VW cancels construction of new battery factory due to lack of interest in electric cars, but its main problem lies elsewhere
5 hours ago | Peter Miller
It is certainly an interesting news in itself, which only underlines the information about the current events in the electric car market, but its background shows how big and completely unnecessary troubles VW got into.
As we have stated several times recently, not a day goes by without us witnessing a re-evaluation of the approach of some car company to electric cars. The last time it was somewhat tragicomically Toyota, which basically coughs up electric cars, but even the little it planned on the market with them turned out to be too big a bite. Today we will return to the opposite end of the peloton to one of the biggest proponents of “electric hujerstvo”, i.e. to the VW concern.
Despite the warnings of many, he bet almost everything on electric cars, with no other guide than his own convictions and political plans. He began to completely ignore the market and it is unbelievable how far down the company this short-sighted approach of the company’s management has permeated. People stopped thinking, it was quite obvious – I have talked to many people over the past years, not only from Volkswagen itself, but also from Skoda, Audi or Seat, and it is fascinating how many of them were able to say something like: “The company decided this , that’s how it will be, we don’t care about the wishes of the customers.” Electric cars have become a religion, the only way and the goal. How could this have turned out?
Well, of course it’s wrong, it’s impossible to function like this in even the most overregulated market, after all, even in a centrally planned economy, people still have the option not to buy anything. Until a certain moment – in a state of relative macroeconomic well-being, massive redistribution, boundless optimism on the market and the dissatisfaction of the interest of at least those who do not reject electric cars, everything developed as expected. Recently, however, all the mentioned factors have started to worry about a non-ignorable lack of interest, which forces companies to reach for the emergency brake.
VW is unsurprisingly among the first, and since the summer we have seen a series of restrictive measures from its side following the declining number of orders for electric cars – limiting the number of shifts, layoffs, reassessing investments in new factories, etc. This week we have another one, and due to its connection with You have probably already heard of him in the Czech Republic. If not, we’ll quickly summarize everything.
With their electrical plans in mind, the Germans intended to build six large factories for the batteries they thought they would need for electric cars. But since they are now finding that they simply won’t sell as many electric cars, they logically don’t need as many battery factories either. After those in Germany and Spain, a decision was to be made about another factory in Central and Eastern Europe, which could also be located in the Czech Republic. It won’t happen, it won’t happen anywhere, there’s no need. The head of the VW Group summarized everything modestly: “Based on the prevailing market conditions, not excluding the slow start of the electric car market in Europe, there is currently no rational reason to decide on further construction sites,” stated the current head of the VW Group. It’s certainly an interesting decision, but even more interesting is its deeper background.
Interest in electric cars is understandably limited, and especially in the situation of the growing supply of such cars on the current market, many car manufacturers are running into the limits of their sales. But from VW’s point of view, the situation is more complicated. It’s not like VW came up with great things, “the market went wrong” and they suddenly had to back down willy-nilly. The market may have gone wrong (from VW’s point of view, otherwise it just fully showed its true face, which the Germans ignored for years), but it cannot be overlooked that the German giant came up with products that would soon hit the limits of their sales even under better circumstances.
I am still in regular contact with several employees of the VW Group directly in Germany, who independently of each other have recently told me such an “ugly story” that is circulating in the company about the brand’s electric cars. That the former head of the Volkswagen group and brand (Herbert Diess) approached electric cars like a grandfather trying to buy the latest technological gadgets for his grandchildren for Christmas. It sounds better in German, but you certainly understand the gist – with good intentions, you are trying to choose the right product in an environment in which you have absolutely no orientation, where you have no idea what the potential user wants. You simply want to make someone happy, to fulfill a wish, so you “buy something”, because you have no idea what that wish actually is, what is currently flying, you buy nonsense and rather disappoint yourself. I find it perfectly apt.
If a grandchild wants a cell phone for Christmas, it doesn’t mean he wants just any cell phone. Grandfather buys him the 70th reincarnation of the Nokia 5110, which is a mobile phone, but… in the words of a classic, “completely unsuitable”. The grandson wanted an iPhone and “fry” ef-one simulators on it, but he got a brick on which he can only fry a snake. And just as a mobile is not like a mobile, neither is an electric car like an electric car. While I myself wouldn’t buy an electric car due to the internal technical limits of these cars because it just can’t serve my needs, I can imagine why someone would want a Tesla – at least it’s fast, has all kinds of interesting gadgets and so on. But why would anyone want a VW ID? Why?
Is it attractive in design? Is it good quality? Is it technically appealing? Is he extremely fast? Does it have good onboard software? Is it cheap? There is none of that and there is nothing else either. I see absolutely no reason why anyone should go and take a million crowns to buy a basic VW ID.3. For God’s sake, maybe a person who wants an electric VW at any price and likes the design idea of a mobile rice dumpling can do that.
ID.3 next to Tesla may not be like 5110 next to the latest iPhone, but the principle is the same – VW went and offered “some electric cars” without thinking about who actually buys them and why. He got himself trapped in a subsidized environment where only market distortion can sell such a product. Even next to the relatively miserable Golf VIII, the ID.3 is a completely uncompetitive product, and the same applies to practically all ID models. The Germans bet on the wrong horse, chose an inappropriate gift with good intentions, and will pay for it for a long time to come.
So while macro factors are largely the main driver of current decisions, the bigger problem seems to be VW’s microworld, which has lost touch with reality. I don’t know Mr. Blume, and I can only believe that someone who has completely lost his sense of reality would not get into the management of a car company like Porsche. However, if this is true, it should lead to a much bigger turnover in the management of the VW Group than stopping the construction or rebuilding of a few factories. Volkswagen is on the wrong track and must first of all begin to re-perceive the needs of its customers in order to get back on the right track. He didn’t and he doesn’t. And he loses mainly because of that.
The rather desperate electric VW portfolio will be the first to sell EVs in case of trouble, as it has been showered with the biggest investments without VW caring who will buy such things. That is also why they are now canceling the construction of another gigafactory for flashlights, but the company’s problems are much deeper. Photo: Volkswagen
Sources: Reuters, Autoforum, Volkswagen
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