Stefan Jacoby, CEO of Volkswagen America, on VW's Electric Car Strategy (Part I)
Photo via USA Today
Volkswagen has recently announced some pretty ambitious goals: it's looking to have 300,000 of the cars it sells yearly--3% of global deliveries--be electric by 2018. It's seeking to surpass Toyota as the world's largest automaker by the same time. Recently, while covering the 2010 Geneva Motor Show, I had the opportunity to sit down with Stefan Jacoby, the CEO of VW America. We talked electric cars, reducing emissions, and gas taxes. Here's what he had to say.Sitting down for the conference along with me was Aron Kressner of the Lazy Environmentalist, and Kevin Sintumuang of GQ--some of the questions were theirs, where noted.
TreeHugger: Do you feel that Geneva well represents the global car industry?
Stefan Jacoby: Yeah, definitely. Everybody is here. It's very compact, actually, within 2 or 3 hours you can get an overview. Everybody is here. Everybody is showing what they will bring in the future. It's a real global, one of the premium auto shows.
TH: I was interested in the announcement of VW's electric strategy. I was wondering if you could briefly talk about the vision?
SJ: Yeah. Well, Everybody is aware of the big change in respect to greenhouse gases. Turning our industry, and turning private mobility from being dependent on fossil fuels, to kind of emissions-free, CO2-free and zero emissions power trains. And it looks like that the technology which will actually be the future for cars will be electric vehicles. And with all the challenges ahead of us, we now have clearly defined our strategy in order to start the transition period between combined combustion engines, traditional ones--which can be further optimized, we should not forget this--and then cars which will be driven through electric engines.
Aron Kressner, of the Lazy Environmentalist: What are some of those challenges?
SJ: Of course the technology--although the technology is certainly developed, it needs to be made safe, it needs to be made reliable, and it needs to be made consumer friendly. We have found out in our research in the United States that consumers are willing to a certain extent to pay more for electric vehicles but they are not actually willing to not get one of the features he has with today's cars in respect of practicability, in respect of reliability, in respect of distance to drive, and actually fulfilling all of the needs American consumers have in a car, yeah? These are the challenges, there are of course infrastructure challenges as well, but I think that these things can be pretty easily settled, you know?
But basically to find the right car for this electrification, and actually understand all the pressure automakers have to get compliance with greenhouse gas regulation, CAFE standards. We must find the right car for the consumers, cause at the very end--they buy it. What is extremely challenging is that fuel is so cheap. Why should somebody with a fuel price under 3 US$ change to an electric vehicle? And you know, that batteries are the most expensive factor, and as soon as there's not a break even, with or without support from tax benefits by the government, consumers are not switching automatically towards electric vehicles.
LE: Is there a benchmark or a goal?
SJ: Well it depends very much, the cost of ownership, on what is the comparison of fuel prices then, how much if you can traditional combine combustion engines be optimized? The more they can be optimized, the more difficult it is for electric vehicles to be really competitive.
We strongly believe that the combined combustion engine is a perfect machine--and can be further optimized and can definitely contribute to fuel consumption and greenhouse gas emissions, so we cannot just say from tomorrow onwards we shift the industry to electric vehicles. That will be a long transition period. We announce also with our electric strategy that in the next 8 years about 3% of our vehicles will be only driven through electricity and batteries by 2018. It takes a long, long time.
GQ: As far as the overall strategy in reducing greenhouse gases, do you think there's a market for smaller cars in America? It seems Americans don't really want small cars.
SJ: The industry wants to introduce small cars into this market. There are Saturns and entire brands being developed, Cavaliers and Coopers and so on, actually a lot of competitors have already introduced small cars since twenty, thirty years ago. We don't need this, we have compact vehicles: the Golf, the Jetta, the New Beetle, we don't need to change our strategy. But I want to see this from a little different perspective. I don't believe American consumers will turn into Southern Italian consumers.
We cannot assume that with all the differences between Europe and the US, that American consumers will switch to vehicles like European sub-compacts. The distances are much bigger. The habits and use of the vehicle are much different. American consumers are used to space in their vehicles, roads are bigger. There are significant differences between driving habits in Europe or South America compared to the US. I don't think it's a recipe to squeeze American consumers into sub-compact. We don't think size will significantly change. But, I also believe that especially in metropolitan areas like Los Angeles and New York, there is of course a demand for sub-compact vehicles, but it will not dominate this 60, 70 million car American market.
Stay tuned for part 2, in which Stefan endorses a gas tax, and goes deeper into detail on the global EV strategy.