Electric mobility has ‘won the race’ but Volkswagen has slammed the brakes on its electric vehicle strategy

Volkswagen AG’s comprehensive electric vehicle plan is no more.

The eponymous brand VW, has considered the ID electric vehicle line central to its future, admit last week they will need more plug-in hybrids as electric vehicle sales slow.

This is just the latest adjustment VW has made to its electrification process. strategy after the company failed to release several models and fell behind in China, where local brands now dominate. The manufacturer also has shelved efforts to find outside investors for the battery division and removed plans to build a 2 billion euro ($2.2 billion) electric vehicle factory in Germany.

In fact, the automaker is selling too many cars that still run on internal combustion engines and is at risk of exceeding emissions limits next year, prompting CEO Oliver Blume to ask manufacturers to European management adjusts tolerant. It’s a sharp turnaround from just three years ago, when VW actively lobbied for electric vehicles in the European Union rift opens between the company and a number of companies in the same industry in the region.

VW has no choice but to focus on its electrification message after betting heavily on “clean” diesel. That bet went sideways when the company was found to have cheated on emissions tests, which forced a drastic shift toward battery-powered vehicles. By 2019, then-CEO Herbert Diess announced its upcoming launch 75 fully electric car models in the next decade.

His EV-or-bust strategy – Diess argues that automakers need to change quickly if they want to survive – has rankled executives from Turin to Tokyo who want more time and flexibility to make the transition from internal combustion cars. The CEO even praised what he saw as first-mover advantages.

Diess said when presenting VW’s battery strategy for 2021 “many people in the industry questioned our approach”. Today, they are following suit, while we are harvest fruit.”

While those spoils aren’t as plentiful as VW expected, the company hasn’t completely given up on electric cars.

Blume has impressive partnerships with companies including Xpeng Inc. and are preparing a new EV brand in China, offering car models equipped with amenities such as in-car avatars to win back young consumers shunned by BYD Co. and Tesla Inc. car buyers in the market.

VW is not alone in having to recalibrate as electric vehicles slow down. Countries including Germany and Sweden have stopped or reduced subsidies for electric cars, which still tend to be more expensive than combustion cars, which has hurt the entire region. Gaps in the public charging network also continue to turn off potential buyers.

Stellantis NV said Tuesday it will sell cars co-development with a Chinese partner in Europe since September as they try to reduce electricity supply costs. Mercedes-Benz AG has stopped developing a platform for a new electric luxury sedan to save money and plans to sell gasoline-powered cars. longer than expected. BMW AG, already has successful sells more electric vehicles than its German rivals, warned this week that the EU’s plan to effectively ban sales of new combustion engine vehicles by 2035 would harm the industry. European regulators are set to review the policy in 2026.

The downturn has dealt a heavy blow to Tesla, which has lost $235 billion in market capitalization this year, more than three times VW’s current valuation. However, CEO Elon Musk still criticized automakers for going against the plan.

“Global adoption of electric vehicles is under pressure and a lot of other automakers are retreating from electric vehicles and replacing them,” Musk said last month when discussing Tesla’s first-quarter earnings. that pursues plug-in hybrid cars. “We believe this is not the right strategy and that electric vehicles will eventually dominate the market.”

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