By The shift to electric vehicles hasn’t been smooth sailing for everyone, especially not for Volkswagen.
Volkswagen poured billions into developing electric powertrains. They weren’t just dabbling; they aimed to overhaul their entire lineup to go electric. This hefty investment included creating more efficient motors and batteries to boost range and appeal to consumers. But was it all worth it?
In 2014, VW launched its first mass-produced EV, the e-Golf. Fast forward to 2024, and they’ve rolled out eight different EV models worldwide. Yet, sales haven’t kept pace with the investment. Why?
Sales Taking a Hit
Full-electric car sales are struggling. Volkswagen reported a nearly 5% drop in EV sales from January to September 2024 compared to the previous year. That’s about 25,000 fewer cars sold. Meanwhile, their hybrid models saw a 3% increase. Seems like consumers are still hesitant about going all-in on electric.
- EV Sales Decline: Down by 5% globally
- Hybrid Sales Growth: Up by 3% worldwide
This trend suggests that while there’s interest in greener vehicles, the market isn’t ready to abandon traditional engines entirely.
Ignoring the Internal Combustion Engines
In their rush to embrace EVs, VW has sidelined their internal combustion engine (ICE) offerings. By 2025, they’re planning to phase out ICE models altogether. The result? Their classic models like the Jetta and the latest Golf GTI aren’t getting the attention they need. The Golf GTI, once a favorite, now feels rushed and underwhelming compared to its predecessors.
The irony? While VW pushes forward with EVs, their traditional models are falling behind, leaving loyal customers without the updates they crave.
Software Setbacks with Cariad
Volkswagen’s in-house software division, Cariad, was supposed to be the brain behind their next-gen EVs. Instead, it’s been a stumbling block. Delays became the norm, and in 2023, VW had to initiate a $1.1 billion cost-cutting plan. Partnering with Chinese EV maker XPeng was a move to salvage the situation, but it highlighted the challenges VW faces in software development.
Financial Strain and Factory Closures
VW’s struggles have led to tough decisions. Three German factories are shutting down, and tens of thousands of employees are facing layoffs. Arno Antlitz, VW’s CFO, warned that the company has only “one to two years to turn things around.” To manage costs, employees were asked to take a 10% pay cut, and more production cuts are on the horizon.
Volkswagen EV Sales Decline: Jan-Sep 2023 vs. 2024
| Region | 2023 Sales | 2024 Sales | Difference |
|---|---|---|---|
| Europe | 341,100 | 293,400 | -47,700 |
| USA | 50,300 | 37,100 | -13,200 |
| China | 117,100 | 148,100 | +31,000 |
| Rest of World | 23,100 | 28,100 | +5,000 |
| Total | 531,500 | 506,500 | -25,000 |
This table underscores the mixed performance across regions, with Europe and the USA seeing declines, while China shows growth.
Volkswagen’s predicament is a cautionary tale. Other manufacturers watching VW’s struggles might rethink their own strategies. The key takeaway? Balance innovation with existing strengths. Jumping headfirst into EVs without maintaining the foundation can lead to significant setbacks.