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VW prepares to take on Tesla in electric tug-of-war

Murali Gopalan | Updated on February 06, 2020

Juergen Stackmann, Board member, Volkswagen Passenger Cars

German carmaker believes the transition to e-mobility is inevitable worldwide

Juergen Stackmann is nursing a bad throat but gamely continues with the interview. He has just flown into Delhi for the big night of Skoda Auto Volkswagen India and is excited about the road ahead for this new alliance.

As Member of the Board of Management of the Volkswagen Passenger Cars brand, Stackmann has his hands full with a host of other initiatives worldwide. According to him, the VW group is undergoing a tremendous change and this is “not only the big one you see in terms of transiting from the internal combustion engine to electric stage” but also connected cars.

This, according to him, will be an even more difficult challenge than the electric sphere. As Stackmann puts it, “…stuff where knowledge, engineering and competencies (are needed) is clearly a big potential growth opportunity for us, but not so easy to manage right now”.

He then speaks of the emergence of local and regional emission standards rapidly growing around the planet, which is literally keeping the VW engineers on their toes. “We have never seen this pace,” he exclaims. It’s one where people literally get to re-engineer their cars every year.

Electrification has been touted as one of the clean solutions going forward and Stackmann says the VW group is well equipped strategically to take on the challenge on the one hand with Tesla “which we regards as our key competitor in electric and connected car sphere”.

The Chairman of VW, Herbert Diess, “is pushing heavily to ensure that we are fast enough, thorough enough and rigid enough” in being able to beat Tesla soon beyond volumes “which is quite easy” but also in terms of technical competence in the electric and software world.

The India scene

Naturally, the talks veers around to India, where the government is keenly pushing for electric as part of the clean-up drive. There are still a host of issues yet to be resolved in terms of charging systems still not fully set up. “I don’t think this country is ready for electric cars yet; it (the government policy) is well intended but tough to put in place now,” says Stackmann. And it is not as if India is different from other parts of the world since many countries do not have this “solid infrastructure for charging”.

“You see the same in Germany, where there is a constant dream of a million electric cars on the road but if you don't invest in infrastructure, that will never happen,” he adds.

Things are, however, changing now, as “we see so much positive pressure on governments in Europe to make the change happen, to stop talking and get into action mode and make investment plans”.

All this could definitely play a big role in getting Europe to change rapidly into electric. According to Stackmann, China is already “in full swing” as the lead mover for the rest of the world in this sphere. It remains to be seen how quickly the US will embrace electric while, in developing countries, he believes it will be more a “city by city rather than a country by country concept”.

For instance, there are cities in South America like Sao Paolo and Rio de Janeiro which can contemplate electric even while other parts of Brazil may not go down the route. “It will come to India doubtless and everywhere else, too, since it is the easiest and fastest way to clean up the air,” reiterates Stackmann.

According to him, VW is on track with electric and now, with bigger countries investing in infrastructure, it cleanly means that “we have come at the right time”. A decade earlier would have been premature. The ID.3 showcased at the Frankfurt Motor Show “is in motion” which means it is only a matter of time before cars are delivered to their customers.

“Once you see them on the road, it will have a huge effect on people and they will want more of them. When the first 10,000 are on the road, it will make a difference,” says Stackmann.

The conversation then veers around to the entry of Chinese automakers into the Indian landscape. The success of SAIC Motor Corp with its MG Hector has doubtless paved the way for others like Great Wall Motors, Changan Automobile and FAW to throw their hats into the ring.

“It is predictable,” reasons Stackmann given that the Chinese automotive industry has grown to “becoming a high quality operation”. Gone are the days when other carmakers sneered at Chinese quality; today the likes of Geely have made success stories of Volvo Cars and have aggressively picked up stakes in Daimler and Volvo Trucks.

“If you look at their cars, it is remarkable what China has achieved in the last few years,” acknowledges Stackmann. Yet, he believes that one must wait and see how they do. “They will find out that working outside your own country is not so easy because they have tried that already in South America,” he elaborates.

Some brands have been there for five years already in regions like Chile; they are part of the competitive landscape but not major rivals yet.

From his point of view, the Chinese are strong competitors but “so far they have not succeeded with breakthroughs outside China”.

Yet, there are no two ways about the fact that “they are fine on production quality” now. The world could have laughed at them a decade earlier “but should stop laughing now. We have very good quality stuff coming in from China”.

On the dynamics of the mobility landscape, Stackmann believes there is so much change and transition in technology, connectivity and software solutions that companies will find it harder and harder to do things on their own.

Need for partnerships

“We have to go for active partnerships worldwide,” he adds, while putting in perspective the move to share VW’s new electric platform with Ford. In return, the group will share the American carmaker’s knowledge/experience in fully autonomous driving.

“The world is moving into stronger and deeper partnerships as we get into a phase of consolidation in the automotive industry. VW is also engaging in a lot of partnerships on the software side to really manage our future,” says Stackmann.

He is also hopeful that the current crisis in China with the coronavirus is temporary, where all automakers will now have to adjust production for demand. “We will see the end of Q1 in China to study trends,” says Stackmann.

The world, according to him, is also not in such a bad place, with Europe better off on sales than what most people thought. South America with the exception of Argentina is extremely stable while China is seeing some consolidation. “Nothing lasts forever…we had a stunning decade of growth and there will be a period of consolidation but there is no crisis. I am always optimistic,” declares Stackmann.

Published on February 06, 2020

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