Thanks to your encouragement, I will continue to provide a synopsis of the automotive sector news that I consider to be the most important. It’s going to be called “Curbside Newsstand”, and I’m going to try to focus on those issues that best reflect the big-picture and long-term changes that the industry is grappling with, and mostly avoid the short term ones, like the tariff wars, because they are political by nature and the industry is simply a victim of them. There may be time we have to touch on them, as they are also influencing longer term decisions in the industry.
Today we’ll go back a few weeks in case you’re not familiar with what has to be just about the biggest story in the industry in terms of the future: VW is betting no less than $91 billion on their ability to transition to making huge numbers of EVs, and making them profitably. They’re literally betting the farm on this one, or at least the south forty.
After Dieselgate, VW decided it needed to reinvent itself. And it decided that EVs were the vehicle with which to do so. Yes, VW had been nibbling around the edges of electrification for some years, but this is a total revolution. VW intends to be the first major manufacturer to build EVs on a mammoth scale, and to make profits doing so.
Here’s how it came about (from an autonews article)
“It was an intense discussion, so was the realization that this could be an opportunity, if we jump far enough,” said Juergen Stackmann, VW brand’s board member for sales. “It was an initial planning session to do more than just play with the idea of electric cars,” he told Reuters. “We asked ourselves: What is our vision for the future of the brand? Everything that you see today is connected to this.”
VW intends to get out in front of this wave, and surf it. Hanging ten even, to the tune of $91 billion. Of course that number is over a decade or so, as it’s a PR move to make it look as big as possible.
The reality is that the whole industry is being dragged into electrification reluctantly. There’s a mammoth global investment in IC vehicles, from suppliers, human resources, technology and factories. And it’s been fine-tuned over the decades to work, profitably, most of the time. Dismantling that is going to create huge expenses and disruptions in jobs and capital investments.
EVs are intrinsically more expensive, due to the cost of the batteries. Yes, that’s coming down, but not quite as fast as might be ideal. Tesla has tried to do the impossible: build EVs at a profit. After a decade of losses, they have two modest quarterly profits under their belt. If theta will continue is anyone’s guess. But the impact on the industry has been huge: Tesla has shown what is possible,but has also said that they cannot yet build a base Model 3 for $35,000 profitably.
Yet VW intends to take that to the next level, as in a Golf class EV, the ID Neo (above) to be sold for some 20,000 Euros ($22,700). That’s very ambitious. And to be built in a VW factory in Emden fully converted for EV production. And VW is building a second factory at its Chattanooga TN facility strictly for EV production.
The ID family also includes the Buzz (bus) and the Crozz (CUV).
This isn’t exactly just on a whim: European car makers also huge emission pressures that are pushing VW and others towards EVs: they can’t meet tightening CO2 standards now that diesel sales are dropping at the same time SUV sales are increasing. There’s simply no way to meet the standards without EVs or plug-in hybrids, and the latter is increasingly seen as a less than ideal compromise.
The big problem: nobody knows if the world markets are interested in that many EVs, that soon. It’s a very big gamble. And one that all the manufacturers are trying to decide how to play. Being out front has huge risks, but the upside of being seen as an early industry mover also offers a “positive risk-reward”. We shall see.
There’s also talk of more than one automaker wanting a piece of the MEB platform pie. Ford has a bit of an advantage there as they seem to be tying up with VW in multiple ways, so it wouldn’t be surprising if they’re the first company to benefit from VW’s capital expenditure.
When the VW/Ford tie up was announced last month, the only real news was that large VW vans will be rebadged Fords, probably from the Ford plant in Turkey, which frees the Hanover plant for more EV production. (to free up Emden, Passat production is being moved to the Skoda plant that already builds the Superb, sending Skoda on a search for more factory capacity in eastern Europe)
There was plenty of chatter about VW and Ford partnering on EV development, but now reports are showing up that Ford doesn’t want the MEB platform, because Ford is all about much larger vehicles.
Ford executive raises doubts about VW deal for electric vehicles
VW is primarily targeting low-cost, passenger car segments with its battery-car program
“Ford’s bet is on commercial vehicles and performance vehicles,” a top Ford executive says.
That is a Ford executive talking which can raise doubts in and of itself.
Perfect name. And the topics are relevant as the future will be the past in the blink of an eye. Just like the present became as I type this…
One of my favorite columns in UK’s CAR magazine was Oracle back in the 80’s/90’s, where they looked forward with automaker’s plans and ambitions. It became even more of a favorite when re-read years later with the benefit of knowing how things actually turned out.
VW should go back to its roots and make the first air-cooled hybrid.
EVs have gotten good enough to where I’d have no problem having one as my DD for around town, and even short(er) road trips. Porsche’s new 2020 Taycan coming out next year is said to have up to an 800 amp charging system that can yield a nominal 250 miles of range in about 15 minutes of charging time, although initially there won’t be many 800 amp charging stations available. Point is, EVs are rapidly evolving and improving as practical daily vehicles. Given the association between Porsche and VW it seems likely this type of EV technology will trickle down. https://www.roadandtrack.com/new-cars/future-cars/a12778510/2020-porsche-mission-e-news-photos-price-release/
Paul, I’m glad to see you doing are doing this. Keeping up with industry news has long been a challenge for me as life keeps interfering!
VW jumping in waist deep is surprising yet not. If they are indeed setting about to reinvent themselves, this is a fantastic way to do it. They are definitely setting themselves apart for the rest; time will tell if this was a wise move for them.
On an semi-related note, I spent some time at the local VW dealer last week for an oil change. They had about 15 reprogrammed TDIs on the lot for sale. From what I learned, which is subject to inaccuracy, VW has reprogrammed the cars from the buy-back and is allowing dealers to bid on them for resale. They’ve been hot commodities, at least at this particular dealer, with reported fuel mileage being about the same as it had been before. No word on performance in new versus original tune.
Yes, the TDis are back out there. My son Ted got one as a rental, no less, a couple of weeks ago. He was surprised.
I strongly suspect mileage will not be quite as good. It was precisely because the defeat system cut out the emission system that made these get substantially better real world mileage than their EPA numbers, which made no sense at the time, and should have raised suspicions. Now the system has to be on all the time. But I’m sure mileage will still be decent.
Bit off topic, but if one way to meet emission standards is by continuous use of Adblue (aka DEF), could the mileage not be as good as before? You would just have to refill that tank more often.
These don’t use Adblue. That’s the whole point; they use SCR technology that is cheaper, and VW hoped it would meet emissions, but it didn’t, so they cheated. If they had used a DEF system, they probably wouldn’t have gotten into this mess, at least not as deeply.
The Touareg TDI definitely used DEF (Adblue), the problem was the dosing was cut back to ensure the 5gallon tank of it would last the whole 10,000 miles between services, when adjusted properly it would not have lasted that long. Mine ended up on the buyback list but I had already gotten rid of it prior to that (as I tend to do…)
The Touareg TDI definitely used DEF (Adblue),
Yes it does. I assumed (perhaps incorrectly) he was referring to the Jetta/Golf/Beetle.
The DEF VWs had their own set of issues, as you’ve just pointed out.
Oh, I was under the impression that they ALL (Passat, Touareg, Jetta, Golf, Beetle) used Adblue and SCR was then an add-on tech that helped it use less of it or basically what managed the usage.
This is how I understood it, I could easily be wrong though, I left Germany way too young to be of any use as an engineer.
SCR = selective catalytic reduction. The injected urea reacts with the NOx in catalyst bed turning it to nitrogen, Co2 and water.
Adblue = urea = well, basically a mix of distilled water and urea.
Jim, I test drove a Jetta TDI in early ’14. Doing what I do at work, I’d already seen Ram (pronounced as “dodge” in these parts due to dialect) incorporate urea. The Cummins engine in the International dump trucks used urea but International had opted for EGRs and such with their in-house engines. And they often ran like crap.
So when I asked the VW salesman about urea use in the Jetta TDI he was clueless about what I was talking about. That raised a red flag for me at the time as they ran so well.
Interestingly VW owns (or did own) 15% or so of Navistar / International.
My bad. Got my terminology mixed up. SCR is used with the Adblue in the bigger VAG cars. The 2.0 L Tdi use a NOX storage catalyst, and other Rube Goldberg devices that allowed VW to not use SCR and Adblue because it was considerably cheaper.
The way VW got into this mess was that Piech insisted on a big push with diesels in the US, and that the NOX catalyst way would work., to meet price targets. Instead of telling him it wouldn’t, they cheated. Ja Herr Piech, We made it work!!
Why they also cheated on the 3.0 L cars with SCR is another matter. I guess they figured if they were going to cheat with one, why not with the other?
Jason, one of the trucks I used to move myself out here in 2010 was a fairly new Penske International 26footer with the new diesel EGR stuff. Somewhere in Nevada it decided to go into regen mode and kept trying to do so all the way across Utah, I had no idea what it was doing and just kept my foot buried deep as it struggled mightily, reading about it later I believe I was supposed to pull over and let it do its thing while idling or somesuch. The only time I ever stopped on that trip was to refuel, there was no manual in the truck and I had no idea what the little light was trying to tell me. I’m surprised it didn’t catch fire. Truly a miserable engine but the Penske staff did nobody any favors by not cluing anyone in on the procedure.
Paul, that makes more sense now, thanks.
My understanding is that the 10k mile service interval was considered a big deal for the “premium” Touareg and that they did not want their clientele inconvenienced by having to do a “splash and dash” prior to that interval even though the manual clearly explains what warnings are given and what to do about it (i.e. it did not seem onerous, you had over 1000 miles to refill the Adblue before power was reduced). The tank apparently was big enough to last for approx 6000 miles the way it was supposed to work and presumably does in other markets. Failure was not an option so they just ran it (too) lean to make it last. VW sounds like it must have been a miserable place to be an engineer for quite some time.
My favorite story is about the same engine being used in the Cayenne (and Q7 etc), except that Porsche would swear up and down that the engine was their own design and VW had nothing to do with it in some of the reviews of the day when it was clearly the same engine with a different plastic cover on top. Until it was found to have the same software, then everyone at Porsche was very mum about their “superior engineering”.
Shades of Navistar and Caterpillar……
Dug out the maintenance schedule for my 2014 VW today. These are the models that required AdBlue that year.
sorry, i just don’t see it. i think the battery technology is already being pushed to the max. when there is a $25k ev that can recharge fully in ten minutes with a 200 mile range in cold weather, give me a call. until then, ev’s will remain a growing niche product much like hybrids are today.
Except that there the possibility that you may not have the choice in the future. While I’m hardly seeing the US going like China, there is still this matter of climate change (no, I am definitely not a denier), and given the choice between having a climate where I can live in, and the glorious roar of a Hemi at full chat, the Hemi can go to hell.
I’m quite up on the idea of an electric car – then again, I was driving one back in the Sebring-Vanguard CitiCar days, and even on that POS the potential could be easily seen.
And nothing cracks me up more than the people who insist on the standard being charging times less than a gasoline car fillup, and cheaper. Who really believe that they have to make a 600 mile trip every weekend. And who are absolutely determined that they will not change their vehicular habits in the slightest (even if that change turns out to be easier).
Excellent addition to CC content!
I kinda agree with you, but the future has a way of catching up quickly. But I’ll stick with gas for now.
Same here. Really this all seems like a waste with the currently available battery technology, there are just too many limitations and the cost is too high. This will change in the future but at the moment electric cars simply are not competitive in cost or overall functionality when compared with conventional vehicles for most people. They should be able to compete in the marketplace on their own merits without any subsidies or special considerations (such as special lanes or being excluded from road taxes).
Of course the marketplace is not clamoring for electric vehicles. Few if any car buyers are dissatisfied with gasoline and diesel engines. It’s all being dictated by governments for no good reason.
A great addition to CC. Looking forward to this news update series.
VW already has the e-Golf out, a couple showed up at work last year, and the local dealers have them in stock. 125 mile range now, and $33K MSRP, so it’s an attractive contender among the “compliance cars”.
Of course there have been electric VWs on the roads for quite a few years thanks to shade tree mechanics. The old Bug is a particularly easy conversion platform. Motor adapter plates are off-the-shelf.
I have a friend who’s doing just that, although he’s using a Baja body for his and is planning to use it offroad. I think there’s definitely a place for EV restomodded classics such as the Beetle as urban runabouts. The only hurdle I see is contemporary-standard crash compliance.
Baja EV has been a fantasy of mine, how cool. I love how it looks with the exposed motor.
If not for crash safety, I might very well have done a Bug conversion years ago. I once had a ’65 Bug that got T-boned at a low speed. The body just folded up like a paper cup.
I have thought of converting the Thing to an EV, but the batteries are the hard part, motor and controller are available and relatively inexpensive.
I don’t think that the adventures of Tesla and their profitability outlook can be used as an accurate gauge for the rest of the automotive world. Tesla built themselves from the ground up, while Volkswagen, et al, have been in the business for some time and have a knowledge base for building cars as well as capital in the form of land, buildings, etc., that are (hopefully) paid for. Using these assets should provide a good strategic fit for the transition to EVs at a lower cost than that of Tesla.
Changing the subject: I have never been more excited about EVs. Their current range and recharge times would easily fulfil 95-98% of my driving.
What’s interesting to me about EV’s is that as opposed to ICE vehicles, it would appear that as long as a vehicle is engineered to meet the crash test regimen in different parts of the world, the drivetrain itself should automatically be “approved” in every market, no? As opposed to ICE vehicles where each drivetrain needs to be emissions tested etc. It seems that beyond marketing and of course supply vs demand issues, there would not be any good reason to deny any market any particular vehicle.
I have no idea how Europe handles taxation/fees for EV’s as opposed to fees based on CO2 emissions as currently occurs.
Taxation is already a thing here as revenue from gas taxes has been dropping the last few years in some states. Better fuel efficiency has been a distinct factor and EVs will only speed this up. Several states are looking into how to remedy this; it’s not from a greed standpoint so much as a palpable drop in revenue for highway maintenance. Vehicle miles traveled only continues to climb, as do prices, while revenue is dropping. Combine public expectations and it’s a formidable challenge.
From a personal standpoint, I’m with Geozinger; my commute of 2.7 miles is ideal for an EV and I’ve pipe dreamed of getting one for just that. Last summer I rode my bike but on days with odd schedules or rain (and all winter) I’m driving a 5,500 pound V8 powered pickup. Not exactly the most efficient commuter imaginable.
I am seeing an electrified Galaxie in your future!!! You could adapt the Chevy powertrain and call it the Bolt Upright. 🙂
I’m fascinated by EVs and Teslas in particular. Teslas, especially since they are the first new US car company to be successful in what? 80 years?
I’d very much like to get an EV in the near term future, as my current (ha!) commute would work perfectly for one. Probably a used one would be a good entry into EV ownership, but it’s still in the future for me.
As for VW, they’re probably the only company that could jump into electrification with both feet. China and to a lesser extent, the EU and are forcing this change and VW doesn’t want to get shut out of the Chinese market at a minimum. Other car companies have dipped their toes in electrification but the market isn’t quite there yet, at least in the part of the world that isn’t China.
I believe, as many other technologies have done, that there will be a tipping point where it all clicks and folks can’t get enough and companies can’t produce EVs fast enough. I don’t know when that will be, but VW seems to want to be prepared.
Great addition to CC, Dr Niedemeyer. For a lack of time and subscriptions, I have only hazy ideas of what’s up, so I’ll enjoy the learning, even if in precis.
The autonews article says all Euro makers and those who wish to sell there are now being flogged mighty hard by emissions regs (and good on the EU for it, say I) which is probably the biggest driver of change in the industry, and they’ll all have to adapt. However, surely there’s more than a strong whiff of PR about this entire VW announcement. I had no idea an EV battery is $20,000, with another couple of grand for motors, etc. VW’s large purchasing power isn’t going to bring that down to ICE levels anytime soon, so the mooted 20KEuro Golf is likely to be a loss-maker for quite some years – or a fantasy. Seems either arrogant or puff to say, in effect, “We’re VW, we can do what Tesla can’t”, simply because of scale. Also, that $9 billion a year: how does that compare to what is spent on ICE by them a year? They’re still well and truly in the business of making ICE units, as the last generation of them is probably not even on the drawing board yet, with a release date over 7 years away.
The announcement is hardly insignificant – and makes GM’s plans to spend $8 billion all up look comical – but the plan did after all stem not from engineering or finance but from a newly-promoted brand manager when the company was hunkered down in a brand crisis.
Glad to see the CC perspective on current events in the automotive world.
The battery remains the sticking point for multiple reasons, yet from Teslas to the Chevy Bolt, we’re seeing more examples of great cars that just happen to also be EVs.
And IMO, that must be the goal.
First one with a viable EV full-size pickup will be a huge winner. Hope GM gets in with Rivian as speculated.
I will chime in late that I like this idea a lot. Discussions of current automotive news and trends with this educated and congenial community will be a treat.