Inside Look at a Top Automaker's Electric Strategy
Photos: Brian Merchant
What's in an EV Strategy?
Electric cars are the future of personal mobility -- right? Even top execs of major automakers wearily acknowledge that petroleum won't be the dominant fuel source forever. So most publicly point to electric cars as the next step in the future of automobiles -- many say the question is when they'll enter the market en masse, not whether or not they will. As a result, just about every major automaker has an EV in the works -- and a corresponding marketing department to tell us all how their entry will be the wave of the future. But how serious are these companies about launching EVs, and bringing them to mass market? What are their real strategies for phasing in EVs, behind the press releases and ad campaigns?These are questions we should consistently be asking ourselves, since the reality behind the currently supplied answers remain about as murky as anything in the auto world.
Just How Much Do Auto Companies Care About EVs?
This ever-present ambiguity made itself clear in a recent press trip I joined to test drive Volkswagen's new electric car prototype, the e-Golf. After spending a few days in Germany and visiting VW HQ to explore their e-mobility program, I got a rare peek behind the curtain at what comprises a major automaker's electric strategy.
I arrived in Wolfsburg, home of the VW headquarters, just in time to participate in the day-long rundown on the company's e-mobility program. First up was a roundtable with a handful of journalists and Dr. Rudolf Krebs, Group Chief Officer for Electric Traction. He outlined the ideas behind the e-Golf and the company's plans for bringing EVs to market: A hybrid electric Jetta in 2012, the mini Up electric in Europe in 2013, and the electric Golf to the US in 2014. Which means VW is bringing its first electric car to US shores a full 4 years after Nissan and GM.
But that's part of the strategy, he assured us -- they were waiting until the dust settled from the launch of early EVs, when there was a clearer vision for what consumers want in their electric cars. They felt there was no need to rush the electric Golf to market.
Soon after, we were given the opportunity to take the e-Golf prototype for a spin around town. A VW engineer rode along, and excitedly spoke about the various features -- some of them quite interesting -- in heavily-accented English. The car was good fun to drive, and appeared to be a quality machine. But the version VW brings to market in 2014 will have an entirely different battery, and the electric Golf will be different in design.
Finally, to cap off the day, we were taken to another roundtable, this time with Mr. Christian Klingler, the board member of Volkswagen Group responsible for sales and marketing. In other words, this is the guy in charge of marketing VW cars to the world. And this is where things got a little weird. Despite ostensibly being aware that this was a press trip designed to promote his company's electric car strategy, Klingler spent much of the meeting pointedly downplaying the significance of electric cars.
Why We Don't Need Electric Cars
He waved off questions about VW's commitment to electric cars, making some old claims that automakers have relied on to resist electric cars. He insisted that studies show that electric cars pollute more than gas-powered ones if they rely on coal power (which numerous other studies have shown to be untrue). He said that VW would only launch electric cars in places where they could be sure there was a clean enough energy supply.
"If there's an advantage for the environment, we'll do it. If not, we won't," he said.
He said that it wasn't clear if there was going to be a real demand for electric cars or not, and that rushing an EV to market now is premature. He chided the LEAF, and expressed disbelief that anyone would actually want to buy one. He noted that Greenpeace was against electric cars.
"The electric car is not a request from customers," he said. "Electric cars are a request from the government."
As a whole, he seemed unconvinced that electric cars were much more than an environmentalist fantasy -- and this is the man who will be in charge of selling his company's electric car to the world. It was a distinctly odd end to the day-long tour of Volkswagen's electric mobility program: VW had essentially flown journalists in from around the world to test drive their forthcoming electric car -- and then to be told the reasons why it, or any other EV, shouldn't be taken seriously yet.
But I'm not writing this article to criticize VW for not lining up their chief marketing guy behind electric cars. On the contrary, I found Klingler's uncharacteristically frank responses illuminating: From a sales (or at least Klingler's) perspective, EVs aren't a viable mass-market product for VW, and won't be for years. VW, has in fact, publicly warned of "eco-hype" before, and emphasized caution and slow deployment.
It makes sense, then, the company's seemingly laggard EV rollout strategy: VW is developing a high quality electric car, but it only plans on putting it into production far down the line, when the market will ostensibly have determined whether there is true demand for the them. (VW's press liaisons, perhaps even more taken aback by Klingler's discussion than even the green journalists were, hastened to inform us later that the company is aiming to have electric cars account for 3% of its total sales by 2018.)
By the time VW puts out its first EV in the US, there will already be a couple third-generation electric cars on the market.
And that's fair enough -- VW is a business, and it has designed its strategy regarding EVs to be cautious, and reactive to the market. Most major car companies have: Not every automaker wants to be the first off the line with electric cars. In fact, those that do have their own unique motives. Both Nissan and GM are in need of brand facelifts, something launching a revolutionary new kind of car can help achieve. They probably won't make much money on the either the LEAF or the Volt for at least a while, but the prestige afforded by being early movers will be compensation enough.
VW, on the other hand, is currently an industry leader, just behind Toyota -- it's comfortably pumping out Golfs for Europe and China, and is firmly planted with the top market share in both. Why risk an ambitious electrification strategy when you're already ahead? It's unfortunate for EVs in general, but most companies are following VW's mold for the most part -- developing an electric car to have handy in case demand spikes, but holding off in terms of large scale adaptation.
Nailing Down Electric Strategy
It's also important to remember that Klingler's opinions and ideas are far from the be-all-end-all for VW -- there is of course a wide range of attitudes towards EVs throughout the company, as our day-long tour demonstrated. From exuberant engineers to pragmatic execs, the opinions rendered towards EV ran the gamut. As such, electric strategy reveals itself to be not finely honed science, but a downright messy affair, with rampant speculation, never-ending developmental work, and conflicting ideologies about marketability, all within the same company.
Yet this is also something of a reminder that automakers probably eagerly anticipating electrification -- and that not all of that top brass is even sold on the idea at all. And sure, most auto execs are probably quietly hoping that some bottomless new reserve of easily accessible oil is discovered in the Arctic, or that someone finds a more cost-effective, efficient way to produce the tar sands stuff -- but let's face it: Oil is on the way out. And so far, the EV is the best alternative for personal mobility. Whichever automaker has the best strategy for bringing reliable electric cars to the mass market soonest will likely reap considerable rewards. It's only a matter of time.
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