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When you have been following the information from Volkswagen Group these previous a number of months, you realize the corporate is producing extra vehicles than it may possibly promote, and never simply electrical vehicles. That oversupply scenario has led to a call to shut two factories in Germany and remove 35,000 manufacturing jobs. To be truthful, a type of factories is the so-called Glass Manufacturing unit in Dresden, the place a small variety of electrical vehicles are produced every year. These vehicles may simply be manufactured elsewhere, however that manufacturing facility has promotional worth for the corporate as a result of clients can watch their vehicles being constructed. The manufacturing facility in Osnabrück was already scheduled for closing as Volkswagen had no plans to fabricate there after 2026.
A couple of days in the past, Reuters raised just a few eyebrows when it reported that Chinese language corporations could also be considering buying one or each of these factories. The report doesn’t title names, however it’s well-known that Volkswagen is forging a relationship with Xpeng in China, so it stands to motive that Xpeng could be one of many corporations considering exploring that risk. Nonetheless the thought could not sit nicely with political and labor leaders in Germany.
German business supply Supervisor Magazin this week outlined a plan that might circumvent these considerations. As a substitute of buying an underutilized manufacturing facility, Volkswagen is perhaps considering forming a three way partnership with a Chinese language accomplice. It could be precisely the alternative of the scenario in China, the place VW needed to enter right into a three way partnership with SAIC when it launched there in 1983. The Chinese language provided the factories and the labor drive whereas Volkswagen provided the experience in automotive manufacturing. That association allowed home producers to discover ways to construct combustion vehicles to European requirements. Now, VW may learn the way Chinese language producers construct electrical vehicles shortly and cheaply. Volkswagen may run extra shifts within the Glass Manufacturing unit to enhance its low utilization by constructing Chinese language fashions. On the similar time, the corporate may benefit from China’s electrical mobility experience, whereas the Chinese language producer would keep away from the EU’s particular tariffs.
In accordance with Supervisor Magazin, negotiations have already taken place however haven’t but been finalized. Particularly, there was allegedly discuss of joint manufacturing on the Volkswagen manufacturing facility in Emden, the place the German carmaker builds the ID.4 and ID.7. Nonetheless, the fee construction didn’t go well with the Chinese language companions, in accordance with a extremely positioned supply. Nonetheless, the unnamed supply didn’t rule out the opportunity of the Chinese language firm taking on that manufacturing facility or some one other type of cooperation.
Such a step would undoubtedly be economically and geopolitically delicate each in Germany and throughout the company construction of Volkswagen Group itself, in accordance with Electrive. Internally, it will have an unlimited symbolic impact. Different automotive producers are dealing with related considerations. Stellantis and Leapmotor based the three way partnership Leapmotor Worldwide to construct electrical vehicles from the Chinese language producer in European Stellantis crops, and the Leapmotor T03 small electrical automotive is now being assembled at a Stellantis manufacturing facility in Poland. Nonetheless, because the Polish authorities mentioned it was in favor of latest tariffs on Chinese language vehicles imported into the EU, Leapmotor is reportedly now searching for one other manufacturing facility in a unique European nation to construct its B10.
An Act Of Desperation?
Supervisor Magazin made no bones about the place it stood on the problem, calling it an “act of desperation,” that was “radical thoughts video games, for now. However the harder the reorganization, the extra possible they turn out to be.” Regardless of such carping from the sidelines, it’s clear that Volkswagen should save billions to get anyplace near reaching its reasonably modest monetary targets. The collective settlement from December 2024, which Supervisor Magazin known as a “faux peace,” supplies for as much as 35,000 job cuts. Nonetheless, many within the firm doubt its implementation. The funding funds has already been determined and Volkswagen should look carefully at which applied sciences to put money into for which markets.
One important alteration within the firm’s plans is a pivot to vary extenders. In Europe, the Opel Ampera and the BMW i3 as soon as used such a plug-in hybrid system wherein a small combustion engine acted as a generator however by no means drives the wheels straight. Most plug-in hybrids at the moment use a so-called parallel hybrid system wherein the onboard engine also can energy the wheels as wanted. In a sequence hybrid, the engine solely turns a generator that provides electrical energy to the battery, which in flip provides energy to the drive motor or motors. In China, so known as prolonged vary EVs use a parallel hybrid system and have gotten highly regarded. BYD even has some fashions that may go as much as 1300 miles with out stopping to cost the battery or fill the fuel tank. Manufacturers like Li Auto, which makes a speciality of EREVs, are having fun with robust gross sales. Volkswagen doesn’t provide such drive techniques in China, the place its gross sales of battery -electric vehicles are sluggish and demand for combustion engines can be falling.
Plug-In Hybrids For Volkswagen
Volkswagen has already introduced it’ll provide plug-in hybrid drivetrains with vary extender engines in its new Scout-branded automobiles and there are experiences that CEO Oliver Blume has ordered the event of plug-in hybrids for different fashions within the Volkswagen group portfolio. “The vary extender is an effective argument for taking away clients’ vary nervousness through the transition section to electrical mobility and making it simpler for them to get began,” Blume is quoted as saying. However that expertise continues to be beneath dialogue at company headquarters.
Nonetheless, it stays to be seen whether or not this can occur. Supervisor Magazin writes that Wolfsburg has been discussing vary extenders since final March, together with for European fashions. Blume is claimed to have but to decide about including it as an choice to fashions bought in Europe. The corporate would dearly like to double its gross sales within the US by the top of this decade, however has not mentioned whether or not vary extenders could be included in vehicles bought there aside from these from Scout Motors. In a speech on the World Financial Discussion board in Davos, Switzerland, final week, Volkswagen CFO Arno Antlitz mentioned “extra initiatives” are into consideration for the US market. “If you wish to double market share, it’s important to be much more native,” he mentioned, all although what which means precisely is much from clear.
We’re seeing the consolidation of the auto business that many have been predicting for years. Honda and Nissan are speaking merger if they’ll determine what to do with Renault’s stake in Nissan. Canoo went bust final week, taking yet one more EV producer off the board. Fiat has shut down manufacturing at its Mirafiori manufacturing facility as a consequence of weak gross sales. The troubles at Volkswagen are only one extra signal that the auto business is on the sting of chaos.
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