Volkswagen Increases 2023 & 2025 EV Production Targets
Credit to Author: Zachary Shahan| Date: Sat, 28 Dec 2019 09:21:34 +0000
Published on December 28th, 2019 | by Zachary Shahan
December 28th, 2019 by Zachary Shahan
Photo courtesy of Volkswagen
For 4 days, I had an article draft open titled “How many electric vehicles will Volkswagen sell in 2020?” A new press release from Volkswagen doesn’t answer that question, but it comes close. More importantly, it announces increased targets for Volkswagen electric vehicle production and sales.
Previously, Volkswagen Group announced an intention to produce and sell 1 million fully electric vehicles in 2025. The target year for that is now 2023, while the 2025 target has increased to 1½ million.
Photo courtesy of Volkswagen
The Zwickau electric vehicle factory, which our own Steve Hanley visited in November as production of the ID.3 launched, is the cornerstone of much of this planned growth. While production of the ID.3 ramps up (or goes through “production hell” as the CEO of a certain electric automaker would phrase it), there isn’t much fun news to report. Such is the nature of auto manufacturing. However, the ID.3 should start reaching customers in Europe in the summer of 2020, and the ID. CROZZ (likely to be renamed the ID.4) will also start rolling off production lines in the Zwickau plant in 2020.
The CROZZ is a crossover (who would’ve thunk it?) and will probably outsell the ID.3 — even though the ID.3 looks to be more competitive than some of the world’s top selling cars. The ID CROZZ will be produced in factories in Chattanooga (Tennessee, USA) and Anting (China) as well as in the factory in Zwickau (Germany).
Photo courtesy of Volkswagen
Even though no automaker other than Tesla has shown an ability to produce and sell hundreds of thousands of units of a single electric vehicle a year, it’s easy to imagine a few hundred thousand annual sales of the ID.3 and ID. CROZZ (each).
There were more than 730,000 Volkswagen Golf sales in 2018, and the ID.3 is basically seen as an electric replacement of the Golf. There were more than 810,000 sales of the Honda Civic in 2018, a car the ID.3 could compete with in key ways. It should offer better cost of ownership and performance for the money.
As noted above, the ID. CROZZ is expected to be even more popular, since it’s a crossover. Top gasoline competitors could be considered the Toyota RAV4, Nissan Rogue/X-Trail, and Honda CR-V, which had more than 807,000, 771,000, and 736,000 sales in 2018, respectively.
That said, we’re yet to see a traditional automaker stimulate as much consumer demand for electric vehicles as Tesla has stimulated, and it’s unclear how long it will take for a large wave of “early majority” tech adopters to pop up who are ready to transition to e-mobility but more comfortable with a traditional auto brand like Volkswagen or Audi to go electric.
Overall, I’m bullish on Volkswagen because it seems committed to electrifying its fleet relatively quickly, is putting a lot of money into it, and is rolling out extremely compelling electric vehicles. But I’ll be cautious about that bull stance until I see clear evidence hundreds of thousands of consumers a year are ready to buy electric Volkswagens. While the ID.3 has decent initial consumer interest, its preorders don’t come close to Tesla Model 3 reservations prior to customer deliveries. Fortunately for those of us eager to see figures previewing sales to some extent or another, in the news release the company just published, Volkswagen highlighted the preorder tally: “For the first time, Volkswagen also offered pre-booking for the ID.3. To date, over 37,000 customers have reserved an ID.3 and paid a pre-booking deposit.” The good news is: I expect Volkswagen to rely more on routine buying than massive preorders for its EVs. It doesn’t have the fanfare Tesla has, but it does have a considerable regular stream of monthly buyers through its many dealers worldwide. In other words, I don’t think you can create a simple equation comparing preorders and eventual consumer demand for Tesla versus Volkswagen EVs. (That said, if you can, Volkswagen’s 37,000 preorders indicate something like 10× fewer ID.3 sales a year than Model 3 sales a year, which would be a horrible disappointment.)
Photo courtesy of Volkswagen
Volkswagen isn’t shying away from bold statements, which I think is one important indication of a strong ID-brand sales push and eventual consumer demand. The German automaker reiterated yesterday that it intends to become the world’s #1 electric automaker:
“Over the next few years, Volkswagen intends to become the world market leader in e-mobility and is investing €33 billion in these efforts throughout the group by 2024, including €11 billion in the Volkswagen brand.”
Tens of billions of dollars aren’t going toward PR and vaporware. That money is for a serious EV offensive that could make Volkswagen the #1 EV producer among conventional automakers. (I don’t think 1 million EV sales in 2023 or 1.5 million sales in 2025 would beat Tesla.)
And remember, German Chancellor Angela Merkel was at the ceremony for the launch of ID.3 production, no small indicator of how serious Volkswagen is about its EV goals.
Photo courtesy of Volkswagen
I should note that it’s not clear how much demand Volkswagen expects for each of its initial EV models. The company is going to introduce several electric models across several brands. This is different from Tesla’s focus on two or three models in the next few years — the Tesla Model 3, the Model Y, and perhaps the Cybertruck. Volkswagen Group will have very similar or rebadged versions of VW electric vehicles available under the Audi, SEAT, and ŠKODA brands. The Volkswagen-branded models should do the heavy lifting, though, so it’s not surprising to see the ID.3, ID. CROZZ, and ID. VIZZION as the company’s first models to genuinely launch into the electrification revolution.
In Volkswagen’s latest news release highlighting its amped up targets, the company reminds us of the key specs explaining why the ID.3 should be a popular hit: “The ID.3 is based on Volkswagen’s Modular Electric Drive Toolkit (MEB) and offers ranges from 330 to 550 kilometers (WLTP). The basic version of the model will cost less than €30,000.”
Volkswagen’s plans to become the world’s largest EV producer aren’t for 2020 or even 2021. Tesla has the next couple of years (at least) on lockdown. Tesla aims to produce more than 360,000 EVs in Fremont this year, while Volkswagen will be in good shape if it does so in 2021. “From 2021, up to 330,000 EVs will leave the assembly line each year, making Zwickau the largest and most efficient EV factory in Europe,” Volkswagen writes. That would put it approximately two years behind Tesla, which I think almost anyone would say is not too shabby. Many top auto analysts consider other US automakers to be 5+ or even 10+ years behind Tesla.
While Tesla has just completed the first phase of its China Gigafactory and has announced a German Gigafactory, Volkswagen itself has aforementioned EV production plans in Tennessee and China. It would be nice to see another automaker announce major electric vehicle production plans in this big trio of regions: Asia, Europe, North America. Until then, it’s hard to consider anyone else as serious about EV revolution as these two automakers. (Yes, Nissan already produces the LEAF in Asia, the UK, and the USA, but the production volume is minor rather than major, and I’m unaware of any plans to ramp up to the latter.)
It’s easy and fun to pit companies against each other in sports terms when looking at a product market. The EV market is no exception. However, it could be framed quite differently. Even sticking to sports, we could consider Tesla to be Michael Jordan and Volkswagen Scottie Pippen. The fact is, the electric vehicle sales of both automakers will be eating into the sales of gasoline and diesel vehicles, transitioning the overall auto market to electricity. The VW ID.3 is expected to compete with different vehicles than the Model 3 competes with, and pull in different consumer groups. The ID. CROZZ, similarly, will attract buyers that the Tesla Model Y wouldn’t convert to electricity.
Together, we are stronger, and what’s most important for the EV market is for a large variety of compelling EV models to reach production and be ready for large sales volumes.
Many Tesla buyers wouldn’t consider a Volkswagen. Many Volkswagen buyers wouldn’t consider a Tesla. That’s a reality any industry players or followers should understand. Additionally, more models hitting the market and more attention on EVs will help “lift all boats.” Tesla product reveals and production launches will raise awareness and sales for Volkswagen models. Volkswagen product reveals and production launches will raise awareness and sales for Tesla models.
I was thinking recently to write an article titled, “It’s The Batteries, Stupid,” a play on the very popular political phrase, “It’s the economy, stupid,” coined by Bill Clinton advisor James Carville in 1992. However, I just realized we published an article with that title in July. In any case, this is what many EV production and sales discussions come down to. Volkswagen doesn’t miss the beat on that in its planning or its PR. It writes, “Volkswagen has also laid foundations for the development, testing and production of battery cells. A battery cell factory with a capacity of 16 gigawatt-hours is to be developed in Salzgitter from 2020. The start of production is planned for the end of 2023/beginning of 2024. For this purpose, Volkswagen has entered into a joint venture with the Swedish battery manufacturer Northvolt.”
Photos courtesy of Northvolt
Yup, that’s a Volkswagen gigafactory, whether the German giant decides to adopt Tesla’s terminology or not. It’s several years behind Tesla’s first gigafactory, but it is clearly now part of Volkswagen’s solid plans for the electric vehicle transition and stands apart from other automaker electrification plans. Like Volkswagen is doing right now, other automakers expect to purchase their batteries from outside companies like LG Chem, CATL, Samsung SDI, and SK Innovation. As demand for EVs spikes, though, that could be a risky bet, since far more demand than supply could lead to high battery prices for automakers, which would make their EVs less competitive. In the course of this tech transition, it might be wise for automakers to vertically integrate more and have greater control over their own destiny on the battery front as well as the vehicle assembly front. Volkswagen appears to be aligning with Tesla on this, at least in part. Who’s next?
2020–2025 is going to be a fascinating period of time for the EV market. We’ve got the Volkswagen ID.3, Volkswagen ID. CROZZ (or ID.4), Tesla Model Y, Tesla Cybertruck, Ford Mustang Mach-E, and surely additional compelling electric vehicles coming to market in the first half of that time period, each with the potential to see more than 100,000 sales a year, a feat only accomplished by the Tesla Model 3 so far. We should be counting individual automakers’ annual EV sales in the millions rather than tens of thousands or hundreds of thousands by the end of this time period. Will Volkswagen make it to #1 by the end of these 5 years? Will Tesla remain far in the lead? Will another major automaker be in contention for #1 or have a strong showing on the podium? We’ll see.
If you’d like to buy a Tesla Model 3, Model S, or Model X and want 1,000 miles of free Supercharging, feel free to use my referral code: https://ts.la/zachary63404 — or use someone else’s if you have a friend or family member with a Tesla who has helped you more. The referral code can also be used for a $100 discount on Tesla solar.
If you’d like to get updates from Volkswagen on its upcoming ID models, head here.
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Zachary Shahan is tryin’ to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director and chief editor. He’s also the CEO of Important Media. 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 offers no investment advice and does not recommend investing in Tesla or any other company.