## VW Chief Executive Says Company Will Introduce EVs Based on the Up! New Small Family in 2013; Cautions Against “Electro-Hype”

##### 04 July 2009

Cautioning that the development and commercialization of the electric car is “not a sprint, but a marathon”, Volkswagen AG Chairman of the Board of Management Prof. Dr. Martin Winterkorn said that Volkswagen would introduce its first electric vehicles based on the up! New Small Family (earlier post) in 2013. Within a decade, he added, Volkswagen wants to offer significant numbers of pure electric cars at affordable prices and with the range expected by customers.

Winterkorn made the remarks during a presentation at the 17th Handelsblatt-Jahrestagung in Munich on 3 July, during which he outlined VW’s approach to future mobility in the current context of the economic crisis, pessimism about the industry and technology potential.

Background. Winterkorn noted that the industry is experiencing its worst crisis in decades, with a collapse in the global market of 18% in the first half of this year. Although Volkswagen sales were down 5.1% for the first half, in June unit sales rose 6%. Volkswagen is Europe’s largest automaker, and saw its global new vehicle market share increase to 11% during the first quarter of 2009.

This performance, Winterkorn said, “is no reason for euphoria” but shows that the Volkswagen group—which comprises nine automotive brands—is staying on course, and shows that its strategy to 2018 is on the right track.

We have nine strong brands that work well together. We have rock-solid finances. We have a huge technological potential, despite the crisis. And above all, we have attractive and environmentally friendly vehicles. From this solid foundation, we proceed to the second mammoth task these days: the development of alterative, emissions-free drives.

With electromobility, the automobile industry faces a fundamental technological upheaval...Our path leads away from oil, to emission-free mobility, and the electric car plays a key role...CO2-neutral fuels play another key role.

—Martin Winterkorn

Electromobility is a response to four major megatrends, Winterkorn said:

• The enormous growth of population and traffic.
• The imminent collapse of traffic in megacities such as Mumbai, Mexico City or Bangkok. By 2050, 70 to 80% of people will live in cities.
• The necessary reduction of criteria and greenhouse gas emissions, both globally and locally. Currently, cars contribute about 7% of global CO2 emissions.
• Limited fossil fuel resources. The perspective of rising oil prices is a turboboost for a change in customer behavior, he said.

While in the past consumers tended to count horsepower and cylinders in the engine, they now are focusing more on fuel consumption and CO2 values, he said. “This trend is no fad, but a fundamental paradigm shift.”

Volkswagen had begun exploring hybrid and electric drive technology in the 1990s. VW, Daimler subsidiary Daug and Varta developed a NimH battery in the early 90s, and the VW group put the Audi duo hybrid on the road in 1997. However, Winterkorn said, VW, and the German auto industry in general, abandoned the early advantage and work in electromobility.

Volkswagen is now committed to electromobility, he said, but noted that “electro” is not enough. “A company such as Volkswagen must include all relevant technologies.”

VW and the electric car. Noting that “there are at least as many predictions as experts” about the size of the potential market for electric vehicles, Winterkorn said that Volkswagen is estimating a global market share of 1 to 1.5% in pure electric vehicles in 2020. That penetration could be significantly higher in big cities and certain regions, such as China.

We are witnessing an electro-hype. Experts, consultants and politicians tumble over one another with forecasts. And the auto industry doesn’t hold back on announcements. The result is massively false expectations by the customer...More than eight percent of drivers in Germany are rock solid convinced that the electric car is already here.

I think this development is dangerous, because we lose not only potential customers, but we are also at risk of disappointing the.,. The everyday, affordable and safe electric car for everyone is feasible. But it is also true that the way forward is long and tedious. As I said before, this is not a sprint but a marathon.

—Martin Winterkorn

Electric cars face three major challenges he said. First is the energy capacity and the recharge time of current batteries, which now are “simply inappropriate” for pure electric propulsion. While lithium technology has the potential to meet most of the needs, he said, much research and development work is still required.

(Volkswagen is partnering with a number of companies, including Sanyo and Toshiba, on batteries, power electronics and electric machines. In May, VW and Chinese carmaker BYD signed a memorandum of understanding to explore the options for partnership in the area of hybrids and electric vehicles powered by lithium batteries. Earlier post.)

Second, the electric car has to move from the “eco-niche” consumers to the mass market. Customers want adequate range (the example he gave was from Munich to Hamburg—about 775 km (480 miles), a one-to-two hour recharging time along with a quick charge option; and a price increase of a maximum €2,000 (US$2,800) more than today. The current price of a battery pack for just a short-range electric vehicle is between €8,000 to €12,000 he noted. Third is a corresponding infrastructure including nationwide recharging stations, intelligent network, and uniform standards. Above all, it is the origin of the electricity. Every electric car is ultimately only as climate-friendly as the generation of electricity it uses. Does it ever make sense ecologically to operate a car with power from a coal-fired plant? What is the potential of renewable energy sources? Should we not perhaps even reconsider nuclear energy?...These questions are important for electric cars playing a large role in the future. —Martin Winterkorn Volkswagen fuel and propulsion strategy. Saying that “electric alone is not enough” Winterkorn said that for the next 15-20 years in Europe, diesel and gasoline engines will dominate. Other markets will have a different emphasis he suggested; flex-fuel engines in Brazil, for example, and CNG and LPG is countries with high gas resources, such as Russia. For the medium term, Volkswagen sees a mix of drive concepts: • Highly efficient combustion; • Natural gas vehicles; • Second-generation biofuels (e.g., BTL and cellulosic ethanol); • hybrid and electric traction; and • possibly the fuel cell. Winterkorn said that VW was continuing to focus on improving the efficiency of the combustion engine, while at the same time driving the electrification of the powertrain in a step-by-step approach, first with increasing hybridization, then the addition of plug-in capability as in the Golf TwinDrive (earlier post), then full electrification. ### Comments This is hogwash. VW can dismiss the future of EV's at its own peril. Customers want adequate range That's what range-extending serial hybrids are (see the Fisker Karma for example). After the 150 km electric range of the battery pack expires the small Honda-type generator in the corner of the car starts up and charges the batteries. Then you could go the 775 km and beyond. Customers want a one-to-two hour recharging time along with a quick charge option You don't need this with a range extending generator as described above. and a price increase of a maximum €2,000 (US$2,800) more than today.
I think the proper way to do this cost analysis is to compare the amount of gas you'd burn over a 10 year period and compare this with the cost of charging an electric car to do the same. Factor in interest and you get your break even point, and I predict it's much more than $2800. Every electric car is ultimately only as climate-friendly as the generation of electricity it uses. Does it ever make sense ecologically to operate a car with power from a coal-fired plant? The conversion to renewable and environmentally friendly energy technologies is a two step process. On one hand, energy needs to be produced cleanly. On the other side, it needs to be used cleanly. He is suggesting that we shouldn't make progress on the clean-use end until we've already solved the issues on the generation side? That seems rather luddite-ish. It would seem to me that we should be making progress wherever possible which will help pull everything else along with it. Once people get electric cars they will realize they can charge them with solar panels on their roof, which will develop that industry more. With ICE cars, no one can power them with solar panels, so the story ends there. Volkswagen is estimating a global market share of 1 to 1.5% in pure electric vehicles in 2020 Totally disagree. Let's do a cost analysis. Hyundai can now offer new gasoline powered cars for under$10,000 (I saw the ads the other day). So, Hyundai could instead leave the engine out and replace it with a range extending Honda-type generator. This is cheaper to make so let's say the price then drops to $9,000. Then fill in the remaining empty space with NiMH batteries, enough to take the car 150 km. Let's price the batteries at$500 /kW-hr. At 190 Wh/km, that will be a 30 kW pack at a price of $12,000. Then add in another$2000 for the electric motor.

Tally it all up and you get a price of $23,000 (probably less due to a less complex car otherwise) for a car that can go 150 km a day without needing gas. Additionally, electric cars have better performance than ICE cars. This will happen in 2014 when Chevron's NiMH patent expires. Why would anyone buy a conventional gasoline powered or even parallel hybrid Prius-type vehicle when presented with that option? The only thing holding it back is the patent. Considering how slow VW and other German companies are to get with it, I would not expect any other statement. GM said that HEVs were a fad and 10 years later they still do not have a valid response to the market. You can weasel word it all you want, but the fact is you blew it. GM said that EVs were a not yet viable, and 10 years later there are ALMOST some on the market. GM said that HEVs were a fad and 10 years later they still do not have more than 3% of the market (Um - isn't that LESS than a fad - after 10 years?). Volkswagen is estimating a global market share of 1 to 1.5% in pure electric vehicles in 2020. Let's hope the are wrong. "Electro-hype" can be a problem and I appreciate Winterkorn's point of view, on the one hand. On the other hand, consider the source. VW is heavily invested in technology it's quite happy with: namely, diesels. So, naturally, the CEO is prone to diss the competition. After all, look what Tesla's Elon Musk says about combustion engines. As for the notion that EV's are not ready for prime, that's up for debate. I've been driving a RAV4 EV for nearly 9 years now, and I'm quite happy with it. The biggest problem is "range anxiety' (which I've gotten used to), coupled with no charging infrastructure. I also have a Hymotion-converted Prius, whose delightful fuel economy numbers are routinely spoiled on longer trips by - no charging infrastructure. The conversation fuel economy and the potential advantage of Range extended PHEVs will get very confusing in the future, because we have no intelligent context for making clear predictions about mpg a consumer may expect for most people's routine trips. Fact is, a PHEV can only get 100+ mpg under very specific and not too ordinary conditions. 70 -80 mpg is, however not too ragged and that's doable regularly in the Prius Hymotion PHEV in my experience. My thought for automakers and aftermarket converters is under-promise and over-deliver. Can't go wrong there. Fact is, a PHEV can only get 100+ mpg under very specific and not too ordinary conditions. Can you elaborate on this? That might be the case for a parallel drive system like the Prius but not for a series drive. If a series PHEV gets 100 km range on electric-only mode and this satisfies 95% of the needs for 90% of the population then you are going to get more than 100 mpg. The mileage is going to be dependent on how much emissions were released to produce the electricity. How to put this best... Its more likely that giant radioactive atomic my little ponies from mars will enslave the earth by xmas then evs being more then 4% of the car mix by 2020. The so called 100 mpg for a Prius+ PHEV conversion comes from 50 miles on electric and 50 miles on gasoline, which starts to look like 100 mpg. If they quoted miles per kwh, where you could compare, then the mileage starts to look more like 50-60 mpg equivalent. The electricity is not free, but the false 100 mpg claim is as misleading as saying an E85 car gets 100 mpg of gasoline. The Passat Ecofuel runs on CNG, range of 400km on CNG plus 400 km on petrol. 119 g/km. 150 bhp. O- 60 mph in 9.3 seconds. On biomethane, carbon neutral. The twin supercharger and turbocharger makes the difference. Also, very low NOX and particulates. Fill this at home with one of the new home fuelling devices and you can do 40,000 km per annum on CNG.....very significant CO2 saving over same performance diesel (25%). Only costs about 2k extra over diesel. So for small additional cost, save a lot of CO2. EVs can aim to match up to this. Kelly, You are the first person I've come across who has a hymotion upgrade kit. Can you elaborate on your experience with the pack? You are stuck at <35 mph in all EV mode just as before, correct? I can drive maybe 2 miles in EV mode before the battery drains if the road is level. If there are hills, maybe I can do 1/2 mile. How far can you go in pure EV mode on a fresh charge? For normal driving, (non EV mode) my understanding is that the hymotion batter is used instead of the Prius battery with the exception that the hymotion battery does not get recharged. For highway/city driving how many miles/minutes does it take to discharge your battery? Do you have a blog somewhere where you talk about this? I've looked on the web for detailed user feedback, but haven't been able to find any useful information. Thanks, TM PS I recently took my prius into the mountains and learned how quickly the battery drains while going uphill. Once the battery is drained (purple bars) the horsepower really drops and the car turns into a wimp. I've also learned not to try to pass anyone on a 2lane highway with the battery in the purple zone - there is no zip in the engine for passing anymore. Mark BC: I think you presented one of the clearest explanations I've yet seen for why the major manufacturers are reluctant to embrace EV. Your figures are quite reasonable and you have proven that it is indeed possible to manufacture a mid-priced, functional EV with a range extender-a Volt at half the cost! Hurray! But let's back away a little and ask ourselves what we are now forcing a marketing team, not to mention all those local dealers, to sell: a$10,000 entry level Hyundai, devoid of features, for more than double! Good luck to them. And now for the questions. Will the car ever make back $13K worth of gas during its lifetime (remember one can really only compare the EV Hyundai to the conventional car, which was probably really good on gas in the first place)? And what is the car's life time? From what I've read no one is really sure how long rechargeable battery packs can last. Finally, if we live in world where gas prices are such that it won't take longer that 10 years to make the money back in fuel savings, won't the owner feel like an A-- for suffering so until then? I'm no fan of Volkswagen, but if I was calling the shots there I'd probably reach the same conclusions about the future of EV. It is more lack of profit than not able to build nor sell. A Prius+ for$35k might not sell so well. There would be a segment of people that would buy them, maybe 10% of the people that already buy Prius. Why would you want to shift sales to something less profitable when the base car has thin margins?

How big the market is for electric cars in 2020 depends on the price and availability of petrol.
I find it hard to reconcile VW's conservative projections with the IEA's latest pronouncements.
Over the next few years to keep oil around as available as at present, albeit at higher cost, they said that we would need several new Saudi Arabia's, and vast expenditure to exploit them.
With the recession this expenditure just is not happening.
By around 2014 oil is likely to be both scarce and expensive.
The choice is not between having an oil-burner or suffering some inconvenience and expense in running as EV, but of being mobile or not.
I reckon the economy is going to be bad enough for many years that most will only be able to go for some sort of NEV, so a proper EV with a range of perhaps 100 miles would be luxury.

Not realy davemart. Its only a choice between 5-6 buck gas and a very expensive and low usefulness ev car.

At about 6 bucks us gasoline several large blocks of the world wont be able to afford to buy oil and the demand side will move much closer to supply for at least 20 more years.

Most us drivers can cope with 6 buck gas simply by downsizing to a used midsized car or by paying off the car loan and thus reducing monthly car expenses enough to pay for the higher gas.

The fact is a 400-500 cc engined compact lith mild/full hybrid car will compete and beat evs for at least 10 more years.

By then we will have everything from advanced air cars to fuel cell cars and a large and robust biofuel sector AND yes we will have rushed production in anwr and other places to make up the gap along with coal to liquids and oil shale and all that.

No its far more worrysome to ask what china and india will be needing in 2020.

The ONLY thing we,the human race,NEED is a good case of designer bird/swine flu that wipes out 80% of the breeding idiots on this planet!!

I see your(the moderator) one track mind does not allow comments that are not within your limited capability to think outside your box.
Fortunately the world does not have to depend on you and your crippled mind.

thank you and apologies.

Well at least its better then electro gonorrhea the noisy killer... sorry couldnt get that outa my head so had to share.

I think we can all expect things wont work out as smoothly as one would hope. Thats all I see in this report they expect bad things to happen to slow it down.

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