VW sees electrification opportunity to break US

Lack of scale has prevented Volkswagen, Europe’s largest automaker by sales, from advancing from its relatively small beachhead in the US and North American markets, according to VW Group’s CFO Arne Antlitz. But the switch to electrification offer a chance to change that narrative.  

VW’s market share is currently 4pc in the US and 5pc in North America as a whole, Antlitz tells broadcaster Bloomberg TV. But he believes this could rapidly change.

“In the combustion engine world, we never really had the scale. Now the market is turning electric, and this is a great opportunity for us to grow,” he says.

“We have all the ingredients we need to grow successfully. We have great products with great heritage. We have the technology. We decided on a local battery capacity in Ontario, which will be very competitive. We have the financial resources and the will.”

But the fly in the ointment could be what Antlitz describes as a “once-in-a-lifetime opportunity” with the relaunch of the Scout brand. While Scout is also promising a “rugged” SUV, the VW finance chief is more excited about its e-pickup offering.

He describes its target market as “one of the most promising segments in America”. The issue is that, in the short term, sales data and the results of a survey of US truck buyers suggests that consumer enthusiasm for ICE trucks is not really translating into great enthusiasm to buy e-pickups.

“I saw the designs just before Christmas, they are great,” Antlitz says. He characterises the concepts as melding “a lot of heritage” but also appearing “very modern” and looking “pretty similar to the original Scouts”.

Juggling investment

Antlitz accepts that there might currently be something of a plateauing of EV demand in both sides of the Atlantic as everyone waits for the next wave to follow the early adopters. But he stresses the flexibility — to the extent he uses the word repeatedly — that VW has built into its capex commitments to ride that out.

“We see some reluctance right now in Europe, perhaps also in the US,” Antlitz says. “Our total R&D cap combined for the next five years in €180bn ($197.5bn).

“And €130bn of that is going into electrification and digitalisation of our products. But we also built in some certain flexibilities. About a third of the upfront investment goes into combustion engine cars still.

So we have a flexible strategy to keep our combustion engine cars competitive. On the way — and we are fully convinced that the future will be electric — our strategy is rather flexible,” the finance chief continues.

This seems to be keeping the door open to frontload investment in ICEs during any hiatus in strong BEV demand growth, to be followed by more spending when the next class of adopters make their move.

Antlitz also hints at potential price cuts to stimulate demand. “We have quite high raw material prices, so prices for EV are high,” Antlitz says.

Given he acknowledges pricing as a potential hurdle to adoption it could follow that, as and when lower material prices continue to feed into VW’s production costs, it might look to cut sticker prices on its BEVs.