Lux Research: Volkswagen In Strong Position To Go Electric In Wake Of Diesel Scandal

OCT 7 2015 BY MARK KANE 27

Volkswagen Cars Led By Plug-Ins

Volkswagen will recover from the diesel gate by electrifying all models?

The future of Volkswagen and diesel cars is a big question mark.

A lot of observers see a way to recovery and reconciliation by introducing electric cars.

A similar opinion comes from Lux Research, who believes that the German manufacturer needs to accelerate efforts in electrification.

“VW is actually in a strong position to innovate their way out of this mess. They have been spending most on the R&D of any OEM (about $11 billion in 2013), and they are the largest automaker by volume. Arguably, no major OEM is better positioned than they are to decisively accelerate the push towards plug-in hybrids and electric vehicles, putting the shine back on their tarnished image. However, they probably lack the vision, leadership, and ambition to do it, so they will most likely carry on as usual after some apologies.

Unfortunately, many of these theories about how VW will operate have now been called into question as Volkswagen CEO told old some 20,000 employees at the German HW on Tuesday that the company will be delaying or outright canceling non-essential projects as pressure mounts to slash spending.

“We will review all planned investments, and what isn’t absolutely vital will be canceled or delayed”, said Mueller in an email.  “We must make massive savings to manage the consequences of this crisis.”

Are the current (and future) EV projects deemed “non-essential” or not?  It is hard to say, as it is still hard to understand how the VW Group will hit emission targets without plug-in technology when the next level of emission standards is ushered into Europe in a few years.

For its part, Lux Research doesn’t seem to be convinced that Volkswagen will go the electric route. The research firm points out other aspects of Diesel Gate, like the failure of regulators, who couldn’t catch VW’s cheat:

  • Regulators will try to improve, but will need better equipment. It’s striking, Lux said, that the US EPA, with its $8-billion budget and workforce of 15,000 staff, couldn’t catch VW, but a small team of researchers from West Virginia University could. Lux suggests that regulators need to revise their testing protocols for real-world performance.
  • Automotive software will come under pressure to open up. OEMs have in the past successfully lobbied regulators to use the Digital Millennium Copyright Act (DMCA) to keep OEM software locked up and proprietary, and off-limits to diagnostic and repair companies the OEM does not like. The EPA has sided with OEMs, fearing that if the software is open-access, then consumers would modify it at the expense of emissions. VW misused the protection of the DCMA to the software cheat, Lux said.
  • Diesel passenger vehicle sales in the US will drop drastically. Due to strict NOx emission standards in the US diesel passenger vehicles have failed to make any significant market penetration, representing less than 1% of passenger vehicles and only 3% of all vehicles on the road. In part, slow adoption was due to the requirement of installing the urea-containing SCR unit to control NOx emissions in diesel engines, which is expensive.
  • AdBlue systems and renewable diesel will infiltrate Europe’s existing diesel passenger vehicle market. The Euro 5 NOx emission standard that is applicable to vehicles prior to 2015 is nearly six times more lenient than that in the US (180 mg/km compared to 31 mg/km). This has resulted in diesel powertrains present in approximately 35% of passenger vehicles and 53% of all vehicles and biodiesel making up 62% of Europe’s biofuels market.

Source: Green Car Congress

Categories: Volkswagen

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27 Comments on "Lux Research: Volkswagen In Strong Position To Go Electric In Wake Of Diesel Scandal"

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Now if the US would apply the same strictness to co2 emissions, it wouldn’t look so much as a protective effort to keep individual car traffic diesel from competing with the regular gas engines of American manufacturers… Let’s try to price co2 emissions and nox emissions and shift to electric.

Make it a win-win and let VW work off their gargantuan fines in the form of reduced-price EVs!

This is an interesting idea. I don’t think they can do this exactly as it would setup a conflict of interest and greed in a multi-national corporation always wins.

The EPA could fine VW $15 billion to be paid equally over 5 years. Then setup a fund to provide an instant rebate for any EV sale in the USA. Say $2k per car with 30kWh or greater battery and a sale price of less than $40K.

I suspect that the analysis is correct. VW – like most of the big manufacturers – regards EVs as a necessary evil to satisfy regulators. Having their E-up, E-golf and GTEs I imagine they will axe further electrification as “unnecessary spending”.

This is a real shame as the VW electrics are really well designed and put together cars that deserve strong and sincere backing. Alas, I think we waved goodbye to any chance of seeing a larger battery in the E range, which would have made the E-up and E-golf competitive with the 30kw Leaf from both above and below in market positioning.

Sorry, that reply was meant for the general thread. I also meant to address your point specifically, which is this is an excellent idea, in that it would give VW Group a real incentive to push it’s electric lineup as hard as possible to get the “reward for good behaviour”. Whilst I doubt it would spur much new investment in new designs, it would encourage them to price their existing models more competetively and to push them out in all states and all dealers, and perhaps offer evolutionary improvements on models which show strongest sales.

This also makes me think that something like this could be used on the industry in general in the form of a levy to the manufacturer on every ICE sold, that is credited back to them (minus the costs of administering the system) for every plug-in sold – if you sell more EVs than ICEs, happy days…

VW didn’t want to do it years ago, they don’t want to do it now. The foot-draggin’on BEVs has made that pretty clear.

I’ll buy from someone who cares what their vehicles do to the planet.

Right. ‘A house divided against itself cannot stand.’ That’s one reason I think Tesla will prevail, they only have one iron in the fire.

I find eGolf to be lacking in my extremely-objective-NOT EV ranking.

http://sparkev.blogspot.com/2015/09/ev-ranking.html

I also find their MPGe rating suspicous. Did they actually test the car or simply divide range by max battery capacity?

http://sparkev.blogspot.com/2015/09/mpge-fraud.html

It seemed realistic to me.

That’s the ticket. When someone cheats you blame the testing procedures as being inadequate.
Yes, perhaps if the testing had of been more stringent then VW would not have been able to cheat and dropped the whole ‘clean diesel’ campaign in utero.
Or not, cheaters are going to cheat, don’t blame it on the test.

+1 Why go prior to Euro 5 rules when Euro 6 are much closer to our tier 2 bin 5, .07gr/mi? It Wasn’t regulations it was diesel subsidy that penetrated the European market.

I appreciate how blunt Lux research is With VW.

I actually think they may go all in on EVs/PHEVs. Remember, someone had to approve the Porsche Mission-E, which will likely become a production car of sorts… and that someone is probably they just made head of VW.

I’m going with glass half-full position. 🙂

I hope VW goes all PHEV and BEV. Cutting EV r&d money would be a Maya like move (reacting to a drought by throwing sacrificed bodies into the remaining wells).

When has Lux been right about anything?

VW is cutting back “non-essential” expenses. One wonders if they can both compete in the ICE world and do the big outlays necessary to compete in the BEV world.

When a company starts cutting expenses, R&D is usually one of the first two things they cut (along with new hires).

While we can hope and dream that VW’s response to this huge scandal, which casts serious doubt about the viability of so-called “clean diesel” tech, would be to redirect efforts towards building more plug-in EVs, I find it rather unrealistic to think that’s what the company will actually do.

As usual, what passes for “analysis” at Lux Research is without value. In this case it’s not that the “analysis” is uninformed, it’s that it’s merely stating what everyone watching the industry has known (or at least, should have known) for years. Except for certain niche auto makers, every manufacturer of mass produced automobiles is “in a strong position to… decisively accelerate the push towards plug-in hybrids and electric vehicles”. The ability to build modern, highway-capable, efficient EVs dates to Alan Cocconi’s invention of the modern integrated motor controller/inverter, for AC electric motors, in 1987. The ability isn’t what’s lacking. But rather than restate what I’ve said so many times, I’ll quote someone who I think said it better: “Until we see Audi, Mercedes, VW, Toyota, GM, Ford deliver a BEV that similarly dusts their own top-of-line ICE product in performance AND value for money, there will be no effective BEV competition for Tesla. And this isn’t going to happen for a LONG time, not for technical reasons, but because ICE carmakers cannot remain viable companies if they start killing off their highest margin products. The ICE carmakers will put batteries into version of their products for the customers who… Read more »

the person that you think “knows better” apparently doesn’t know a whole lot. it is inconceivable that any government is going to enact regulation that immediately outlaws all cars that aren’t BEVs. you can’t live in the real world and believe that such would actually happen. it’s not because of crazy conspiracy theories: it’s because BEVs are not ready for prime time. there are BEVs on the market now; do you see the public abandoning ICE cars in droves and buying BEVs? of course not.

ICE cars will be around for the foreseeable future. there are other things that governments can do to reduce emissions that will take political courage: (in the US) they will have to significantly increase taxes on energy use, not just for cars, but energy use in general. this will drive people to purchase smaller, more energy efficient, automobiles instead of monster SUVs.

it just seems like it is hard to get EV enthusiasts to understand that there actually are alternatives to an immediate “EV revolution” that isn’t going to happen anyway. it’s like the EV enthusiast sees the BEV as a hammer and every problem as a nail…

Your response doesn’t appear to have any relation to my post, which was entirely about market forces, and said nothing about the guv’mint forcing VW or any other auto maker to do anything.

Did you perhaps intend your comment to be a response to someone else?

P.S. — I didn’t say Randy Carlson “knows better”, either.

I wouldn’t say companies have to make EV that beat (aka, perform better) their top model gas car. If they make something that beats comparable cost gas cars, that’s something.

If P90D was made by GM, that would be one (beats Corvette). SparkEV is only other EV that beats comparably priced gas car. I mean, how can you get lower priced than under $40/mo to lease a car that accelerates quicker than $20K car?

One product out-competing another isn’t just about “performance”. It’s also about convenience, utility, the “coolness” factor, and perceived value for the money.

Many people, not just EV-haters, incorrectly say that EVs can’t compete until they out-compete gasmobiles in every categories. That simply isn’t so. That’s like saying that a cellphone would have to out-compete a land line telephone in all categories, including reliability and clarity of voices.

We all know that people who use cellphones are willing to settle for less, when it comes to reliability and voice clarity. They settle for lower quality there because the added convenience of being able to make or receive a call no matter where they are, outweighs the lower performance elsewhere.

Similarly, BEVs won’t have to be recharged in two-three minutes, or have a 400+ mile range, before people start seeing them as offering higher overall value than gasmobiles. Eventually, the average driver is going to come to realize that not having to drive to a special store once a week to pay a lot of money for gasoline is worth putting up with an occasional inconvenience elsewhere, and that charging up at home is a lot more convenient.

I don’t want to be negative on this subject, but corporations are profit driven, Tesla, VW, gm, 3m, etc. VW cheated because they couldn’t find another way to get a product in the market and didn’t have an alternative technology like hybrids or fuel cells. Let’s get them pay the fines and clean their management. I think the success in car electrification is possible with bold players like Tesla and BYD, or with big players with some know-how, gm / BMW. To force big corporations like VW to go electric, they need the pressure of governments, consumers and the market, Porche is exploring ev’s because Tesla is stealing clients on their luxury market.

Fortunately the joke of TDIs is over, so they have to clean their act and hurry up investing in real green tech, but no judge would make that happen, only the forces of the market.

Please offer EV’s for us. 2 of my 3 TDI’s are “in the recall” and if not for tolerating 100% biodisel the oldest would deserve replacement too. Trade in on Electric is ideal. Then I’m beholding to my own choices on how clean my Electricity is.

You probably won’t be able to trade, as dealers can’t turn around and sell 2.0 TDIs. With the lack of a plan, as far as today’s VW hearing went, I think it looks like VW is planning on shrinking defensively. I feel bad for owners of 2013-2015 TDIs, who bought what they thought were economical cars and are seeing ~$5000+ hits in value (remember, that would be personal sale only, as many dealers are rejecting trades). Those with older “Gen 1” cars just found out that VW doesn’t plan to begin recalling until late 2016. There are so many TDI with exhausts that will fail (are failing) before this recall. What are these owners supposed to do, when it takes $4,000+ just to get back on the road. Have their new exhaust systems replaced all over again, with SCR and its new Catalytic cannister? Rep. DeGette held up a schematic of the exhaust, today, right during the hearing. She said one part costs $2,000. That’s about as much as GM wants for the Volt’s battery. I am glad that how much this design was a failure, even before “diesel gate”, is starting to come out. It was engineering negligence, before… Read more »

Musk joked that the Model X has a super cabin air filter in case you get stuck in traffic behind a VW diesel.

It is a fantastic idea. I hope they start immediately in making a few giga factories first.

Being a good idea, and doing it are two different things.

VW Will not change its product line drastically. Diesel is strong in Europe that’s the prime market for VW. And Europe and China are the prime markets for VW. Losing market share in US will hurt, but developing a US oriented drive train would cost too much.
They will offer in US their Passat and Golf GTE plugin hybrids that are already on the market in Germany. And that’s it.