Volkswagen is ramping up its electrification plans, with boss Ralf Brandstatter pledging that more than 70 percent of its cars sold in Europe in 2030 will be fully electric. But what’s the likelihood of NZ reaping this reward?

THEY’RE calling it ‘Accelerate’ – but perhaps Volkswagen Group’s latest business strategy raises potential for New Zealand to be left even further behind as a benefactor of this giant maker’s electric vehicle provision to the mass market.

Views expressed by the Europe market giant at a weekend seminar at which new products – including a high-tech sedan, known as Trinity – were also announced are globally exciting.

Emboldened by the reception for its first bespoke electric, the ID.3, Europe’s largest car making cabal has decided to reach further, with a flagship battery-dedicated sedan arriving in 2026 that will “set new standards” for charging times, battery range and other technology.  

VW released a sketch of the Trinity, showing a sweeping roofline that resembles that of the Audi A7. It says the car will deliver a “Level 2 plus” autonomous system and “be technically ready for Level 4.”

There is no formal definition of Level 2 plus, but if the sedan is equipped with the right hardware, upgrading it to a Level 4 system could be done with over-the-air updates.  

Level 4 is just one step below optimal autonomy and defined ability to operate without human input or oversight but only under select conditions defined by factors such as road type or geographic area.

In additional news, VW says it will shelve plans to a small city-based EV, the so-called ID.1, until probably 2025 but will put its ID.Buzz minivan, which draws styling inspiration from the original VW Kombi van, into  production in 2022. 

It has also unrolled plans to develop a “neural network” of its vehicles, pooling their data to assist with future autonomous driving features.

The ID.3 hatchback and ID.4 five door crossover be the first cars to contribute to this, with around half a million examples expected to be on the road within the next two years. But the process will really kick in from 2026, as VW introduces new versions of key conventionally powered vehicles that can also supply data to its cloud system.

“They will communicate and exchange data, on traffic and obstacles,” says VW boss Ralf Brandstatter. “It will be a self-learning system of millions of cars.”

Great news if you’re in a market that VW believes is worthy of achieving priority for these implementations.

Unfortunately, that’s not likely to be New Zealand; we’re well down a list that is topped by Europe, the United States and China.

With exception of product behind the premium Audi and Porsche badges that has been relatively easy to secure, the Group’s electric car availability to our market is already slower than what has been forecast, over recent years, by various CEOs for all the relevant brands that are held by a common distribution rights’ holder, the Giltrap Group’s European Motor Distributors’ operation.

While it’s been great to see the Porsche Taycan and Audi’s e-Tron models, the cars that are really crucial to lifting VW Group’s presence in the EV-sphere are the growing count of relatively affordable models based on the Group’s MEB platform.

It’s these models that are proving much harder to achieve.

Having now lost the electric Golf that gave it credibility with battery car fans, VW NZ is already facing up to not seeing its next EV, the ID.4, until the end of 2022. That’s more than a year later than it originally hoped.

A sister car in the same crossover format from Skoda, the Enyaq, has also been delayed – apparently to a similar timeframe. Timelines for the SEAT E-Born and Q4 e-tron, which are also MEB models, also seem to have become more fluid.

The only MEB car is the ID.3 that the NZ distributor does not want, arriving through a channel it does not support – and perhaps wishes did not exist.

However, grey importers who buy stock from other right-hand-drive markets for resale here are finding the ID.3 to be a drawcard. The lack of factory support doesn’t seem to be inhibiting consumer interest.

So why the hold-up for official, brand-backed sale? It’s not for lack of desire. But unavoidable realities do temper the situation.

We’ve outlined previously how Covid-19 has disrupted car making and that VW Group has had to prioritise selling electrics in the European Union, to avoid being penalised for failing to reach mandated CO2 targets.

Yet it’s also worth pointing out that potentially local and regional politics and policies aren’t helpful, either.

VW Group is among makers who have decided their electric models deserve to go, foremost, to markets with supportive policy signals for the sale of low or zero-emission vehicles.

Is that New Zealand? Sort of.

 It’s obvious the Government is getting serious about tackling climate change is a positive. Last year, we saw the declaration of a climate change emergency, including a commitment for a carbon-neutral public service, including transitioning the fleet to EVs. In January, Government unrolled the Clean Car Import Standard and signalled an incentive for electric vehicles is coming soon.

The latter is the most crucial element to gaining access to VW’s products. The parent brand is among car makers that believes that initiatives to help make next-gen vehicles more accessible to buyers - notably any measures that lower the relatively high initial cost of an electric vehicle – are vital. 

That view seems to have pushed the local distributor into sounding out similar thought. Last month EMD made a collective statement on behalf of its VW, SEAT, Skoda, Porsche and Audi networks saluting the Government’s plans to lower emissions by switching up local vehicle regulations but also suggesting that the timeline was ‘steep’ and that more incentives were needed to make it work.

Also included in the statement, according to the outlet that received and reported on it: “From an importer standpoint, we need to see strong incentives in the form of a feebate to help create demand for these vehicles.”

One other dark cloud hangs over all brands hoping to sell NZ-new EVs here. It’s in the shape of Australia.

Production planning for all new passenger vehicles coming here often includes the co-operation of our neighbour. NZ is a tiny new car market – we take just 0.02 percent of the world’s annual car production. Australia is a much bigger player. If we accept the same cars they do, as a combined order, then the factory is far more likely to oblige.

But there’s a catch: Australia itself. It lags embarrassingly far behind the rest of the world on the inevitable shift to zero-emissions transport, mainly because of the intransigence of the federal government. Scott Morrison’s administration has not only shown disinterest – some say it is actively discouraging their update. It  has been given an F for “fail” for its policy efforts to support the uptake, even as data shows that more than half of our neighbour’s driving population is actively considering an EV for their next car.

Meantime, VW Group is raising the pace of change toward an electric future.

At the weekend it said it now expects that 70 percent of its sales in Europe will be pure electric vehicles by 2030. That means it will have to deliver more than one million EVs a year in Europe alone by then to reach that goal. VW also sees EV sales surging to more than 50 percent of sales in China and the US in the same time frame.

 This does not mean it will divest fossil fuelled product by then. However, Brandstatter has revealed that several “core” models – the Golf hatchback, Passat sedan and wagon and Tiguan and T-Roc sports utilities - will all get successors to their current generations, each featuring at least mild-hybrid powertrains and some offering plug-in hybrids with up to 100kk of pure-electric range.

The only electric that is creating vexation is ID.1, based on an adapted platform called MEB Entry. In a statement, VW said, “Plans for an electric car under the ID.3 - with an entry-level price starting at 20,000 Euros - are pushed up by two years to 2025.”

No reason for the delay was given, but VW is said to have been struggling with battery chemistry and achieving a sensible profit margin on the vehicle.

In respect to that, several publications have reported that VW plans to post an operating profit margin of at least six percent as of 2023, despite the higher costs of making battery-powered cars. VW has also said it plans to invest about 16 billion euros in electrification and digital services up to 2025, further cutting into margins.

Market reception to ID product is good. UBS analyst Patrick Hummel recently described the ID.3 as “the most credible EV effort by any legacy auto company so far.” UBS also believes VW's EVs are competitive with Tesla models on key metrics including cost, energy density and efficiency.

The ID.4 is already on sale in Europe, with China and US deliveries beginning later this month. The sleeker ID.5 crossover will follow in the second half of the year. And a seven-seat ID.6 X will go on sale in China soon as well.

It's possible that EV sales for VW Group could top Tesla sales in 2021.