Analysts are carefully watching Volkswagen to see if it can recover from its diesel emission scandal, and a few are wondering if electrified vehicles will be the answer.
“VW is actually in a strong position to innovate their way out of this mess,” said analysts with Lux Research. “They have been spending the most on R&D of any OEM (about $11 billion in 2013), and they are the largest automaker by volume. Arguably, no major OEM is better positioned than they are to decisively accelerate the push towards plug-in hybrids and electric vehicles, putting the shine back on their tarnished image.”
Volkswagen has already developed a similar strategy for China, announcing last May that 20 different vehicles were being developed specifically for that market. The electrified fleet is to include both plug-in hybrid and battery electric powertrains in a variety of vehicle classes.
Prof. Dr. Jochem Heizmann, member of the board of management of Volkswagen AG with responsibility for China, laid out the plan in his essay, “Electrifying China With a Tailor-Made Efficiency Strategy.”
“I think we should be aware that plug-in hybrid power is the best solution in the short and medium term,” said Heizmann. “Perhaps the development of all-electric vehicles can be realized in the long run.”
Elon Musk, CEO of Tesla Motors, also recently noted that plug-in vehicles are an optimal way for Volkswagen to recover.
“With hydrocarbon combustion we’ve hit the limits of physics – improvements are very tiny,” he told Auto Express. “There must have been lots of VW engineers under pressure – they’ve run into a physical wall of what might be possible so trickery was the only option.
“If I was taking over VW, I’d go the other way and aim to be a leader [in clean vehicles]. Maybe the path to redemption is towards clean vehicles.”
Switching from being a category forerunner in diesels to electrified vehicles will be an arduous challenge for Volkswagen, which currently has only two hybrids in the U.S. market and tallies less than 100 sales each month. And some analysts are doubtful that the company can initiate the drastic changes to make an EV-heavy strategy work.
“VW probably lacks the vision, leadership, and ambition to do it, so they will most likely carry on as usual after some apologies,” commented Lux Research.