Five years ago, Volkswagen was slamming the left lane at 80 miles per hour and getting 45 miles per gallon doing it. Drivers couldn’t believe the performance they were enjoying from turbo-diesel engines in their Passats, Jettas, and Golfs.
It was too good to be true.
The world’s largest automaker had installed defeat devices on its vehicles that prevented the EPA from detecting its cars were polluting up to 40 times the legal limit. Volkswagen’s reputation took a hit as it spent over $20 billion to settle claims, but redemption may have come as the automaker ditches dirty diesel for a nostalgia-infused electric future.
“Volkswagen clearly had to change its business strategy,” said Jessica Caldwell, executive director of insights at Edmunds. “They had to shut the door on diesel; even if new vehicles were fixed, people would be dubious of it. And, cars would be less desirable if they were not gaming the system — had to go completely clean, in the opposite direction. Putting resources in the EV bucket is a positive for them, but it’s more difficult to stand out in that category. Diesel gave them a unique edge.”
Volkswagen kicks off its modern EV initiative in the U.S. later this year with a Tiguan-sized crossover called the ID.4. Targeted at the Tesla Model Y and Ford Mustang Mach-E, the ID.4 promises 300 horsepower, all-wheel-drive, and 310 miles of range. It is one of 15 EVs that Volkswagen plans to launch by 2025 en route to 40% electric sales by 2030. Expect the ID.4 to start at under $40,000.
“We think it provides a remarkable combination of affordability, low cost of ownership, range, design, connectivity and technology, aimed right at the hottest segment in the U.S. market,” said Mark Gillies, Volkswagen’s senior manager for product and technology.
Diesels were fantastic to drive, but EVs offer mountainous torque, instantaneous acceleration and smooth cruising. That’s due to Volkswagen’s underlying flexible EV architecture. Dubbed “MEB,” the system utilizes a skateboard-style battery pack powering a rear motor on two-wheel-drive models and an additional motor for all-wheel-drive versions.
MEB supports vehicles ranging in size from the Golf-size ID.3 to the large ID. ROOMZZ and ID. BUZZ concepts.
Soothing America’s nostalgia, Volkswagen committed to a production version of the ID. BUZZ, a vehicle that looks like the Euro train melted into a classic Microbus, by 2022. Inside, silver birch wood floors, captain’s chairs that become tables and a third-row bench that converts into a bed imbue an urban hippie vibe, but with flatscreen instruments and capacitive touch steering wheel controls.
The ID. ROOMZZ leans deeper into the 2020s as a sleek crossover with three rows of seats, head-up display with augmented reality, and front seats that can rotate rearward when the vehicle is in autonomous mode. It boasts 270 miles range and 80% charge in 30 minutes. All-wheel-drive and 369 horsepower promise an invigorating driving experience.
Volkswagen must go electric to survive, but it’s joining a crowded party. Tesla already dominates EVs and is being joined by virtually every automaker.
On April 2, GM and Honda announced an agreement to share a new EV platform powered by efficient batteries for a range of vehicles wearing brands from both automakers. Production begins at GM plants in North America for 2024.
“I think the German brand name, for a lot of people, is a bit of a premium,” Caldwell said. “VW always skewed younger. Going to battery-electric vehicles, its younger demographic will help them. VWs have great design.”
Initial production of the ID.4 will come from Germany, but it will soon join the Passat and Atlas at Volkswagen’s plant in Chattanooga, Tenn., where the automaker is investing $800 million and will create 1,000 jobs by 2022.
Before that, there are challenges to overcome.
“The diesel scandal lost a lot of the VW magic,” Caldwell said. “They don’t want to morph into another Honda or Toyota. Keeping some of the VW design and heritage is important to them. The ID.4 looks cool. A small utility is the type of vehicle people in the U.S. and around the world like.”
But overall, is pivoting to electric a good strategy?
“Yes, I think it is a necessary strategy for them,” Caldwell said. “Long-term, all automakers will be battery-electric. The end of diesel just came quicker than we thought.”
The journey from diesel to electric has been a long and convoluted one for Volkswagen, but turning lemons to lemonade is imprinted in the company’s DNA. Recent challenges made VW a better automaker, better prepared for the future.
“The company realized it needed a more robust compliance culture, and that has been implemented worldwide,” Gillies said. “We expect to see a lot more electric vehicles in the lineup.”