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Published on December 30th, 2019 | by Zachary Shahan

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Volkswagen Group Aiming To Produce 3 Million Electric Vehicles In 2025 — How Might It Get There?

December 30th, 2019 by  


Volkswagen Group has been spending a lot of time these days focused on its electrification plans — or e-mobility, as they call it in Europe. Some take this as simply PR, but I think the sales targets are real and we know the company has launched an initial electric car factory and is investing tens of billions of euros into batteries and EV development. There’s plenty of evidence Volkswagen Group envisions a fully electric future, and probably even expects that will arrive before its stated targets.

To start off, a comment yesterday from a CleanTechnica reader reminded us that Volkswagen communicated more than a year ago that it was winding down its combustion engine business (approximately 100% of its business today). To throw the critics a bone, though, it’s worth noting that the first deliveries of Volkswagen’s last generation of gas/diesel vehicles won’t begin until 2026.

When you combine that with the company’s plan to sell 3 million electric vehicles in 2025, approximately one quarter of its projected sales, you get a couple of basic options regarding the company’s assumptions. It either assumes that electric vehicles will be so competitive in the eyes of the masses that 1 out of every 4 Volkswagen buyers will want an electric vehicle (EV) but not competitive enough in the other 75% of buyers’ eyes, or it assumes that supply will be so limited that the company won’t be able to produce more than a few million units, wait times will be long, and most buyers will decide to hold out a bit longer to go electric. The former idea seems a bit hard to believe (especially when, in my opinion, today’s top electric vehicles are objectively much better than their gas/diesel competitors), but the latter idea seems even more unlikely.

In short, I think Volkswagen’s expectation that only 25% of car buyers will want an EV in 2025 is too pessimistic, but it’s still the most ambitious forecast or plan from a conventional automaker. There are some big questions about resource availability as well (listen to the podcast below), but the article will assume Volkswagen’s expectations are right on point and that it will indeed produce 3 million EVs in 2025. Let’s explore how Volkswagen Group (home to Volkswagen, Audi, SEAT, ŠKODA, and a few other brands) could come to that number, using ample insight from a new presentation from Chairman of the Board and Volkswagen CEO Herbert Diess.

In the presentation linked above, Diess highlights an investment of ~€33 billion (timeframe is not indicated) and that the company has based its new-climate strategy on fully electric vehicle platforms since 2015. The first wave of those ground-up EVs is just arriving, led by the Audi e-tron, Porsche Taycan, and Volkswagen ID.3. We’ve also got the ID.Crozz, ID.Vizzion, e-tron GT, ID.Buzz, Skoda Vision E, and e-tron Sportback around the corner.

One important point often lost on non-EV publications and the public at large is that these EVs are mostly cost competitive with gasoline or diesel vehicles in their classes, and they offer significantly better driver and passenger characteristics. The first part of that sentence was the next point in Diess’s presentation.

TCO = total cost of ownership. As the presentation shows, Diess agrees with me that EVs are already cost competitive and Volkswagen’s second wave of EVs will be significantly lower cost of ownership, which makes it bewildering that 75–80% of consumers would still choose the latter, but I guess Diess and crew are expecting unfortunately low awareness of this point, or strong fear of going electric nonetheless.





As you can see in the next chart, adding it all up, Volkswagen Group expects ~4% of its sales to be electric in 2020, and then expects the figure to climb up each year to more than 20% in 2025.

That’s about 450,000 sales in 2020 across 16 or so models. It’s unclear how the model breakdown is expected to go in terms of sales volume, though. Given the brand, price, and marketing focus, I presume the ID.3 and ID.Crozz will carry a large portion of the sales on their shoulders, especially when you consider that Volkswagen expects half of its EV sales in 2025 to come from the ID family. However, note that the company is launching 8 new electric models in 2020 — adding onto the currently available Audi e-tron, Porsche Taycan, VW e-Golf, etc. — and only two ID models will be on the market by year end. My very scientific estimate is that the ID.3 and ID. Crozz will each have 100,000 sales in 2020 and the remainder of the group’s sales will come from other models. We’ll see.

Oh, there’s one more big thing to note: Volkswagen expects a small portion of its EV sales to be in North America. The company doesn’t actually have much market share in the US in general, and on top of that Maarten Vinkhuyzen has explained previously why it is many EVs are sold in much higher volumes in Europe than the US. The end result, according to Volkswagen, is that Europe and China will dominate the company’s EV sales for years to come. So, even in 2023 or 2025, don’t expect large numbers of ID.Crozz, ID.Buzz, e-tron, or Taycan sales. 
 

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About the Author

is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA] — after years of covering solar and EVs, he simply has a lot of faith in this company and feels like it is a good cleantech company to invest in. But he does not offer (explicitly or implicitly) investment advice of any sort on Tesla or any other company.



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