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Volkswagen plans major cull to focus on e-mobility

By raccars Published


Business strategy will see the end of low-profit models and feature workforce restructuring.

Volkswagen’s aggressive new business initiative aims to position the German car manufacturer as an e-mobility leader, in addition to giving the group’s image a boost in the wake of the Dieselgate scandal. The Transform 2025+ business strategy will see low-profit models culled and the business and workforce restructured in order to mercilessly pursue its e-mobility ambitions.

Model cull to fund e-mobility efforts

Volkswagen has confirmed that it is to cull low-profit and low-volume models in order to save almost €2.5 billion, the equivalent of around £2.13bn. These savings will fund development of VW’s EV range.

The manufacturer has yet to reveal which models will be sacrificed. However, it has already demonstrated how ruthless its new strategy can be by its recent cost-cutting efforts, including decreasing its motorsport involvement.

The development of Volkswagen’s e-mobility range forms the second part of its three-phase Transform 2025+ strategy. The first stage, which it aims to complete in 2020, involves the restructuring and transformation of its core business properties.

The slashing of 20,000 jobs is an immediate example of these restructuring efforts at work. The cuts, which have just been announced, are thought to play a major part in the financial recovery of the brand after the costly Dieselgate emissions scandal.

After making the initial first-stage savings, Volkswagen claims that it will have the funds to make substantial investments in its e-mobility line-up and its plans to become a leader in the field of electric vehicles. It has its sights set on achieving this by 2025 and then wants to be a dominant force in the sector within another five years.

Striking at the 'heart' of the market

Volkswagen’s CEO Herbert Diess said that the brand will launch its ‘major e-mobility offensive’ from 2020 and emphasised that it has every intention of playing a major role in the EV ‘breakthrough’. He said that the company was not aiming to create ‘niche products’. Instead, it wanted to hit right at the automobile market’s ‘heart’.

Diess added that by 2025, Volkswagen wanted to be selling one million electric cars each year and to be the global market leader in the field. He said that VW’s electric cars will become a ‘new trademark’ for the brand.

Volkswagen is also planning to invest heavily in connected technology and aims to launch a digital platform which, it is presumed, will be used in Volkswagen cars and other connected devices. The brand is estimated that this connected technology is set to have a €1bn (£855 million) value by 2025.

US strategy revealed

In addition to working on its global ambitions, Volkswagen is also planning an attempt to boost the brand’s presence within the American market, where VWs are still seen as a relatively niche choice. This initiative will include a first-phase ‘SUV offensive’ and a second-phase ‘electrification wave’. Both elements of the plan seem to be represented by the recently revealed ID concept and large Atlas SUV.

Speaking of its plans for the US, Diess said that Volkswagen’s main target will be the US key segments; limousines and large SUVs. He said VW would be ‘strongly expanding’ the brand’s range initially before following this during the second stage by introducing its new electric cars to the American market.

The phased US attack marks a new era for the brand in the United States after recent attempts to recover from the emissions scandal. Last month the company was given approval for a settlement worth around £11bn with US car owners affected by Dieselgate.

The settlement is the largest of its type in American history and will compensate around 475,000 drivers. Owners can opt for a software fix or sell their vehicle back to Volkswagen. They will also be entitled to up to $10,000 each as an additional compensation payment.

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