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How Volkswagen Aims To Beat Tesla at Its Own Game - POLITICO
How Volkswagen Aims To Beat Tesla at Its Own Game - POLITICO
How Volkswagen Aims To Beat Tesla at Its Own Game - POLITICO
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The stalwart Volkswagen intends to make its own mark in the electric-vehicles race | Jens Schlueter/Getty Images
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05/02/2024, 10:42 How Volkswagen aims to beat Tesla at its own game – POLITICO
Volkswagen this week announced a massive expansion of its electric car plans
with multibillion-euro moves on battery cell production and software
development aimed at cutting off Tesla by copying its strategy.
“Our goal is to secure a pole position,” VW’s CEO Herbert Diess said of his
electromobility plan during Monday's Power Day — an event marketed and
produced to ape a Tesla or Apple product launch.
But unlike Elon Musk’s "Technoking" persona, Diess struck a more reserved
figure, handing the broadcast off to executives from the Porsche and Audi
brands to outline why battery technology is so critical to the company's future.
Despite the dry Teutonic delivery, Diess’ message is just as gung-ho as a
California keynote.
The Power Day was pulled together in just two weeks to head off unease from
investors about a lack of clear direction from Wolfsburg on its battery strategy,
after Tesla held its latest Battery Day event late last year, said a VW official
who asked not to be named.
Under the plan, VW will aim to have an interest in six battery plants in Europe
by 2030 at a cost of around $29 billion, according to estimates by
BloombergNEF. Meanwhile, Diess said 60 percent of the company's vehicle
sales should be electric by the end of the decade. There will also be a shift of
internal resources to software development for autonomous vehicles.
Just like its rival, that means moving fast and investing big.
“It’s a mirror image to what Tesla has done, and it’s working,” said Matthias
Schmidt, a Berlin-based auto analyst, citing the boom in VW's share price —
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05/02/2024, 10:42 How Volkswagen aims to beat Tesla at its own game – POLITICO
up more than 17 percent over the last week and nearing heights last seen
before the 2015 Dieselgate emissions scandal. “It’s a carbon copy strategy, and
the whole reason is to try and get investors to pay for the electric transition.”
Since taking VW's top job in 2018, Diess has been trying to clean up the mess
of litigation and brand damage caused by Dieselgate, while pushing an
electrification agenda.
Diess is very much aware of his target: The two CEOs regularly exchange
emails. They shared a stage in Berlin when Musk announced plans for a
German gigafactory in late 2019, and a big PR coup came last September when
Diess made a splash with a video of himself driving Musk along an airstrip not
far from Volkswagen's headquarters to a spy film soundtrack.
"I think for a non-sporty car it's pretty good," Musk told Diess of the electric
VW ID.3 that has become a flagship e-model for the company.
For VW management, Tesla's success has been a driver for the company's own
transition despite opposition from some executives uncertain about a costly
and disruptive move away from fossil fuels.
“We always see Tesla as an accelerator for our revolution,” said the VW
official.
Gigafactories
The battle between upstart Tesla and Diess' 83-year-old German giant is
centered just outside Berlin, where Tesla is building a car plant capable of
producing 500,000 electric vehicles a year. Musk has also claimed the site will
have the largest battery factory in the world.
Tesla is by far the world's most valuable car company, with a market valuation
of $676 billion compared to VW's $120 billion, but it is a niche player in terms
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05/02/2024, 10:42 How Volkswagen aims to beat Tesla at its own game – POLITICO
of global auto sales. VW typically sells more than 10 million vehicles each year,
20 times Tesla's output last year.
But Tesla is growing fast. Its new Berlin facility, along with a factory in China,
ramps up the challenge to VW. Musk also wants Tesla to develop a cheaper
model targeted at the German market.
Diess also wants to use part of the EU's pandemic recovery fund to help cover
the €2.4 billion cost of building a battery plant in Spain and transitioning a
factory run by its Seat unit to churn out electric cars.
"Tesla has received billions of euros for their battery facility near Berlin,"
Diess said on Tuesday. "We need the same conditions that our competitors
enjoy."
Ben Kallo, an analyst with financial advisory Baird, reckons the result could
see at least two electric vehicle ecosystems — one dominated by Tesla with
most of its technology in-house, akin to Apple's iPhone — and a rival similar
to Samsung which uses Android.
“There is only one complex software domain where Europe still has a chance
to play a leading role: the next generation of automotive software,” Diess said
Tuesday.
If the company can secure a revenue stream from in-vehicle software, it can
use that profit to cut the cost of its electric cars, making e-mobility more
affordable.
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05/02/2024, 10:42 How Volkswagen aims to beat Tesla at its own game – POLITICO
“They are basically trying to use their scale to lower their costs, and the gap
they need to build is on software,” said Schmidt. “Software is really key in
getting the price of electric cars down, and it could change the whole model of
the industry."
Last year, Tesla outlined plans to reduce the cost of battery cells by 56 percent
through an efficiency drive and series of technical upgrades. Volkswagen said
Monday it can slash its cell costs by 50 percent by developing a one-size-fits-
all format for most use cases.
"[They] have both selected one cell format that they want to mass produce to
help push down costs," said James Frith, head of energy storage at
BloombergNEF. "It's hard to say if one is being more aggressive than the
other."
Better batteries
The knock-out punch for either side could be a breakthrough in solid-state
batteries, which have a higher energy density than the lithium-ion technology
used today. VW has an investment in QuantumScape — an American
company working on improvements in cell technology.
The benefits of such batteries could be profound. For example, charging times
could be less than half compared to today's best batteries, and lighter
materials could boost vehicle range by 30 percent, VW says.
Sometime after 2025, the German carmaker said it's aiming to cut ultra-fast
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charging time in its batteries for a trip of 450 kilometers — the distance
between Munich and Leipzig, or Las Vegas and Los Angeles — down to 12
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minutes using the technology, less than half today's maximum charge time.
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05/02/2024, 10:42 How Volkswagen aims to beat Tesla at its own game – POLITICO
"It's not true we can say now at what time point solid state batteries will be
rolled out," Diess said. "In lab testing they work well, but we are lacking a
concept and an industrialized solution."
That sentiment echoes what Musk told German politicians late last year
during an event on battery technology organized by the country's economy
ministry.
“There’s quite a bit more work in building the machine that builds the
machine,” Musk said of the problems rolling out battery breakthroughs on an
industrial scale. “The very difficult part is then scaling up that production.”
That makes predicting a champion in the race to dominate the electric car field
difficult to call.
"It's likely that the winner will be decided based on its cathode material
producers and manufacturing costs," said Frith.
Related Countries
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Related People
Herbert Diess
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Volkswagen
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While the bloc will miss its delivery target, it now has the capacity to produce 1 million shells, EU
officials said.
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05/02/2024, 10:42 How Volkswagen aims to beat Tesla at its own game – POLITICO
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