VW’s redemption lies in electric cars & flat battery packs

Eye of the storm: VW may pin hopes on electric vehicles and new battery pack design to revitalise embattled brand ///

By Simon Rees in Toronto ///

Ships threatened by storms are positioned to face the wind as the captain down to the lowliest rating brace themselves for impact. The storm created by Volkswagen’s (VW) Dieselgate scandal continues to lash the company and, like the crew of an embattled vessel, the management’s efforts are focussed on keeping the corporate ship righted and afloat.

Electric vehicles (EV) could prove an important means of doing this, mitigating both the scandal’s damage on VW’s reputation and carving out a wider piece of the growing EV pie, particularly in the North American market.

Moves to this effect are already becoming apparent.

For example, VW announced in mid-December that it will present a new concept car at the Consumer Electronics Show (CES2016) that runs from January 6-9 in Las Vegas. The car will represent “new era of affordable long-distance electromobility” and will “illustrate the major changes that the car is set to go through in the next few years”.

Trade show hyperbole aside, it certainly seems that whatever is unveiled will be a flagship product. Details have been kept to a minimum so far. VW chairman of the Volkswagen passenger cars brand Herbert Diess will make an opening speech on the show’s eve.

VW is already promoting an EV version of its popular Golf model, the e-Golf. It also has several other concept cars in various stages of development, such as the Bulli Concept. Those who follow the automaker’s fortunes and the EV markets in general would be wise to watch this space closely.

Flat-structured battery packs could hold the key to VW’s electric future.

“We are developing a special vehicle architecture that foresees the installation of flat batteries,” Diess said, “This will be a breakthrough for us.”

The flat battery pack structure – which packs in more lithium-ion batteries into a smaller space – is reminiscent of what Tesla Motors used in its Model S, Nissan in its LEAF and BMW in the i8.

The flat battery pack also usually results in a larger battery as it runs the entire length of the cars chassis and is not limited by space in the back or front of the vehicle. This means VW could be heading towards a lithium-ion battery with a capacity in excess of 60kWh.

The development also sees VW, for the first time, thinking from the battery perspective rather than a automaking one.

Total recall?

In the meantime, there was some good news with regards to concerns that around 800,000 VW vehicles might have “unexplained inconsistencies” relating to CO2 emissions. In December, the company announced no unlawful changes to stated fuel consumption and CO2 figures had been found through investigations.

However, nine models representing around 36,000 vehicles per year for VW returned “slight deviations” and will be retested.

Unfortunately for VW, Dieselgate affords little wriggle room for the company to move out from underneath its shadow, especially as formal investigations are set to continue into 2016. Nine managers who were “possibly involved” have already been suspended.

Dieselgate erupted in September after VW confessed to installing defeat devices on diesel models from 2009 to 2015 that utilised type EA 189 engines. These devices comprised software that allowed the vehicles to cheat US emissions rules on nitrogen oxides (NOx). An estimated 482,000 cars are affected in the US, with a global total of around 11 million.

VW chairman Hans Dieter Pötsch said at a press conference in Q4 that systemic failures stretched back possibly over a decade. “We are not talking about a one-off mistake, but a whole chain of mistakes that was not interrupted at any point along the timeline,” he said.

But at least the company can now start righting the wrongs on the cars themselves. At the same December 10 conference, CEO Matthias Müller noted recalls in Europe would start for 2-litre diesel engine vehicles in January; Q2 2016 for 1.2-litre engine vehicles; and Q3 for 1.6-litre engine vehicles.

It was taking longer to achieve fixes for US vehicles in order to ensure they met the country’s NOx emissions standards, he added.

The effects of the scandal have already dented the company’s bottom line. In October this year, VW announced a net loss for Q3 2015 of just over €1.67 billion ($1.79 billion). Most of this was attributable to €6.7 billion set aside during the quarter to help cover recall costs and win back customer trust.

Sales have been affected too.

For example, US sales in November 2015 stood at 23,882 vehicles compared with 31,725 vehicles for November 2014, down 24.72% year-on-year. In the UK, the Society of Motor Manufacturers and Traders reported 12,958 new VW vehicles registered for November 2015 compared with 16,196 vehicles in November 2014, a decline of 19.99%.

The lull will last until investigations are completed and details of the wrongdoing are made available. One wonders how the markets, shareholders and customers will react when the truth is fully and finally revealed.

It appears VW has now reached the eye of the Dieselgate storm.

This article was taken from the upcoming Benchmark Magazine issue 4, part of a Benchmark Membership subscription. For more information contact David Colbourn: dcolbourn@benchmarkminerals.com 

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