Intending to drive 55% of its US sales to be fully-electric by 2030, Volkswagen is gearing up to boost its product portfolio, regional R&D and manufacturing capabilities by locally integrating its combustion-engine (ICE) and electric vehicle (EV) assembly, American-focused engineering, battery know-how, and software development. Towards this initiative, the global vehicle maker has announced its commitment of $ 7.1 billion over the next five years in the North American region, including Canada, Mexico, and the US.
According to Scott Keogh, President and CEO of Volkswagen Group of America, the vehicle maker will begin to phase out gasoline-powered vehicles from its American line-up, aiming to exit from sales at the beginning of the next decade while focusing on the most desirable models. It will advance its electric line-up, including the American-assembled ID.4 in 2022, the ID. Buzz electric microbus in 2024, and new electric SUVs from 2026. In toto, the group's brands plan more than 25 new battery electric vehicles (BEVs) for American consumers through 2030.
Leveraging Inherent Capabilities
Keogh believes that regional capabilities will be crucial to sustaining the group's success in the region. Currently, more than 90% of its vehicle portfolio for North America is assembled in the region itself, including the Atlas and Atlas Cross Sport SUVs in Chattanooga, TN, and Tiguan, Taos Jetta in Puebla, Mexico. Volkswagen aims to strengthen these capabilities in its pivot to electric mobility.
This strategy builds on the company's preparation of its Chattanooga facilities for local EV production. Assembly of the ID.4 SUV is poised to begin in 2022, sourced mostly from regional suppliers. It also plans to upgrade its factories in Puebla and Silao, Mexico, for the assembly of electric vehicles and components (such as e-motors), by the middle of the decade.
Localising Design & Engineering
Beyond assembly, Volkswagen aims to localise all major design and engineering responsibilities for the 'vehicle hat' (body and interior) of products destined for the domestic markets by 2030. This approach reflects the company's emphasis on American consumer demands while scaling the group's global vehicle platforms (MEB and future SSP).
As part of its preparation to launch the American-assembled ID.4, the group has invested more than $ 2.7 billion in supplier partnerships throughout the North American continent, including its battery partnership with SK Innovation. In addition, the group plans to build a battery cell production in the US to meet the growing demand for batteries across its brands.
On the research side, the Center of Excellence (CoE) NAR Battery, with locations in Belmont, CA, and Chattanooga, will accumulate know-how and research capabilities in battery cell technology. In addition, the CoE closely collaborates with technology partners Quantumscape (San Jose, CA), which is driving solid-state battery technology, and 24M (Cambridge, MA), which is reimagining the design of battery cells.
Software Development
Keogh committed software and digital solutions for American consumers, developed directly in the US. The group plans to bring over-the-air (OTA) updates and new software features, such as plug and charge, for the ID.4 this year. It is also working with its software entity CARIAD SE to support the formation of its North American subsidiary in 2022, with software units in Seattle, WA, and California's Bay Area. The goal is to strengthen the company's digital footprint in America.
Electrification Plan For Spain
VW Group plans to electrify Spain by creating a European Electric Vehicle Hub, building up a battery cell production and full, sustainable E-ecosystem. According to the vehicle maker, these are the goals of Volkswagen Group and SEAT for the Iberian Peninsula.
The group declared its plan to apply to the Electric Vehicle PERTE programme after the Spanish government announced to open the call for applications on April 1, 2022. The 'Future Fast Forward' programme would include a total investment of more than €7 billion together with external suppliers along the entire value chain of e-mobility. Furthermore, Volkswagen announced Valencia as the dedicated location for a new battery cell factory in Spain.
According to Thomas Schmall, Member of the Volkswagen AG Board of Management responsible for Technology and chairman of the SEAT S.A. Board of Directors, this project is highly important – for Volkswagen, Spain, and Europe. 'It's our ambition to electrify Spain and we are willing to invest more than seven billion euro together with external suppliers for the electrification of our Martorell and Pamplona plants and the localisation of the battery value chain in Valencia.'
Gigafactory Valencia would be Volkswagen's second location after Salzgitter and the first one outside of Germany. 'In Valencia, we are planning to build up nothing less than next-generation cell production: A standardised factory, producing Volkswagen's cutting-edge unified cell and supplied with renewable energy, enabling a sustainable battery production. It will create a strong pulling effect in the whole battery value chain in Spain and beyond', said Schmall.
In total, Volkswagen plans to build six Gigafactories in Europe with an annual capacity of 240 GWh together with partners. Northvolt will meet the group's demand for premium cells in Skellefteå, Sweden. The group has founded a European corporation for cell development and manufacturing and keeps the option open to integrate partners or investors to speed up the roll-out of all further cell factories coming up for Europe. Its centre of gravity – and a blueprint for all following plants – will be the Salzgitter plant in Germany, starting production in 2025.