Volkswagen, the world's largest automaker, has two themes for its lineup at the 2019 Shanghai Auto Show – electric and sports utility vehicles. Herbert Diess, CEO of the group, is betting on scale to help it succeed in the world's largest electric car market, even though right now it's dominated by Chinese makers.
The Volkswagen Group plans to build 22 million e-cars over the next decade. When questioned whether this target was too aggressive, Diess defended the strategy, saying that was only about 15 percent of the group's total sales, and to get mobility CO2 free, electric cars are the right way forward.
"We're coming strong… We (are) already launching electric cars on the existing platform," Diess said. "I think it will be quite revolutionary starting in 2021."
China is rolling back its generous subsidies for electric cars, which may spur competition and consolidation in a market that has close to 500 NEV makers. That could be positive for VW's electrification push. While Chinese auto sales posted a double-digit decline in the first quarter, Diess reiterated the group's commitment to its largest and most profitable market.
"I think we are entering a new era in China. China has the right ecosystem, the right scale and the right speed. So we want to be part of them, we will relocate much more R&D capabilities here. We have a strong market position, coming with strong products and strong partnerships, I think we are well-positioned now," he added.
With the auto event fanfare, five VW SUVs debuted in Shanghai, at one of the three big events it held in the lead-up to the Shanghai auto show. Volkswagen sees the share of SUVs will rise to 50 percent in the next five years. Diess spelled out the 2019 forecast for VW's global growth is to edge up despite demand uncertainty.
"We did a lot of improvements. For instance, Latin America improved a lot. I would say half a billion only last year. The U.S. and Mexico are improving. Their cash flow position is getting better. You are suffering a little bit now for the first three months in China. But still, we hope that we will have a positive year 2019," Diess told CGTN.
Diess noted the rise of the startup automakers, but he pointed out it is not easy to become a relevant player, and Tesla's current volume took a long way with a large amount of money spent. He added that there are a few startups which had looked promising a year or two ago were already dropping out. "So I would say it is an open race," he noted.