Volkswagen reveals electrifying future

Volkswagen will try to cleanse the public image of its brand by electrifying a quarter of its fleet by 2025 and slashing a quarter of its emissions in the same timeframe, its boss revealed in a strategy document today.

CEO Herbert Diess plans to “fundamentally change” Volkswagen’s corporate culture to make it the world leader in electric cars by 2025. Hehas  also put a dampener on profitability, admitting that climbing from today’s two per cent margin per car to its six per cent target might not happen before 2030.

A part of that is because of the investments the scandal-hit car-maker has made in electrification R&D, including spending €3 billion on its own collection of “gigafactories” to make electric-car batteries and launching its oft-mooted low-cost brand in China, India and Latin America by 2019 at the latest.

"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.

"Going forward, our electric cars will be the hallmark of Volkswagen," he told reporters.

But CEO Herbert Diess admitted it would take the carmaker at least a decade to return to where it needs to be in North America, which was Ground Zero for the Dieselgate scandal last year.

He said he was aiming to hit the US hard with cars and SUVs more appropriate to US market needs, including large SUVs and a surge in electric cars. He expected Volkswagen to sell a million electric cars a year by 2025 and said it would rebirth the moribund Phaeton factory in Dresden to build the BEV E-Golf.

Diess has admitted Volkswagen will struggle to meet an interim profitability target of four percent by 2020, which will lag behind the rival PSA Group’s six percent target by 2021. That’s even with Volkswagen’s admission last week that it will slash 30,000 jobs by 2025 by not replacing retiring or departing workers.

On the flip side, Volkswagen will introduce 9000 new jobs in high technologies and software development to become less reliant on outside suppliers.

"We want to make Volkswagen future-proof," said Diess, who made his reputation at BMW as a cost cutter in development.

"Our industry will undergo more fundamental change over the next 10 years than ever before," Diess predicted, suggesting the breakthrough timing for electric cars was only four or five years away.

"For most customers the electric car will soon be the better alternative," he said.

"The image of our brand has suffered from the diesel crisis, many people no longer trust us as they used to," Diess said of the brand that sold 4.4 million cars last year.

"Our main task is to win back this trust and In North America we want to write a comeback story," Diess said.

"Nowhere else can you make more money by selling cars than in the United States," said Diess.