We’ve discussed the Volkswagen diesel scandal ad nauseum and need to move on to what Volkswagen will be doing to improve the market and get back to making money in the US. The diesel scandal has already cost the brand $14.7 billion and has caused a serious decrease in the confidence we have in the brand. The new direction of VW is to produce EV models to become then next development of the mainstream models that are offered by Volkswagen. The goals are to have several models on the next few years and the plan will make a difference for VW. The company is also planning to put a lot of focus on e-mobility and self-driving cars over the next decade or so, according to its Strategy 2025 outline.
The first part of the plan is to reduce the number of low volume models and only sell those that are profitable for the brand. This will help to trim down the lineup and create room for growth in what VW hopes will be the future of the automotive market. By 2020 Volkswagen plans to have 19 SUV models on the market, which is a huge jump from the two that are currently offered. This direction makes sense since the SUV market is the most profitable and highest volume of all the automotive classes right now.
In addition to adding these SUVs, there will be a large number of EV models that will be offered to create the thirty that VW plans to have by 2025. The goal is to have at least one million new EV models sold by 2025 and to do this they have to commit a huge amount of money to the development and cut some jobs. They have already announced the reduction of their workforce by 30,000 jobs which will happen through natural attrition and retirements. This action helps to save the money needed to develop the next phase of this project.
In addition to cutting the lineup and reducing the workforce, the investment that will be a goal of at least four percent profit margin by 2020 and a six percent by 2025 to turn the numbers around from where they are now. In order to reach these profit goals they plan to invest $4.5 billion each year to the development of the models they’re working toward and bring a positive impact on the earnings to $3.7 billion per year by 2020. This will help add to and speed up the development of the many EV models that are being planned for the future of VW.
This investment of money and development into the EV market is a huge change for VW and one that can put them on the doorstep of the next phase of development or have them reeling by 2025. We won’t know which direction this will take until it gets closer to that time, but we will certainly get to see the overall developments and products that are part of this plan to bring VW away from the diesel scandal an into being the largest EV manufacturer in the world by 2025.