put together a very interesting article that looks at 2 big questions surrounding Volkswagen future with their push for EVs.
The first main question is how VW will deal with autonomous vehicles and the other one is how the Osborne effect will affect VW from the inside (when a company’s or industry’s sales slump (potentially to a fatal level) because consumers are awaiting a notably better product that is expected to be around the corner).
Here's some snippets from the article:
The first topic is autonomy. Previously driving a 2015 Tesla Model S with first-generation Autopilot (hardware by Mobileye) and now driving a 2019 Tesla Model 3 with “Full Self Driving,” with a 2015 BMW i3 and plenty of rental cars in between, I have a hard time seeing any other automaker being close to what Tesla is doing. Volkswagen has some investments in this space, and it has a MOIA ride-sharing pilot running in Germany that currently uses human drivers but is supposed to utilize self-driving vehicles someday. (Visit the MOIA website and our MOIA archives for more info.)
Like all automakers, Volkswagen aims to be “a leader” in autonomy. It is certainly focusing more than ever before on software and appears to be going in the right direction, as a recent presentation from Chairman of the Board and Volkswagen CEO Herbert Diess indicates
That looks like a super smart shift for Volkswagen, and the German automaker should be able to build out a strong software sub-business.
The second big topic or question I consistently have is about how the Osborne Effect will roll out within Volkswagen Group. As a refresher, the Osborne effect is when a company’s or industry’s sales slump (potentially to a fatal level) because consumers are awaiting a notably better product that is expected to be around the corner.
This is how it’s a significant matter with regards to Volkswagen: The company is really pushing electric vehicles now. It’s about to start shipping its first highly compelling and I think cost-competitive electric vehicles, models which I think are objectively superior to any of Volkswagen’s gasoline or diesel models in popular vehicle classes. It will take some time for consumers to become aware of these electric models and their benefits. It will take some time to warm up to the idea of going electric, charging a car instead of gassing it up, etc. However, at some point, a large portion of the public — and especially a large portion of Volkswagen’s target demographics — will understand that electric cars are better, have lower cost of ownership, and are “the future.” As the masses see them as “the near future” and are getting ready to go electric, they will forego new gasoline/diesel vehicle purchases.
Will that happen with a slow enough ramp for Volkswagen to carefully transition to e-mobility in a financially solvent way? Will its projected rise in EV sales and decline in fossil fuel vehicle sales fit the desired curves? Or will something like 25% off Volkswagen buyers go electric with a few years while another 25% or more sit on the sidelines and wait to go electric in the near future (but also not buy a fossil vehicle)?
Even assuming they don’t defect to Tesla or Nio, the transition to electric vehicles could present serious production and financial challenges. Some have argued — perhaps accurately — that there won’t be enough EV battery supply for more than 25% EV sales by 2025. Perhaps there will be a one-year wait for a new Volkswagen ID.3 or ID.4 (ID Crozz). If that’s the case, will consumers simply buy another gasoline car, or will they wait?
My hunch, from how other tech transitions have occurred, is that the S-curve will be steep, so steep that it won’t look like an S. If that’s how it rolls, what’s Volkswagen’s plan if it has demand for 3 million fossil vehicles in 2025 instead of 8 million? How much is it working to have the capability to produce 5 million electric vehicles in 2025 instead of 3 million? How will its finances look under such a scenario?