“Chatting twice as long, earning half as much” Why VW dealers don’t want to sell e-cars

“Chatting twice as long, earning half as much” Why VW dealers don’t want to sell e-cars

“Chatting twice as long, earning half as much” Why VW dealers don't want to sell e-cars

This article first appeared in December 2020 at WirtschaftsWoche. A current report on Volkswagen’s electric strategy

is not just any car company. CEO Herbert Diess has publicly made himself the industry’s pioneer in climate protection. He had calculated that fist alone – one percent of what mankind blows into the atmosphere per year. Diess now wants to radically rebuild the world’s largest car manufacturer: from the cause of one of the biggest economic scandals of the post-war period, the diesel scandal, to an environmental leader. Volkswagen should be completely climate neutral by 2050.

For Diess it is clear: This is only possible with electric cars – a lot of electric cars. Like no other traditional mass manufacturer, he is pushing for the drive turnaround. And takes a lot of money in hand: Alone. To this end, Diess is also working with its own Association of the Automotive Industry (VDA). Some competitors and suppliers there are struggling with the new, stricter CO2 targets and emissions standards of the European Union (EU), speaking of a “. Not so the VW boss. He calls for a higher CO2 price, even stricter emissions regulations and an end to the diesel privilege.

For some in the VW group, Diess’ electric turnaround is going too fast. The influence of the brakes is likely to go much further than the VW boss would like. VW, so the allegation, could do a lot more to promote sales of its new e-cars. In some cases, VW is even undermining the sale of its own electric cars.

In fact, the first Volkswagen designed as a purely electric car, the ID.3, got off to a cautious start in the fall. The car that is supposed to bring “electromobility for everyone”, as Diess calls it, to the lower middle class at lower prices than, for example, the models of the electric pioneer, is not yet a box-office hit. . For comparison: in the spring of 2016, Model 3 had more than 400,000 pre-orders in the books within a few weeks.

The electric VW, which is supposed to replace the Golf, which has sold millions of times, has been delivered since September. 7349 ID.3 were approved in up to and including the end of November. According to estimates by industry experts, a good 3,000 of these are in-house and dealer registrations. The Wolfsburg-based company sold 10,515 of the Evergreen Golf in November alone, of which only 1941 had an electric drive.

At the same time, Greenpeace claims, VW could sell many more electric cars if it wanted to. It is undisputed that the start of sales of the ID.3 in the summer was slowed down by software problems – a fact that the VW management certainly did not want. But Greenpeace says the deeper reason for the weak ID.3 sales is another: the EU’s CO2 fleet targets. VW – like almost all other manufacturers, by the way – just wants to meet this, but not go below it. Because the money, according to Benjamin Gehrs, mobility expert at Greenpeace and the main author of the report, is still being earned from cars with internal combustion engines.

. Depending on the weight of their models, the individual EU limit value is higher for some manufacturers and lower for others. In 2020, VW is allowed to emit an average of 97 grams of CO2 per km and car sold. If the manufacturers fail to meet their target value, heavy fines will be due for the first time in 2020, after the EU had turned a blind eye from 2017 to 2019, it will now be expensive: 95 euros per gram per km and car sold.

According to industry estimates, VW is currently 102 grams, but should still come to 98 grams by the end of the year thanks to more plug-in hybrids, which may be counted with 50 grams of CO2 per km. That coincides with the latest statements by Konkret, the VW would cost around 250 million euros fine for 2020. Although there was a risk of painful fines, VW does not want to sell more electric cars than is absolutely necessary, according to the Greenpeace authors. Because with combustion engines you can still earn more money than with pure electric cars. The currently still higher production and raw material costs for the electric vehicles are to blame.

When asked by WirtschaftsWoche, VW confirmed that its own electric cars are currently generating even less profit than combustion engines: “The profitability of electric cars will be below that of combustion engines in the initial phase.” Exact figures cannot be given for competitive reasons. Volkswagen has therefore designed its electric offensive for high volumes, economies of scale and efficiency in order to increase profitability. “By 2025 at the latest”, the company wants to “become the world market leader in e-mobility”.

: “VW also started converting its fleet relatively late – although the entire industry knew that the fleet targets would come.” However, until 2025 the automaker could not make any “big leaps in emissions savings,” said Diess, because there were not enough new battery factories could be built. “On the other hand, we could still improve between 2025 and 2030.”

Independent experts are also skeptical of this allegation. A precision landing at the fleet targets is “not realistically plannable, the VW management knows that”, says Peter Mock, Berlin office manager of the multinational think tank ICCT, whose Washington branch was involved in uncovering the VW diesel scandal in 2015. The high investments in the conversion of numerous VW plants and in battery production also speak against this. “The corresponding numbers of electric cars have to roll off the assembly line for that to pay off. And they will surely be in the six figures in the long term, ”says Mock. Specifically, VW will invest more than 35 billion euros in the electrification of its fleet by 2024 alone.

Greenpeace sticks to its accusation. And provides further arguments: For 2020, the first year in which the 95 gram target applies, car lobbyists in Brussels have negotiated a soft transition rule. In the calculation of the fleet consumption, you can cancel the fuel-thirsty five percent of your new vehicles across the board. From 2021 onwards, this will no longer work, which is why it will then be more difficult to achieve the goal. Every electric car that will no longer be sold in 2020 but only in 2021 makes a “particularly valuable contribution to mastering the difficult-to-achieve goal of 2021,” says Gehrs. In addition, from 2021 onwards, calculations will be based on the stricter WLTP instead of the NEDC for the first time.

How many e-cars are sold also depends not only on corporate planning, but also on the largely independent dealers and, last but not least, the customers, says Mock from the ICCT. But the dealers in particular seem to be a serious problem for Diess’ renovation plans. This November, Greenpeace sent 56 test buyers to a total of 50 VW dealerships in 38 cities across Germany. In the sales talks, you presented yourself as the ideal buyer of the all-electric ID.3. Nevertheless, the compact car was only recommended in one out of 25 cases if the interested parties did not express a preference at the beginning. Even if the test persons explicitly considered the ID.3 and fluctuated “between the electric ID.3 and a conventional Golf”, the Stromer was only recommended in 7 out of 25 cases. Most of the time, the sellers explicitly advised not only to buy the ID.3; they expressed “fundamental doubts about electromobility,” said Gehrs.