ICE age far from over: Volkswagen

VOLKSWAGEN will continue to invest billions of euros to ensure its combustion engine vehicles remain competitive.

While agreeing that electric vehicles are indeed the future of road-based transport, Volkswagen Group chief financial officer and chief operating officer Anro Antlitz told Reuters that it will keep a firm foothold in the combustion engine sector, despite the industry’s ongoing move toward electrification.

The move comes as markets across the globe encounter dwindling demand for battery electric vehicles. Volkswagen Group has been forced to readjust its previously announced strategy to fully embrace electric vehicles, shelving efforts to seek external investors for its battery unit and scrapping plans for a €2 billion ($A3.25b) EV factory in Germany.

It now plans to invest two-thirds of its capital allocation of €180 billion ($A292.39b) into electrification and digitalisation, the remaining one-third to be invested in “keeping our ICE cars competitive”, said Mr Antlitz.

“The future is electric, but the past is not over. It is a third and it will stay a third,” he clarified.

In addition to those models already announced (pictured), Volkswagen also plans to build a small, affordable EV, now without the assistance of Renault.

Plans for the collaboration between Volkswagen and Renault collapsed last month, with VW to now go it alone in the development of a sub €20,000 ($A32,480) battery electric model to challenge cheaper Chinese imports from brands including BYD, MG and others.

At the same time, Volkswagen concedes that it will need to balance-out cooling battery electric vehicle (BEV) sales with the addition of more plug-in hybrid electric vehicle (PHEV) models – including in Australia – the planned move contradicting earlier plans to make its ID. family of battery electric vehicles a pivotal part of its short- to medium-term future.

Former Volkswagen CEO Herbert Diess announced plans to introduce up to 75 fully electric vehicles over the coming decades, stating in 2021 that electric mobility “had won the race”.

Like other European manufacturers, Volkswagen has faced struggles with its electrification strategy. Fast-growing competition, particularly from China, has seen a number of model rollouts delayed, extending the life of combustion powered models well into the next decade.

Locally, at the launch of the recently revised and repositioned Touareg range, the brand made clear its plans to offer PHEV versions of the Golf hatchback (expected when the Mark 8.5 facelift launches in the second quarter of next year), as well as the new-generation Tiguan mid-size SUV (due late 2024 or early 2025), and the all-new Tayron seven-seater SUV (late 2025).

The first PHEV for the business is the Touareg R e-Hybrid, the most powerful VW yet, not to mention the most fuel-efficient ever in Australia, and one of the most expensive, too. But the brand says it is mindful of buyers who can’t shell out $130K on a large SUV, and will cater to more budget-friendly price points for a selection.

Ralph Beckmann, general manager of marketing and product for VW Australia passenger vehicles, said those models will help pull down the entry point for plug-in tech for the brand.

“It’s probably no surprise that it could be Golf and Tiguan, and then potentially another player who is coming into the family that we’re not going to be talking about today,” he said, referring to the first-ever Tayron.

“It’s an opportunity now to open these conversations again. I think there is definitely room for it in the market.

“We saw it in the ‘Register Your Interest’ numbers as well (for Touareg R)” he said, referring to the 2000 customer inquiries on the range-topping PHEV, which is a $129,990 plus on-road costs proposition.

“The plug-in hybrid seems to have an important role to play in the market as well. So, we’d love to offer it beyond the pure electric product in the other ranges, as well,” he said, referring to the imminent – yet delayed – launch of the VW ID electric vehicle range.