Volkswagen today announced its commitment of $7.1 billion over the next five years in the North American region (NAR1) to boost its product portfolio, regional R&D and manufacturing capabilities. Scott Keogh, President and CEO of Volkswagen Group of America, Inc., shared an update on the strategic roadmap with media. By locally integrating its combustion-engine (ICE) and electric vehicle (EV) assembly, American-focused engineering, battery know-how, and software development, Volkswagen aims to drive 55% of U.S. sales to be fully-electric by 2030.
“American ingenuity and manufacturing know-how are at the heart of our strategy for growth, and thousands of men and women are working hard every day throughout North America to bring the Volkswagen brand to life for consumers,” said Scott Keogh, President and CEO, Volkswagen Group of America, Inc. “This profound commitment to our localized capabilities will transform Volkswagen into one of the leading EV brands known for its commitment to innovation, quality, and the communities we call home.”
Boost to all-electric portfolio, phase out of gasoline-powered vehicles
Keogh announced that Volkswagen 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. In its place, Volkswagen 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 all, Volkswagen Group brands plan to introduce more than 25 new battery electric vehicles (BEVs) to American consumers through 2030.
Leveraging all capabilities in the North American region
Keogh emphasized that regional capabilities will be crucial to sustain Volkswagen’s success in the American marketplace. Currently, more than 90 percent of Volkswagen’s vehicle portfolio for North America is assembled in North America, including the Atlas and Atlas Cross Sport SUVs in Chattanooga, TN, as well as Tiguan, Taos and 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. Volkswagen 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.
Beyond assembly, Volkswagen aims to localize 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 Volkswagen Group’s global vehicle platforms (MEB and future SSP).
Dedicated battery supply, know-how and build-up of battery cell production
As part of its preparation to launch the American-assembled ID.4, Volkswagen 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 global Volkswagen Group aims to build up a battery cell production in the United States to meet the growing demand for batteries across its brands. The Group is currently assessing governance and finance models, and aims to finalize decisions through 2022.
Beyond supply, Volkswagen is expanding its battery know-how in the United States. In May 2022, its new Battery Engineering Lab (BEL) in Chattanooga will start operations. As result of a $22 million investment, the BEL will enable the company to test and validate batteries for all Volkswagen electric models in the American marketplace.
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. The CoE closely collaborates with technology partners Quantumscape (San Jose, CA) which is driving solid-state battery technology, and 24M (Cambridge, MA), which is re-imagining the design of battery cells.
American-focused software development
Keogh laid out a commitment to software and digital solutions for American consumers, developed directly in the United States. As part of that, Volkswagen plans to bring over-the-air (OTA) updates and new software features, such as plug and charge, for the ID.4 this year. Volkswagen is also working with CARIAD SE, Volkswagen Group’s software entity, to supporting 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.
1) Canada, Mexico, United States