Since Tesla has taken the market by storm, everybody has been hearing the same question: Who will be the next Tesla?
Well, nobody can really be the next Tesla, as not many companies are owned by a flamboyant billionaire who is truly creating a market that did not exist before. However, the process of catching up to the Californian manufacturer might be almost over as many companies are fully dedicating to an all-electric future and shifting towards battery electric solutions.
There is one company though that it is making all the right moves and investments that might erect it as the first true competitor of Tesla and that is the Volkswagen Group.
These are 5 reasons why VW is set to become the next electric vehicle powerhouse:
1. Dedicated EV Platform
The first important step that Volkswagen has made in its quest to become a dominant force on the electric vehicle market was to create a dedicated EV platform. In fact, by launching its MEB (Modular Electric-Drive Toolkit) platform VW is now able to achieve two key components for success: cutting costs and flexibility.
A dedicated EV platform gives the automaker the freedom to place any shape or size of body design on top. Engineers don’t have to create a different platform for every new model, which simply translates into less money spent in development as the main component of the vehicle remains the same.
As a matter of fact, the MEB Platform is already being used on a wide variety of vehicles. It is used by the ID.3, which is a compact city car, and by the ID.4 and ID.6, which are SUVs. VW is not the only brand who is using this dedicated platform as its subsidiaries Audi and Skoda will be also employing it for the new Q4 e-tron and Enyaq iV respectively.
The versatility of having a dedicated platform is, as VW explains, due to the fact that “the number of modules that are put together to create a battery system is variable. This modular structure allows for maximum flexibility: if the customer requests a higher range, then more modules will be fitted to the battery system. The fundamental structure however remains the same.”
VW envisages production of approximately 26 million fully electric cars by 2030 and it is planning to have over 19 million of these vehicles based on the Modular Electric Drive Matrix.
2. Variety of Models
Dedicated platforms also play a role in this aspect as they allow the company to create a wide variety of models. The company is not only trying to tackle the electric vehicle market but also to meet the needs of consumers, which can be widely different.
That is why Volkswagen is quickly gaining ground because with a dedicated platform it is able to offer compact cars, SUVs and soon sedans and mini vans. The German giant is aware that in order to become a dominant force on the market it needs to have a wide portfolio that can attract a greater number of buyers. A dedicated platform is certainly the foundation to achieve that.
The whole Volkswagen group is set to reap the benefits of the platform as it will be able to offer EVs in different segments. In fact, we reported that SEAT will launch an urban electric vehicle by 2025 based on MEB. In the meantime it is gearing up to launch this year the new Cupra El-Born, a compact hatchback based on the same platform.
3. Hefty Investments
There is no way around it. In order to be successful in this business there is a constant need for innovation and that does not come cheap. Companies that want to stay relevant in a world without internal combustion engines need to act quickly but also to make hefty investments.
As we reported, that is exactly what VW is planning to do. The Group will spend around €73 billion on electrification, hybrid powertrains and digital technology over the next five years. Approximately €35 billion of that investment will be spent on battery-electric vehicles.
However, what will set VW apart from all the other brands is what the company is planning to spend its money on. The German group is aware that in order to thrive in a future without combustion engine it needs to restructure the way the company thinks and operates.
First off, last year the company spent millions to transform the iconic plant of Zwickau, making it the largest electric vehicle factory in Europe, and the new home of six electric models from the brands Volkswagen, Audi and Seat. Improving the infrastructure where the EVs are built is a key component to survival for these brands, and VW has understood that.
Part of this incredible investment that the company is planning to do is also to create their own brand of batteries. As a matter of fact, the company has announced that VW is aiming to secure the supply of battery cells beyond 2025. In Europe alone, six gigafactories with a total production capacity of 240 GWh are to be established by the end of the decade. In-house production will bring significant cost benefits to the company and ultimately lead to a reduction of the costs of EVs.
The company is not only spending to produce batteries but also to recycle them. Volkswagen Group Components has opened the Group’s first plant for recycling electric car batteries in Salzgitter. The goal is to reach a recycling rate of more than 90% and allow the company to achieve a circular economy thanks to the valuable raw materials recovered.
In the end Volkswagen is not concentrating only on one area, but it is making sure to be ready for the all-electric revolution in every aspect of its business model, from the battery cells, to dedicated powertrain to the recycling of spent cells.
The heavy investments that VW is making now will pay dividends in the future.
4. Charging Infrastructure
Another aspect that will help VW become a true electric powerhouse is the fact that the company understood that in order for its business model to flourish, its EVs need to be supported by a wide and reliable infrastructure.
The charging infrastructure is one of the main reasons why Tesla has become so popular and the golden standard of the industry. In fact, its Superchargers can now fill up a car in a matter of minutes and the company is expanding the infrastructure every day.
The reason is because one of the main ‘worries’ for people switching to an EV is range anxiety and not knowing where they will be able to recharge the battery. However, a wide and reliable infrastructure could be the solution to this problem.
At the VW battery day, Volkswagen has said that along with its partners, the company intends to operate about 18,000 public fast-charging points in Europe by 2025. This represents a five-fold expansion of the fast-charging network compared to today and corresponds to about one third of the total demand predicted on the continent for 2025.
In addition, there is also their joint venture IONITY with Mercedes-Benz, Ford, BMW, Audi and Porsche. They have the ambitious goal to establish 400 high-power charging stations across Europe, paving the way to pan-European EV travel.
Volkswagen also wants to establish about 8,000 fast-charging points throughout Europe together with BP. The fast chargers with a charging capacity of 150 kW will be installed at a total of 4,000 BP and ARAL service stations, with the majority of these in Germany and Great Britain.
The German giant has also unveiled the prototypes of its mobile autonomous charging robot, which could potentially revolutionise and expand the charging infrastructure over the next few years. These robots which are fully autonomous will be tasked with recharging vehicles in restricted parking areas, like underground car parks.
Volkswagen has clearly paid close attention to Tesla’s playbook and it is trying to create one of the biggest infrastructures in Europe.
“I think so, because you know, the race is open – this is not the industry which you can conquer within a few years or so, this is not tech. So, you need life cycles, you need product, you need plant capacities, you need market, you need to earn the trust of the customer.” This is what Volkswagen CEO Herbert Diess said when asked about the gap between Tesla and its rivals.
In those few words, he has explained why Volkswagen, a brand that has been around for more than 100 years, is still on top of its game. The reasons are multiple, but they can all be summarised in one word: tradition.
This is the same brand that has created an incredible number of icons such as the Beetle, the Golf, the Passat and the Westfalia. VW, with careful planning and attentively listening to the shifts of the markets through the years, has managed to stay relevant.
Right now, what Volkswagen is doing is simply history repeating itself. The company is evolving in the same way it has in the past and with these investments, they truly have a chance to become the next electric vehicle powerhouse.