Volkswagen still ‘convinced future is electric’ despite EV winter

The automaker is planning to give customers a lot of new shiny cars to play with this year as it continues a massive restructuring plan, with more than 30 new models expected to be launched in 2024.

“We’re looking forward to many highlights that we hope will position us as a frontrunner in the competition lineup,” Volkswagen CEO Oliver Blume said Wednesday of VW’s plan to launch swathes of new models across its different brands. 

The group is planning to launch a mix of electric vehicles, internal combustion engine (ICE) cars and hybrid vehicles this year. 

Volkswagen is taking a longer-term view on electric vehicles, saying it plans to accommodate different customers’ needs, a softening of the automaker’s language which previously aimed for ambitious EV uptake.

But the group remains committed to its EV pivot, despite doomsday predictions and recalibrated production plans from rivals. 

Speaking on a media call for its investor day, Volkswagen CFO and COO Arno Antlitz said: “We are very aware that current public debate is somewhat critical in terms of electric mobility. 

“But we are convinced the future will be electric.”

Volkswagen faces tough 2024

Shares in the carmaker plunged more than 7% at one point after it released annual financial figures on March 1, but have picked up in the weeks since to approach February levels.

Volkswagen’s earnings were marred by a frosty economic outlook where it said it expected sales growth to drop by two-thirds to 5% in 2024, after enjoying massive growth in its EV unit. 

The group plans to put cash aside for battery-related acquisitions this year. 

In hindsight, it seems miraculous that Volkswagen was able to achieve double-digit sales growth last year, given the gloomy signals emanating from one of Europe’s biggest companies. 

In March’s earnings press release, Blume said, “We are confident about 2024 despite the muted economic outlook and intense competition.”

During his media call Blume said that the automaker was targeting markets in the U.S., China, and Mexico to drive growth, hoping that new models this year will appeal to drivers in future years.

He added that Volkswagen had “put its house in order” with its operational changes and is pivoting to growth with its new models.

EV winter

The EV sector is struggling through a demand glut, hitting the once rampant industry like a ton of bricks as carmakers deal with a stockpile of inventory that isn’t flying off lots as expected.

Higher interest rates, falling gas prices, and an unexpected struggle to convert traditional ICE drivers have affected the production plans of manufacturers like Aston Martin and Mercedes. 

Several automakers were enticed by government subsidies that haven’t yet translated into widespread consumer uptake.

Volkswagen, which also owns Porsche and Audi, was an early acolyte of the EV craze and hasn’t been immune to these industry obstacles. 

The German carmaker has also been affected by falling demand in its biggest market, China, which has been hit by a property crisis, a protracted exit from COVID-19, and the growth of ultra-cheap native rival BYD. 

The manufacturer cut 300 jobs at its Zwickau plant in Germany last October, while 2,000 temporary workers were thought to not be safe. 

Volkswagen’s early investment into EVs, prompted by the 2015 Dieselgate scandal, hasn’t been smooth. 

Slow and glitchy software has put it on the back foot in China, and it hasn’t been embraced by EV fans in the same way as stalwarts like Tesla. 

Volkswagen’s rebrand

Volkswagen agreed in December to a €10 billion ($11 billion) cost-cutting plan to help turn the tide. The plan involves hacking staffing costs by up to a fifth. 

The carmaker’s brand chief, Thomas Schaefer, put Volkswagen’s current competitiveness plight in plain language to employees.

“We are not making enough profit with our cars to finance the transformation and our future from our own resources,” Schaefer said on the company’s intranet site last November, Bloomberg reported. 

“Other manufacturers would close plants in such a situation.”