The world's second-largest automaker has the largest number of model variants among its brands, with a plug, for sale today. That's among the automakers with a meaningful U.S. presence, and models available somewhere in the world. I count nine from the Volkswagen Group (OTCPK:VLKAY) available to order in dealerships today:
Not all of these are sold in the U.S., of course. Only four are in the U.S. today (VW eGolf, Audi A3 eTron, and the two Porsche models).
Volkswagen has confirmed four more specific plug-in vehicles on the roadmap, to be delivered globally between now and the end of 2019:
Surely there will be more than just those four. For example, there will likely be a new Volkswagen Jetta, Audi A8, and four other Volkswagen SUVs with PHEV versions by that time. Volkswagen is talking about 20 new cars with a plug by 2020. Many of us can guess what most of those models will be.
By 2019, the Volkswagen Group's electric car developments will have forked into two paths (to be clear, development on some or most of these begun before 2015):
Cars that are made in gasoline, diesel, hybrid, plug-in hybrid and all-electric variants.
Cars that are all-electric from the ground up, perhaps with an addition of a range-extending gasoline generator in some cases, a la the BMW (OTCPK:BAMXY) i3.
The current Volkswagen eGolf and Golf GTE are the foremost examples in that former category. As part of a mid-cycle refresh of the current VW Golf this upcoming November 2016 (week 45), the eGolf will get a range boost of approximately 50% thanks to a higher-density battery. This will bring the range up to approximately 120 miles.
Considering that the Chevrolet Bolt (NYSE:GM) will be hitting U.S. dealerships around the same time - fourth quarter of 2016 - with a range of at least 200 miles, that begs the question: At what price discount does Volkswagen have to sell the eGolf after that point?
The Chevrolet Bolt will sell for $37,500 (or less). If the Bolt has 220 miles of range, and the eGolf 120 miles, all other things equal, what's the required discount to get people to buy the 120-mile range eGolf? Is it $10,000? More? Less?
Of course, the Chevrolet Bolt won't be the only challenge to the new VW eGolf. The Nissan (OTCPK:NSANY) LEAF 2.0 is also expected to arrive by the middle of 2017, only six months after the Bolt and eGolf 2.0. We know nothing about the LEAF 2.0's specs, but the concept car Nissan unveiled in October 2015 had a 60 kWh battery - same as the Bolt. If true, that would likewise imply a range of closer to 220 miles.
Eventually, there will also be a Tesla (NASDAQ:TSLA) Model 3, with similar range. And a Jaguar. And a Honda (NYSE:HMC). And a Hyundai. And a Ford (NYSE:F). And a Volvo (OTCPK:VOLVY). And a… well, you get the point - almost every automaker will be making EVs with ranges from 200 to 300 miles by 2019, and we will see many of them already in 2018.
As you can see here, the Volkswagen eGolf will be handily out-gunned by both GM and Nissan within the next year, at a bare minimum. And that leads us to the second point, which is Volkswagen's all-new electric-only platform.
Similar in concept to all sorts of other automakers including GM, Tesla and Faraday Future, the new Volkswagen all-electric platform looks like the "skateboard" GM pioneered well over a decade ago - and Tesla famously executed upon with the Model S. It would be available in a variety of form factors, from small compact/economy cars that can be parked in the tightest of spaces, all the way up to full-size minivans.
In fact, it was this minivan version that Volkswagen showed at CES in Las Vegas in January - the "Budd-E." It had a 101 kWh battery and could go an average of 233 miles on the U.S. EPA cycle.
This fall, Volkswagen will show another concept in this series, probably something in the size-class of a Golf. If so, it would be taller to account for a thicker floor filled with batteries, and would get its own distinct design language in order to distinguish itself from the regular VW models such as the Golf. One might guess that battery sizes in that model could range anywhere from 50 kWh to 100 kWh.
Ultimately, by the end of 2019 or 2020 at the latest, one of the models in that series would replace the VW eGolf. Why? Because it could fit a much larger battery, with much longer range. It would not make any sense to keep the current eGolf idea at that point.
Between the large minivan and the Golf-equivalent pure EV, you could imagine every other body style and size. Sedans, hatchbacks, crossovers, 4x2, 4x4, four doors, two doors - you name it. Volkswagen will make at least some of them, soon enough.
The timing of most of those new-platform VW EVs point to calendar year 2019. I imagine we will see these cars well in advance of that manufacturing date. We have already seen the first concept car, and we will see at least one more later this year. The final designs should start showing by 2018, and mass production would begin sometime in 2019.
Volkswagen is torn between wanting to project a (misguided?) green image at the moment - and as always staying away from showing its cards to the competition, too far in advance. That's why we are seeing such a long list of vague and not-so-vague indications about Volkswagen's plans, some of whom are confusing and almost contradictory. Which of these are smokescreens, and which are not?
What is clear is that the VW Group has the engineering expertise to make whatever kind of electric car it wants. The question is what it will choose to make, and whether those choices will be based on actual belief about consumer demand, or whether they will be based more on political pressure.
My prediction is that the VW Group model that will have the surest impact the soonest, is Audi's initial effort for a pure EV, which was shown in September 2015 to be the eTron Quattro Concept. It is slated for production in 2018 in a factory in Brussels, Belgium. It is a car that was largely defined by the U.S. Audi team, although of course most of the core engineering is being done at Audi's German headquarters.
It's got a battery that's over 90 kWh - similar to Tesla - and should therefore have a similar range of almost 300 miles. On paper, it's a crossover-SUV, but in reality it's more of a "tall station wagon." As such, it doesn't compete with the Tesla Model X as much, but more with the Tesla Model S. It has doors that open reliably every time.
The contrast with Toyota (NYSE:TM) is also very interesting in this regard. While Toyota has said that it continues to research batteries for long-range EVs, for now it has placed its eggs in the hydrogen fuel cell basket for the time being. It believes that hybrids will carry the day until 2025-2030, at which point its long-term plan is for a massive sales ramp of hydrogen fuel cell cars between 2025 and 2050.
Toyota makes more cars than Volkswagen, and is vastly more profitable than Volkswagen too. Will Volkswagen's huge offensive into electric cars alter this equation? If so, for better or for worse? So far, electric cars have proven to be a money pit. Will the next three years be the moment when this changes?
The comparison with General Motors is another one. Volkswagen leads the plug-in market in most of Europe, but in the U.S. GM has more sales under its belt. The Chevrolet Volt has consistently been the best-selling plug-in hybrid in the U.S., and it's being joined by the Cadillac CT6 PHEV in the next year, shortly after the Chevrolet Bolt EV.
It's pretty clear that GM will take huge EV market share (if not PHEV) away from VW in 2017 and possibly also in 2018, but we know less (read: almost nothing) about GM's plug-in plans beyond the Chevy Bolt EV - than we know about Volkswagen's plans for 2018-2020. With Toyota sticking to hydrogen fuel cell cars though, both VW and GM are going down a different path than their more profitable competitor.
Ford is moving even more cautiously here. It has an EV in the market today, and two PHEVs, and while they have been selling in modest quantities, it is they are not going to gain market share against other EVs and PHEVs in the next two years. To the contrary, they are likely to lose big against GM and VW.
The competitive tale between the world's three largest automakers - Toyota, Volkswagen and General Motors - has just begun.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in TSLA over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: At the time of submitting this article for publication, the author had no positions in the companies mentioned. However, positions can change at any time. Volkswagen hosted the author at its annual press conference with management. The author regularly attends press conferences, new vehicle launches, factory visits and equivalent, hosted by most major automakers.
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Source: Volkswagen Challenges GM, Tesla And Nissan With New Electric Cars 2016-2019
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