VW can help make EVs mainstream, Diess says

Editor's note: An earlier version of this story overstated the number of full-electric cars for which VW has booked production. The figure is 15 million by 2025.

HERNDON, Virginia — If electric vehicles fail to catch on globally over the next several years, it will be because Volkswagen did not try, CEO Herbert Diess says.

The German automaker's plan to flood the globe with tens of millions of capable, affordable and profitable EVs beginning next year — the direct result of a strategy shift that came after getting caught cheating on diesel-emissions testing — could move EVs from niche to mainstream products, Diess said in an exclusive interview.

"Now we're coming into an age where electric cars will play a major role. We will be very big in electric cars worldwide because we are very strong in China. We have huge economies of scale, and we will bring those cars here" to the U.S., Diess told Automotive News Oct. 31.

Globally, about 1 million EVs were sold in 2017, about half in China, according to the International Energy Agency. The figure represented a 54 percent increase over 2016, the agency found.

Lower costs, greater range

VW's strategy relies on its flexible MEB platform, which sets only a few parameters for designers working on individual vehicles but allows massive economies of scale to hold down production costs. As an example, Diess said the cost basis for the next-generation electric VW Golf will be reduced 40 percent, despite improving the compact car's technology and interior room.

"A 40 percent cost reduction, but a much better car; twice the range, bigger interior, but outside, still a compact car," Diess said, adding that the automaker's scale should allow it to sell EVs at roughly the same cost premium above a gasoline engine as its diesel offerings once commanded.

VW has booked production in its plants for 15 million full-electric cars, Diess said, and has sourced the batteries to power those vehicles from three Asian companies: CATL in China and LG and Samsung in South Korea.

"I think we have the best setup strategy for the electric vehicles to come," Diess said.

While lower costs and greater range will attract additional customers to EVs, Diess readily admits that the technology does not always make sense.

Renewable energy

"Many — not all — would consider an electric car because if you are still driving far distances, 20,000 or 30,000 miles [per year], it's probably not the right car," he said. "But there are so many people who are driving longer distances only so often, and it makes a lot of sense, in Europe, in China, and in the United States because the cars are really becoming good."

VW, he said, will continue to invest in new gasoline and even diesel engine architectures for the foreseeable future to bring added fuel efficiency to regions where EVs are not yet a viable option for mobility because of charging infrastructure or range limitations. Yet EVs, Diess said, will grow because they are roomier and offer greater performance than combustion-powered alternatives.

"Sales are picking up. It's not all over the place, but West Coast, if you go to a parking lot, you see already a decent mix of electric cars there. Most of them are probably Teslas, but what's happening now is that the cars become so much better," he said. "We will be aggressive on the pricing. We will be much lower than Tesla, but we have all the huge economies of scale and the car is specifically designed now" for battery power instead of being converted from a combustion powertrain.

An EV "becomes a better car, because it's so much fun to drive — it's roomy, it's clean, you have less maintenance costs. It's just fun," Diess said.

"Will all cars be electric? No, not for the foreseeable future. Renewable energy is a must. If you don't have renewable energy, or at least a low carbon share of energy, then you're driving on coal instead of oil, and it doesn't make sense."