Volkswagen to invest USD 800 million in the production of electric vehicles

Recently, Volkswagen announced its plan to increase investments in electric vehicles in the US. As part of the plan, Volkswagen will invest USD 800 million in the production of electric vehicles at its plant in Chattanooga and Tennessee. Additionally, the company stated that electric vehicle production would begin in 2022 and it is looking to manufacture luxury Audi vehicles in the US. Moreover, Volkswagen has plans to add electric vehicle production facilities in Germany by the end of 2019.

MarketsandMarkets™ view point:

Atul Kumar – Assistant Manager : Automotive & Transportation Research at MarketsandMarkets™, shares his point of view as mentioned below:

Volkswagen is a well-established automotive manufacturer founded in 1937 and is headquartered in Wolfsburg, Germany. The company produces cars under 12 different brands including Volkswagen Passenger Cars, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania, and MAN. The company also manufactures electric vehicles. The company’s bestselling electric vehicles are e-Golf and e-Up. The company plans to release new electric vehicles by 2020. Volkswagen will continue to hold a strong position in the industry in the development of electric vehicles. Factors such as the rising demand for zero-emission vehicles, stringent emission norms, and government initiatives on electric vehicles are driving the growth of the automotive electric vehicles market. According to MarketsandMarkets™ analysis, the Asia Pacific region is expected to dominate the automotive electric vehicles market during the forecast period, followed by Europe and North America. The ecosystem of the automotive electric vehicle market consists of manufacturers such as ABB, Alfen, Samsung SDI, and Automotive Energy Supply Corporations.

Electric Vehicles MarketImpact of investment

The investment in the production of electric vehicles will have a positive impact on the electric vehicle industry. Developments can be seen with respect to the growing demand for zero-emission vehicles and also increase in the number of charging stations. Heavy investments from Volkswagen is expected to cater to the growing demand for electric vehicles and play a major role in the evolution of the electric vehicles market. Thus, owing to the high amount of incentives and subsidies in Europe, a high growth rate in electric vehicle sales can be observed. With the increasing investments in electric vehicles, Volkswagen can create various job opportunities in the market. Moreover, in November 2017, Volkswagen along with its Chinese partner, JAC Motors, announced an investment of USD 12 billion for a tenure of 7 years in the production of electric cars in China. The company will produce 40 new hybrid and electric vehicles locally. This investment is a part of a wider investment (USD 25 billion), which was made in September 2017 for the electrification of 300 models of Volkswagen AG holdings by 2030. Through these investments, Volkswagen aims to strengthen its position further in the electric vehicles market.

Impact of Volkswagen’s investment on top competitors

The investment in the production of electric vehicles will have a major impact on the competition as well as on the environment. The company is driving forward the transformation to e-mobility. Volkswagen will be able to generate more demand globally, which, in turn, will help the company to stay ahead in the highly competitive market. This investment will give Volkswagen an advantage over its competitors such as Hyundai and Honda. In April 2018, Volkswagen partnered with retail companies such as Walmart and Target for the development of fast charging stations. In April 2018, Volkswagen had launched 9 new models in China alone.  

With increasing R&D in the field of electric vehicles, Volkswagen will use a MEB (Modular Electric Toolkit Chassis) for electric vehicles that will consolidate all the vehicle’s electronic controls and reduce the number of microprocessors. Additionally, with the increasing investment in electric vehicles, the company is moving toward the accomplishment of its plans to sell 150,000 electric vehicles by 2020 globally.

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