CLEANING UP ITS ACT
VW to expand range of electric cars as company rebuilds image following emissions scandal,
FRANKFURT— German automaker Volkswagen plans to ramp up its offering of electric vehicles as it fights to bounce back from a scandal over diesel cars rigged to cheat on emissions tests.
The electric campaign is part of a wideranging review of the company’s strategy, including making the company’s management more open and trustworthy.
CEO Matthias Mueller said Thursday that the company plans to introduce more than 30 electric-powered vehicles by 2025 and sell two to three million of them a year.
Mueller made the statement as the company made public the results of soulsearching triggered by the scandal that erupted in September 2015. The new plan, dubbed “Together—Strategy 2025” includes a focus on digital mobility, which could include options such as car- or ridesharing apps, a more open management and stronger profitability.
The company set increasing the profitability of the core Volkswagen brand as a goal, which barely makes moneyed. Mueller said the company intended to increase operating profit margins from 6 per cent to 7 to 8 per cent by 2025.
Volkswagen costs are higher in part because it has powerful employee representatives under German law who make it harder to shed workers, outsource work or move production. With around 610,000 employees, it sold just slightly fewer cars last year than Toyota, which has 344,000 employees.
The company also sought to make its management more open and less convinced it knew best without consulting partners or outside advice.
“Our most important currency is trust,” Mueller said at a news conference at the company’s Autostadt, or Auto City, visitor centre next door to its headquarters in Wolfsburg, Germany. He acknowledged the difficulty of winning back public confidence after the emissions scandal.
Mueller said the company would need more electric vehicles to meet increasingly tight government limits on carbon dioxide emissions, the greenhouse gas that scientists blame for global warming, and other pollutants. He said, however, that the company would keep a major focus on developing and selling internal combustion engines.
Volkswagen bet heavily on diesels meeting emissions goals. But that strategy suffered a blow after the company was discovered to have met emissions tests using engine-control software that turned emission controls on when the car was on a test stand and turned them off for everyday driving.
The company is working out a settlement with U.S. authorities in federal court in San Francisco to repair or replace some 500,000 cars with the problematic software. Worldwide, 11 million cars were sold with the software.
The company has set aside at least 16.2 billion ($23.5 billion Canadian) from last year’s earnings to cover the costs of recalls and fixes. Mueller said Thursday he had no reason to increase that sum based on what he knows now, but that could change after the U.S. settlement is agreed.
“Our most important currency is trust.” MATTHIAS MUELLER VOLKSWAGEN CEO, AS THE COMPANY SEEKS TO REBUILD PUBLIC CONFIDENCE AFTER COURTING CONTROVERSY