Six months ago, Volkswagen offered up BUDD.e, a microbus concept loaded with interactive touchscreens aiming to show the world that it was serious about electric vehicles following a diesel emissions cheating scandal that eviscerated sales and forced the German automaker to restructure.
Now it finally is.
Volkswagen's board has adopted a plan that will reshape the company's core automotive business to focus more on electric vehicles and autonomous driving technology, boost profit margins 7% to 8% from 6% last year, and possibly sell some of its assets. Volkswagen CEO Matthias Müller said on Thursday that the company will launch more than 30 all-electric vehicles over the next 10 years with a goal of selling two to three million of these EVs in 2025. If VW (vlkay) reaches that target, its electric vehicles sales would account for between 20% and 25% of the company's total sales volume.
VW estimates its electric vehicles will account for about one quarter of the global passenger car market by 2025.
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Under its so-called "Strategy 2025" plan, the automaker says it is reviewing all of its 340 individual vehicles model that make up its product portfolio and plans to eliminate those that are not geared toward profitable growth.
VW says it will continue its expansion and investment plans in North America. The company announced in 2014 plans to invest $7 billion into North America over five years. Some of those investments are beginning to materialize. The company opened a new $6.8 million parts distribution center in Rocklin, Calif., in June and announced it would spend $4.5 million on a training center in Southern California.
Additionally, VW reiterated its commitment to stick with its expansion in China, where it will focus on introducing economy entry-level vehicles. The company says it will partner with "regional players," and that talks are at an advanced stage. VW didn't name these regional players or indicate if these entry-level cars would be electric.
Under the company's new board-approved plan, VW will also develop battery technology to take advantage of rapid gains in the market volume and sales of electric vehicles. VW didn't provide many specifics of how it hoped to become a major batter player, only adding in an official statement that strategic options would be "carefully examined."
Why Toyota and Volkswagen invested in ride-sharing apps:
Volkswagen executives have been signaling their electric vehicle intentions for months. What's perhaps more surprising is the company's more recent pursuit of autonomous vehicles. While Audi, one of VW's brands, has been a leader in the development of autonomous vehicle technology, the parent company hasn't been as vocal about its plans until now.
VW, which recently invested $300 million in Israeli ride-hailing startup Gett, says it wants to license a competitive self-driving system that it develops in-house by the end of the decade. In other words, Volkswagen wants to develop a self-driving software that it could license to taxi companies or ride-hailing services like Uber, Lyft, and Gett.
While Volkswagen has laid out a dramatic restructuring plan, problems from the diesel emissions scandal remain unresolved.
Volkswagen long touted the environmental and fuel efficiency benefits of its turbocharged diesel injection engines. That all changed last year when it was discovered that Volkswagen had installed illegal software in its turbocharged direct injection (TDI) diesel engines to meet U.S. standards during regulatory testing. U.S. Environmental Protection Agency accused the company of installing so-called defeat devices, which allowed the vehicle’s nitrogen oxide output to meet U.S. standards temporarily, and then produced up to 40 times higher NOx in real driving conditions.
Volkswagen eventually admitted to this, and a drop in sales and resignations from top executives followed. The company is still negotiating with U.S. regulators over a consolidated suit against the company. Volkswagen has been given several extensions to reach an agreement, most recently on Thursday when the federal court in California handling the suit set a new deadline of June 28.