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VW CEO Warns Against Possible Auto Industry Crash Due To EVs
4 H BY STEVEN LOVEDAY 84
We really can’t say we’re surprised by this.
It seems each day the Volkswagen story changes. The automaker has been advertising its dive into electric vehicles for years and still has little to show for it. The Dieselgate scandal shed additional light on the automaker’s efforts, as well as the speed at which it was going to push forth with its huge EV offensive. One announcement after another, yet not much has come to fruition. Not to mention plan changes, delays, and sporadic negativity toward electric vehicles.
Volkswagen Coverage:
If you follow the segment, you’re likely aware that Europe is aiming to reduce carbon emissions and promote EV adoption by initiating stricter laws. The Parliament was aiming for a 40-percent emissions reduction, while the German auto industry was pushing for 30 percent. Now, the goal has been set at a 35-percent reduction by 2030.
It’s no surprise that German automakers will do whatever they can to push the goal in their favor and extend the deadline as long as possible. Building electric cars is not easy and will cost them more money.
While Volkswagen has been releasing constant news about how it’s on board with electric vehicles and the automotive group aims to have millions of electric cars on the road by 2025, its CEO Herbert Diess seems to be leading the efforts against the potential emission reduction requirements. In addition, he’s going so far as to try to convince us that the entire automotive industry could crash and 100,000 jobs may be lost. Diess said (Süddeutsche Zeitung via Electrek):
The transformation in speed and impact is difficult to manage.[…] Such an industry can crash faster than many believe.
Source: Electrek
Categories: Volkswagen
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84 Comments on "VW CEO Warns Against Possible Auto Industry Crash Due To EVs"
THE SKY IS FALLING!!!
You say that, but most of the Tesla fans have been saying traditional makers will go bankrupt. This is exactly what VW is saying now. It is going to upset the industry and he is confirming that. This is what people wanted, I thought…
It is hard for those companies invested in so many ICEs as they do still have to support those (and they have all their investors telling them to support those) and to develop new cars stretches budgets as much as it does for Tesla, especially when their investors tell them to invest in ICE.
“is hard for those companies invested in so many ICEs as they do still have to support thos”
BS. You simply make the move to serial hybrids with multiple bays for batteries. At present (while batteries are expensive) you only populate the bays with enough battery to give it an AER of 50 real world km. Actually to meet current regs you can just put in 1-2kw of battery and leave the expansion bays empty until the customer opts to upgrade or regulations require that.
It has been several decades since I bought a computer that wasn’t upgradeable.
And how much does this cost? How well do most Tesla fans like that type of car? Why does someone buying an ICE want a serial hybrid that might lack performance or cost more relative to cheap ICE?
You see where I am going with this? Tesla is going to beat them on costs for at least a generation, they will spend billions developing cars they can’t sell (they will have to sell them for a loss or less profit than ICE). What they need to do is buy EV startups or start new companies that can compete on Tesla’s terms.
What’s to keep VW or any other major car company from investing in Tesla at some point? If it does become crystal clear to everyone that EV’s are better why not jump unto the big band wagon of Tesla? Tesla doesn’t have the cash to build multiple factories to meet demand everywhere. Is a Nummi like collaboration possible?
Nothing is preventing VW or any other legacy car company from investing in EVs or even buying shares in Tesla. The problem is that doing all of this investment might not be enough to save them. All current automakers have huge legacy costs building ICE cars, and it is very possible that they do everything right and still lose.
Take Kodak for example. Kodak was once one of the greatest, most innovative companies in the world. Kodak not only invented the digital camera and invested heavily into getting away from the film industry they knew was in decline, they also had a great brand and a presence almost everywhere in the world. That wasn’t enough to save them from the onslaught of low cost digital cameras from newer, leaner companies.
They can’t afford Tesla. I’m not saying that because Tesla is so great, but because its price multiple is so extreme and there would be very little contribution to what VWGs board lives for: profits. IOW, the ROE invested sucks.
The math to make VWG aim for Tesla, is measured in avoiding what everyone here is saying. If the horse hasn’t left the barn, the remaining auto players could successfully (in my view) go back to slow-walking market progress. Without Tesla, substantial momentum would be lost in support of regulations. There wouldn’t be a “they did it” example, or a car you can actually buy. That’s when regs get rolled back on faith the ICE chorus sings truth.
Unless you’re trying to argue that Tesla is going to take over the entire automotive industry, you really don’t have an argument. It’s not that your argument is merely wrong, it’s that it has no foundation at all. You haven’t made a single valid point.
Volkswagen isn’t worried about the entire automotive industry “crashing”. It’s just worried about its own ability to make the transition which the EV revolution represents, and it’s hoping that if it whines loudly enough, the German government will extend a helping hand.
Which is great in theory but that would just put the price of all cars up by several thousand (potentially $10,000+ in some cases), not to mention requiring the complete reworking of all models they produce in such a short time frame.
How does that saying go? “Lack of planning on your part, does not constitute an emergency on my part.”
If legacy auto makers failed to plan ahead for the reality of the EV revolution, then they have no one but themselves to blame. It’s not like they couldn’t see it coming years ahead of time.
Change is hard. Life isn’t fair. Welcome to the real world, Volkswagen.
It’s
notlike they couldn’t see it coming – years ahead of time.If all the established car manufacturers didn’t see it coming then it’s not as much of an issue. If almost all car manufacturers (by volume) are “behind” then they’re basically at the same starting point. Companies like Tesla really aren’t much of a threat outside of a few niches (i.e. companies like BMW) and won’t be for another decade or more (if Tesla are lucky).
VW seem to be better placed than most to make that transition.
And they called us arrogant for suspecting this. Wow, such a short time-line for this industrial disruption!!
It always is, there’s a physiological phenomenon for those who are in the industry of being disrupted. They are so blind for the massive train that is going to plough into them. That’s why huge giants like Kodak, and landline telephone companies fell. They just failed to pivot in time still clutching on to their archaic ways.
The hardest part about this is getting a company founded on ICE design to emotionally accept that the end of ICE’s reign is nigh. All electric drive trains are evidently the future.
Publicly they deny it, but I think some are starting to accept that reality internally. Battery prices dropped quicker than anticipated making PHEVs less relevant. I think this is more important to luxury makers this car generation, but it will migrate down.
Agree. A whole purgatory of PHEV and mild-Hybrid look to be leapfrogged, first by small makers who want market share and can procure battery volumes. I read this epitaph(?), on 48V, and found it interesting:
https://tinyurl.com/yawl7vbb
What’s different, for VW, is they still see the auto-world through a lens of “as few as possible” platforms and are only now starting to see the disruption of a binary (EV & ICE) outcome. They aren’t alone, as legacy “tweakers” of ICE, who thought the incremental thing was going to work out. Where they differ, is how massive they are, and what sourcing is implied to produce even a fraction of current production as all-EV (or BEV).
Also the WLTP emission limit for PHEV’s/hybrids has been cut from 90g/km to 50g/km, From what I’ve read the only one that makes the limit at present is the Mitsubishi overlander PHEV..
I think you mean the Mitsubishi Outlander PHEV?
“You say that, but most of the Tesla fans have been saying traditional makers will go bankrupt. This is exactly what VW is saying now.”
Oh, what cabbage. Yes, some of the legacy auto makers will fail to make the transition to making EVs instead of gasmobiles. That’s entirely predictable, because it happens in every disruptive tech revolution.
But the reason why some fail is because they fail to remain competitive with others in the industry which do a better job of making the transition!
This idea that “the entire automotive industry could crash” is beyond absurd. The only way that could happen is if people stop buying cars altogether.
If whining was an Olympic sport, Volkswagen would get the gold medal. 🙄
“most of the Tesla fans have been saying traditional makers will go bankrupt”
BS
Sounds like fishing for excuses to delay production and delivery of BEVs in 2020. I expect a lot more similar interviews and press releases from VW. Their message is “why change things, we can make more money the old way”.
For VW, the future is always “just around the corner”
They figured they had more time, and now they’re realizing that without starting earlier, they’re in for a good deal of hurt. Companies can’t make huge transitions like that overnight, and it’s their own fault for not doing what they said they would do back in 2013.
After witnessing Dieselgate, I have no remorse for them. They didn’t just screw up, they intentionally cheated. If they can’t adapt and do what they say they’re going to do, then “drastic” measures such as the 35% emissions regulation should be enforced. They were given an opportunity but squandered it, and never followed through with their initial promises of being the EV leader. A business that can’t adapt to changing times doesn’t survive. It’s capitalism 101.
They cheated yes. But their behaviour afterwards for me is much more of a problem. The kept denying it for a long time, and when there was no escape anymore, they had to admit. End then it got even worse: they kept on cheating, even with their Porsches and Audi’s. How stupid and stubborn can you be? That alone cost them 5 years of EV development. And now you start to cry like a all boy in a big kindergarten. No mercy, sorry!
Thank you! You have expressed my own thoughts and feelings, probably better than I ever could have.
If VW had followed through on all those previous promises, or even some of them, about becoming the industry leader in making EVs, or had even put into production some of their endless parade of vaporware EVs, then they wouldn’t be in the position of suddenly having to make a massive change to most of their lineup all at once.
No sympathy here.
He’s not wrong. People will lose jobs. It’s a known fact building EV’s is less resource intensive. Building electric motors is a lot more automated than building an ICE. Transmissions in EV’s are dead simply. Outside of Tesla with their rather complex pack assembly most EV’s have a few hundred cells in their pack.
So, Jimmy Chanos shorting WRONG company. Check.
The transition will hard felt. The Rust Belt will definitely be dead 💀. Country will hate EV and vote GOP until ICE jobs are back
The Transition Will Be Tough at First . However , As Other Jobs Are Created The Bumps Will Get Smoothed Out And In the Future, There Will Be ZER0 Regrets !
Perhaps we can power the “older generation” with Coal – Then it’s a two-fer!
Alot of people in the horse and buggy business lost their jobs in the early 1900’s…
but like Elon said a few months ago, their is a lack of trained electricians in the US, i’m sure their is a lack all over the world, train now to not be obsolete in 2 years
In September 2013, VW boldly declared themselves the leader in “electric mobility” by 2018.
5 years later, in September 2018, who is the leader? And now the specter of VW drowning in the EV wave to come?
It’s easy to see why skepticism of VW’s announcements is rampant.
Just look what happened to Winterkorn, a couple years after his quotes in VW’s 2013 press release (next post).
My hunch is they changed their plans with Model 3 reveal and response in 2016-03
Sounds like VW misrepresented their timeline and lied to shareholders. Quick, somebody call the SEC!
So there’s 70,000 people trained in what, exactly? They watched a 15-minute animation and pitch as part of a half-hour company stand-up meeting? Or did 70,000 people get a month of training? The latter could be easily $500 million that VW will never spend.
August 2013; Hey Honey (VW), the transition to EVs is happening, are you doing something about it, so that your employees will still have jobs?
Yes Dear.
October 2018; Hey Honey (VW), the transition to EVs is REALLY happening, did you do something about it, so that your employees will still have jobs?
Yes, I spent a WHOLE day in September 2013 writing up that huge press release.
What EV wave is that? VW are at the front of the wave compared to the majority of the larger/established manufacturers. without companies like VW the “wave” will just be a ripple building slowly over several decades.
VW has been claiming to be at the front of that wave for several years now. If reality matched their claims, then they wouldn’t now be whining about the approach of that wave; they’d be surfing it!
I’d call it more of an adjustment than a crash. Didn’t Tesla shed 9% of its workforce while being in super growth mode?
There’s alway loss of jobs while even hiring for different segments in large corporations.
I think this is a non story, just Volkswagen, German Auto industry bashing.
Tesla bought Solar City, and they have been picking at that for a while. They also trimmed some middle management and “what are you doing, exactly?” contractors. They did not touch production / line workers at all. VW will have to, or retrain them. Probably the former.
Read again.
Norway has shown that consumers will switch brands to get a BEV, by delaying the introduction of BEV’s, VW might find they don’t sell any more Diesels, they’ll just see their competitors getting the sales. Once you’ve tried silk, it’s hard to go back to cotton. They might find the competition then retains that customer at their next car change as well!
Norway don’t have an auto industry
only because of insane tax incentives (around 30% less).EV do not sell in countries without EV incentives
Iceland does not have EV incentives. Marketshare is second highest in the world after Norway. Despite Tesla having neither a presence nor a Supercharger there, some folks even import Tesla’s from other markets on their own.
Just wait until 2019 and you will see how well Tesla vehicles sell in the US with much less incentive than today, and then watch them in 2020, when they will outsell their incentivised competition and ICE while having no access to incentives.
BTW: Have you ever bought an ICE at full MSRP? Because most ICE vehicles are heavily discounted to be sold at all…
For most of phevs and all bevs in Norway the only tax is 25%vat. The gas guzzlers gets the heavy tax penalty by this model: the less efficiency, the more tax..
why not intoduce this type of tax regime everywhere?
An then use the tax for ev incentives/ tax cuts
Norway is one of the most wealthy and forward-thinking countries on the planet. They are not exactly representative.
Knock me over with a feather. Ya think so, how insightful.
It’s difficult to change a corporate culture which for years acted with impunity, felt they could do, or say whatever they wanted.
They cheated on emissions standards, lied about it, and continue to generally be a force that tries to hold back the changeover to evs.
They have no credibility whatsoever.
Dear VW, STOP THE FUD ! If “Y0U” Can’t Stand The Heat , GET OUT OF THE KITCHEN !
+1.
The companies that produce _wrong_ models will simply go out of business, but their factories will be bought and re-tooled by companies that produce the _right_ models (for the market). And that’s how it should be. That’s the capitalism’s way of re-purposing resources to serve the advances and oust the inefficient vision and management.
i see no drama, only progress.
What is with your constant use of “0” instead of “o”?
Too much 4chan?
0h n0ez
I can believe an automaker can fall incredibly rapidly (2008). They have enormous debts and depend heavily on revenue from car sales. Imagine taking a 30% salary cut living month to month…. I know in US Mercedes sales the last 3 months have been down 10 to 30%. Keep that up long and they will have to start cutting. Luckily production and deliveries of Model 3 is still limited and that the Model Y is still a ways out…
I think people are way overestimating how far away the impact of the Model Y is.
There was an immediate slide in BMW 3-series sales when Tesla revealed the Model 3 and started taking deposits. That slide has only gotten steeper as Tesla entered production and worked their way through the reservations and started taking orders with delivery in 2-4 months.
Tesla is going to reveal the Model Y in 5 months. That’s going to lead to an immediate drop in sales for competitors. I expect the time from reveal to initial production, and then from initial production to 5K/week will be shorter than it was with the Model 3. I think we’re less than 2 years from 1-2K Model Y being sold every month, and not much further than that from hearing about over 1M Model 3 and Model Y each being sold on an annual basis.
If you don’t have a 150+ mile EV today, I think you’re already lowered into your grave and just waiting for the dirt to bury you over the next few years. Only Nissan and GM have any shot at surviving the transition that Tesla is bringing.
@Taylor M.
I think you may have forgotten about the Hyundai/Kia brand, in your “shot at surviving the transition” statement. I got a good look at the Kona (test car) at the DC CCS EVgo fast charger here in Los Angeles last week, and the Kona looks like a worthy contender to the Bolt & 2019 Leaf (60kWh), in the 200mi. + range (Hyundai/Kia supply constrained) hatchback segment!
I think VW will be fine, they are actually dumping a lot of money into EV development as much as people like to pick on them.
I predict that I’ll have a Model Y in my driveway before VW delivers anything EV in the USA.
I love that prediction
Well technically they do deliver EVs in US. maybe just not the EVs anyone would want too much. 🙂
Nobody, except for maybe Tesla fans, want legacy auto manufacturers to fail, but people need and want zero emission vehicles that run on inexhaustible fuel sources. Transition is always difficult and sometimes very painful. Auto manufacturers that commit to the transition and lead change will come out on top.
I always beach, moan, and complain, when Tesla starts to devour my lunch, because I foolishly left it out unattended. Honestly, I didn’t realize, until it’s too late, just how hungry that ravenous Nicola guy was!
I was unaware that the Energizer Bunny was now running, longer and stronger, on less expensive Lithium batteries. The ICE OEM tortoise, may have finally met its match, in the ensuing EV adoption race to Zero Emissions!
Hey Germany, unless you want your economy to collapse, I suggest encouraging German automakers to embrace electrification.
@VW: And what? You had your chance, but you got caught cheating. And then you had your chance to turn things around to make it right but you drag your feet and still bang on about how diesel isn’t dead. Sorry, but either get on board or move the f**k out of the way. EV train is coming in full force.
35% reduction in 12 years is a joke. Norway has managed >60% reduction in about 6 years until now.
Funny thing is, the competition building EVs does not care so much about ICE competitors crashing. Maybe the ones from China do, because they want a cheap buy in to get factory sites and skilled assembly workers. Within 12 years, a quarter of the current workforce will retire anyway, and the others can adapt. Besides, someone has to take care of the robots that will assemble the EVs.
VW management is showing in more and more ways that they just CANNOT TELL THE TRUTH about anything. If VW doesn’t want to be in the future car business, the public will simply purchase ev’s made by other brands. Problem solved.
They started the company with a stolen BEETLE design from the Czech republic. 80 years later nothing has changed in their behaviour.
conversion to electric will be a massive change to the economy. it requires fewer people to assemble, fewer pieces, less maintenance, no transport truck hauling gas and parts around. some of those industries will collapse. I doubt any of that will be overnight.
I hope at least that Tesla is not going to crash otherwise in 100 years people would still have to read conspiracy theories in the comments section of Insideevs. That would be worse than reading the yellow pages.
You don’t “have to read” anything here. Gosh, we would miss you and your fellow serial Tesla bashers so much if you left. We’d cry a bucket full of crocodile tears.
VW also wants to remind everyone to watch out for snakes!
If anything, there will be a boost in car sales as the s-curve of EV adoption happens
Big auto companies used to be run by engineers but that changed a long time ago. Traditional auto companies run by MBAs competing with an auto company run by a rocket scientist is fun to watch.
By doing that VW is just lobbying to safeguard their profits acting in the best interest of their shareholders. A company acting in the best interest of the planet is fine too but shareholders interest usually come on top. You do not like it then there are other types of society but those did not fare too well in the past (soviet Russia etc…).
Now I take it that it does not mean that VW does not want to address the EV market but brutally enforcing a rule without taking demand into consideration is politics acting recklessly in a business world with offer and demand rules. Communist countries did that and it famously triggered huge famines. Biggest 20th century famines were caused by politics interfering with markets.
You are right, but these companies had almost a decade to address this but they moved the target to the last minute and now are struggling. They had the advantage of over 5 decades of experience compared to Tesla and yet they cannot manage, that is not good……
You can come with any number of views, but the hard core fact remains that when they had a chance to change, they just sat doing nothing and when the other company started working, they still didn’t do anything, thinking and hoping that Tesla fails and everything comes to their comfortable zone, but now that those chances are slim, they are trying to create the FUD which people cannot accept and are really getting pissed at.
In short, we have one person facing the wrath of the world, just because they don’t want to go another zone, and when he succeeds these companies make up another reason for not moving to the other zone.
I agree that they need to be pushed towards EVs but in an orderly way in a long term view. For example in the years 2000-2010 there were big incentives for solar in many EU countries. Then states realized they could not sustain the incentives they agreed upon earlier and those were often brutally stopped leading to many bankruptcies. It many situations it resulted in the exact opposite effect than the one initially thought about. This is why those measures needs to be negotiated. Everything needs to be negotiated in life, including often with one’s partner/wife/GF.
Their most influential shareholder is the German state.
When i look at Tesla it seems like demand of evs is already through the roof.. VW could Just make Great and profitable 30 k ev’s today by the millions..
If Tesla can do that(or close) , it should be super easy for the big, rich, professional VW.
I thought Tesla was going bankrupt (as per Bob Lutz) as they do not have any
* Technical Advantage
* Battery Advantage
* No Manufacturing experience
* No Cash as they are burning out cash like crazy
as other car companies will quickly manufacture electric cars and put it in market even if they have to lose money.
Wondering if he changed the company name to Tesla by mistake when he was mentioning all along ICE manufacturers.
Man what do Tesla fans know. They are just fans with no knowledge of how businesses operate in the world and have to be educated by people like Bob Lutz
And thats one of the biggest reason for me to buy a Tesla: Its the only company i know that makes ther ev’s with passion and love.
It’s inevitable that electrification and the next global recession will cause several of the big Auto brands to die. My guess in the US will be Fiat Chrysler and maybe a big chunk of GM. In Japan, it’ll probably kill Mitsubishi, Suzuki and one of big three, Toyota, Honda, Nissan. My guess is Nissan. It’ll pretty much destroy European auto unless they electrify.
I think what a lot of people are worried about is the low end. Tesla can and does have a decent business selling high-end expensive long-range EVs.
But their cheapest car is currently $49,000.00 That is out of reach for most.
The EV biz needs good affordable EVs. That is extremely hard to do. We might need more PHEVs and medium range EVs (120 to 150 miles). But a lot of people want a car that can handle long trips and the medium range EVs are not good at that. So PHEVs may be a growth sector if we want to move the masses electrified driving. The Volt. The Pacifica. The Mitz Outlander PHEV.
The EV fans want pure EVs….but at $49K for the cheapest one…they are kinda out of reach.
Awww, poor VW. I think I’m going to dump my Model 3 and get a diesel, cough cough…