Volkswagen AG (XTER:VOW3, Financial) has only recently exploded onto the electric vehicle scene, but its success was no gamble. Rather, it was the culmination of years of careful planning.
Now, having established its first beachheads in the EV sector, Volkswagen appears ready to launch the next wave of growth, one that may soon vault it to the head of an increasingly crowded – and competitive – field.
Preparation is the mother of victory
From the very beginning, Volkswagen took great pains to lay the groundwork for a successful foray into the EV market. The German auto giant understood early on that the success of any aggressive push into the EV space would be dependent on its ability to serve as many of the diverse and varied needs of car owners as possible. Thus, when the VW Group officially launched its EV lineup, it did so with a host of new models ready for commercial release, all of which were built on a single core platform, dubbed the Modular Electric Drive Matrix, or MEB.
Volkswagen’s commitment to a single modular design architecture demanded patience and significant monetary investment. Cutting corners on the MEB simply was not an option, since failure would require a ground-up redesign of not just one vehicle model built on the platform, but all of them. However, all that upfront effort has yielded a distinct advantage for Volkswagen: It can now design, test and commercialize a wide range of vehicle types from the same basic platform, facilitating the rapid rollout of a full range of products virtually from day one.
European domination
With a firm foundation underpinning its new vehicle strategy, Volkswagen has moved with great alacrity to establish itself as the top EV player in its home market of Europe, a feat it managed to achieve in relatively short order.
In 2019, the company sold a total of 45,850 EVs across the 11 European national markets tracked by eu-evs.com, which was only good enough to earn it third place in terms of market share at 14.6%. Just one year later, Volkswagen was at the top of the heap, selling a whopping 165,362 EVs in 2020 to secure a much improved 25.3% market share.
While last year’s explosive growth undoubtedly raised the market’s expectations for Volkswagen in 2021, it has thus far managed to live up to the hype. In the first quarter of 2021, Volkswagen was Europe’s top EV seller once again despite a relatively slow start, delivering 38,168 vehicles and securing a healthy 22.1% market share. Things picked up noticeably in the second quarter, during which Volkswagen managed to sell an impressive 62,852 EVs, increasing its market share to a new high of 30.1%.
Going international
With its European heartland secure, Volkswagen has begun to set its sights on markets further afield. Specifically, it has targeted the critical North American and Chinese markets as part of a global EV strategy. This strategy, called ACCELERATE, has set some ambitious targets, as Auto Evolution reported on Aug. 30:
“Under the ACCELERATE strategy, the Volkswagen Group intends to increase the share of its EV deliveries in Europe to more than 70 percent. The automaker’s goal for North America and China is more than 50 percent.”
While Volkswagen looks to be on track to achieve its European market goal, its presence in the other two major markets is still in a nascent phase, though that appears set to change rapidly. Volkswagen has already started production of its iD.3 compact EV at its new factory in mainland China, the first such facility to have been purpose-built around the German automaker’s vaunted MEB architecture. While Volkswagen has set the goal of selling between 80,000 and 100,000 EVs in China this year, that is ultimately a soft target in light of the chip shortage afflicting automakers worldwide.
The sky’s the limit
Volkswagen has set ambitious goals for its EV lineup. In March, the company declared its intention to deliver 1 million electrified vehicles in 2021, a target that includes hybrid cars as well as pure EVs. As with its Chinese sales goal, however, chip availability may prove to be the limiting factor for Volkswagen this year. Thus far, the German auto giant has managed to continue its growth momentum into 2021 despite dwindling chip supplies, delivering more than twice as many electrified vehicles in the first half of 2021 than it did in the same period last year. At the halfway point of 2021, Volkswagen had sold 170,939 pure EVs globally, in addition to selling 171,300 plug-in hybrids.
Taking a longer view, it seems to me that Volkswagen is almost ideally placed to tackle the EV market, given its existing footprint as one of the world’s top automakers, as well as its rapidly scalable EV platform, which is set to support a staggering 27 separate models by next year. If Volkswagen can successfully execute its EV growth plan, I surmise that it will have little trouble in securing its position as the global industry leader.
