paltry $10 per car. That’s how you make money in the car business.
Until recently, Volkswagen was saying it expects to sell 15 million cars based on its new MEB platform, which is dedicated to making electric cars exclusively. Relative to others in the industry, that was a high number and Volkswagen had high targets for EV share as well.
On March 12, Volkswagen said in a press release that it is raising the number of models that will use the MEB platform from 50 to 70 and its production goal for that chassis from 15 million to 22 million cars by 2028. Keep in mind that the MEB chassis will be available to all members of the Volkswagen Group, which includes Porsche, Audi, Skoda, SEAT, Bentley, Bugatti, and Lamborghini.
Volkswagen CEO Herbert Diess says, “Volkswagen is taking on responsibility with regard to the key trends of the future — particularly in connection with climate protection. The targets of the Paris Agreement are our yardstick. We will be systematically aligning production and other stages in the value chain to CO2 neutrality in the coming years.
“That is how we will be making our contribution towards limiting global warming. Volkswagen is seeking to provide individual mobility for millions of people for years to come — individual mobility that is safer, cleaner and fully connected. In order to shoulder the investments needed for the electric offensive we must make further improvements in efficiency and performance in all areas.”
The company says it is “on the road to complete decarbonization by 2050.” That will be a three step process starting with reducing the carbon emissions from its global operations. Using renewable energy whenever possible will be part of the plan as well as taking measures to compensate for the emissions it cannot eliminate using renewable energy credits and other carbon offset techniques. It is also asking its suppliers — particularly aluminum and steel companies — to do their part in decarbonizing their own operations.
The press release continues, “In order to support the electric offensive, LG Chem, SKI, CATL and Samsung were selected as strategic battery cell suppliers. In view of the constantly increasing demand, Volkswagen is also taking a close look at possible participation in battery cell manufacturing facilities in Europe. Looking further ahead, solid-state batteries also have great potential. The goal is to enable an industrial level of production with this technology together with our partner QuantumScape.” Volkswagen has also said it will share the MEB platform with other manufacturers, starting with e.GO, an electric car startup headquartered in Aachen, Germany.
Could this be the same company that subjected monkeys to hours of breathing exhaust fumes from a diesel powered Ford F-250 in a desperate attempt to prove that diesel emissions were safe for humans? It seems hard to believe the villain of just a few years ago now wants to be a knight in shining armor. “We’ll see,” said the Zen master.
Editor’s note: Aside from yesterday’s announcement, Volkswagen published a press release this morning that indicates the company’s electric vehicle investment plans from 2019 to 2023 have risen to €19 billion, €8 billion more than previous plans. As they say, money talks. If these investments are implemented — and if they keep rising year after year — Volkswagen should be a formidable electric vehicle manufacturer by the middle of the 2020s, if not sooner. —Zach