By Eric Peters
for NMA
The push to “electrify” everything that rolls is turning out to be a lot like the push to “vaccinate” everyone in that both have turned out to have adverse effects.
VW hasn’t died suddenly – but it is dying.
Chief Financial Officer Arno Antlitz, speaking to thousands of maybe soon-to-be ex-VW employees, said VW has “one maybe two” years to turn things around else there may no longer be a VW in as little as two years from now. The company is reportedly considering shuttering its plants in Germany – a Hail Mary pass to reduce manufacturing/compliance costs. But moving manufacturing operations to places where it costs less to manufacture things won’t solve VW’s issues because that is not VW’s core problem.
Its core problem is that it bent-the knee to “electrification.”
More finely, that it bent over when it was accused of “cheating” on federal-level emissions certification tests, which the government used to take away VW’s strongest selling point – affordable, high-mileage vehicles – and crippled it financially by imposing unprecedented fines on the company for selling affordable, high-mileage vehicles.
Specifically, VW’s range of affordable high-mileage diesel-powered vehicles.
VW was the only car company selling a lineup of such vehicles, ranging from the $22k TDI Jetta – a family sedan that could travel more than 500 miles on a tank of fuel – to TDI-powered hatchbacks such as the Golf and Beetle as well as the larger Passat sedan. VW sold far more of these than Tesla sold $50k EVs that go maybe 300 miles.
Hence the problem. The affordable, high-mileage cars VW was selling had to go – in order to eliminate the alternative to $50k EVs that go maybe 300 miles.
VW’s TDI diesel engines were derided as “dirty” – not because they polluted in any meaningful way but because VW had programmed them to pass federal emissions-certification tests. What happened – as regards to the federal emissions-certification tests – is that it was “discovered” VW programmed the software that controlled the operation of its TDI engines to pass the tests.
Oh, the humanity!
Out in the world, when the driver of a TDI-powered VW floored the accelerator pedal, there was a slight and momentary increase in emissions that exceeded the federally-allowable threshold. It was an angels-dancing-on-the-head-of-a-pin difference and in normal times would have been No Big Deal because it wasn’t one. But it became a Very Big Deal because it provided the excuse needed to get rid of the affordable, high-mileage alternatives to the battery powered vehicles that were just then on the verge of being pushed hard.
VW has never recovered from this – and it is not likely it will ever recover from this.
VW’s brand name stands for people’s car – a kind of tautology for affordable cars – and that is what VW used to sell but no longer does. Instead, it is trying to sell battery-powered devices such as the ID.4 – which has a base price just shy of $40,000 (and a standard range of just over 200 miles) that escalates from there to just shy of $60,000.
On deck is an “electrified” Hippie Bus that only aged and wealthy hippies will be able to afford as it is expected to have a base price of just shy of $50k.
These are not people’s cars. They are affluent people’s cars. And there are only so many of them and for that reason only so many can be sold to them.
And that is why VW has “one, maybe two” years left. It is not a luxury-car brand that can survive selling far fewer cars to far fewer people at far higher prices. Mercedes and other luxury-car brands can do it that way because they are luxury-car brands and so – ipso facto – don’t sell many vehicles.
VW can’t afford to operate that way, however – because people who have the $50k to spend want a luxury-brand for their money. VW trying to sell luxury-priced devices is akin to McDonald’s trying to sell a $15 plant-based Quarter Pounder.
Now, some news stories are spinning VWs’ woes as arising from union/labor cost woes, but this is spin. The company’s management is bleeding the company of green to appease the greens who are, of course, red. It continues to go along with “electrification” out of government-imposed necessity. The company sluiced $5 billion to Rivian – the manufacturer of $70k-plus electric trucks and SUVs that cost Rivian $30k each to sell – as part of a “partnership” to develop more EVs.
Hari meet kari.
The same, by the way, is happening to Stellantis. Or at least to the Dodge and Chrysler brands owned by Stellantis. They no longer sell the models that Dodge and Chrysler buyers want to buy. In fact, they sell hardly anything at the moment. Chrysler is down to just one model – the Pacifica Minivan – and Dodge has nothing to offer other than the Hornet, a small crossover that’s a far cry from a Charger or a Challenger and the leftover Durango, which probably won’t be around for much longer, either.
Carlos Tavares, the CEO of Stellantis, said the other day that there is no longer a market for cars; rather there is a “state-imposed supply chain.” The industry manufactures what the government demands – and the market be damned.
Exactly so.
The disease process has entered its terminal stage. VW – and Stellantis – and not just them, either – haven’t got much time left.
Behold the results.
Eric Peters lives in Virginia and enjoys driving cars and motorcycles. In the past, Eric worked as a car journalist for many prominent mainstream media outlets. Currently, he focuses his time writing auto history books, reviewing cars, and blogging about cars+ for his website EricPetersAutos.com.
Editor’s Note: The thoughts and opinions expressed in this article are solely those of the author and do not necessarily reflect the views or positions of the National Motorists Association.
