VW bets on new tech­nol­ogy to bounce back from cri­sis Plan to be elec­tric cars leader by 2025

Kuwait Times - - TECHNOLOGY -

FRANKFURT: Volk­swa­gen hopes to bounce back from its cri­sis with a shift in fo­cus to more bat­tery-pow­ered cars, dig­i­tal tech­nolo­gies such as au­tonomous ve­hi­cles, and an in­crease in sales of SUVs in the US.

Her­bert Diess, the head of the Volk­swa­gen core brand, said yes­ter­day at a news con­fer­ence that the goal of the Trans­form 2025 plan was “to fun­da­men­tally change Volk­swa­gen” as it re­cov­ers from its scan­dal in which it rigged diesel cars to cheat on emis­sions tests.

The plan fore­sees new in­vest­ments in elec­tric­car tech­nol­ogy and in soft­ware that would en­able new ways of us­ing and shar­ing cars. Diess said at group head­quar­ters in Wolfsburg, Ger­many, that the com­pany ex­pects to sell a mil­lion elec­tric ve­hi­cles a year by 2025.

The com­pany would also “mas­sively step up” its ca­pac­ity to de­velop soft­ware, aim­ing to create in­dus­try-lead­ing soft­ware and hard­ware sys­tems for dig­i­tally con­nected and au­tonomous cars by 2025.

An­other el­e­ment of the plan is in­creas­ing sales in the US by in­tro­duc­ing prod­ucts that are more ap­pro­pri­ate for the mar­ket, such as more SUVs and larger cars. The plan for the Volk­swa­gen brand fol­lows Fri­day’s an­nounce­ment that the di­vi­sion would elim­i­nate 23,000 jobs in more tra­di­tional ar­eas in Ger­many and create 9,000 new ones fo­cused on new tech­nolo­gies.

Diess said the com­pany aims to raise profit mar­gins on sales to 6 per­cent by 2025, from just 2 per­cent in 2015. Prof­itabil­ity at the Volk­swa­gen brand has lagged due to its higher cost base, the re­sult of a strong role for em­ployee rep­re­sen­ta­tives. They have half the board seats, and are gen­er­ally sup­ported by the govern­ment of Lower Sax­ony, which holds a stake in the com­pany. Partly as a re­sult, Volk­swa­gen Group makes most of its prof­its from its lux­ury brands Audi and Porsche.

The com­pany struck a deal with its work­force, which agreed to the job re­duc­tions through vol­un­tary means such as early re­tire­ment over a pe­riod of years. In re­turn, em­ploy­ees won a com­mit­ment to lo­cate new tech­nol­ogy de­vel­op­ment and man­u­fac­tur­ing in Ger­many.

Volk­swa­gen has agreed to pay $15 bil­lion un­der a set­tle­ment with US au­thor­i­ties and car own­ers over cars equipped with soft­ware that turned off emis­sions con­trols un­der nor­mal driv­ing con­di­tions. The scan­dal has served as a spur for the com­pany to shake up its man­age­ment cul­ture and ad­dress long­stand­ing is­sues such as the cost ques­tion in Ger­many.

Volk­swa­gen aims to be the world leader in elec­tric cars by 2025, Diess said. “By 2025 we plan to sell one mil­lion elec­tric cars per year, and by then we also want to be the global mar­ket leader in elec­tro­mo­bil­ity,” Diess said at a pre­sen­ta­tion of the brand’s fu­ture plans. “Go­ing for­ward our elec­tric cars will be the hall­mark of Volk­swa­gen,” he added.

The shake-up at Volk­swa­gen’s core brand comes as the group tries to re­cover from the big­gest cri­sis in its his­tory af­ter it ad­mit­ted last year to in­stalling emis­sions cheat­ing soft­ware in some 11 mil­lion diesel ve­hi­cles world­wide.

The so-called de­feat de­vices could de­tect when a ve­hi­cle was un­der­go­ing reg­u­la­tory tests and low­ered emis­sions ac­cord­ingly to make the cars seem less pol­lut­ing than they were.

The cri­sis hurt sales and dam­aged the im­age of the proud Ger­man com­pany, push­ing it to its first loss in over two decades last year. Even be­fore diesel­gate, the VW brand had been strug­gling with prof­itabil­ity, weighed down by high costs and low pro­duc­tiv­ity.

WOLFSBURG: Volk­swa­gen’s chief Her­bert Diess is pic­tured in front of the new Volk­swa­gen I.D, the 100 per­cent elec­tric car of Volk­swa­gen dur­ing a press con­fer­ence on Novem­ber 22, 2016 in Wolfsburg, north­ern Ger­many.

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